DJL Research In The News

David J. Livingston is an authority on the supermarket industry who is often quoted in the business press.

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We love Whole Foods but shop at Wal-Mart
Life, inc. at Today on, Online, April 4, 2012

"People who like Wal-Mart shop there, and people who don’t like Wal-Mart shop there more," said supermarket consultant David J. Livingston.

Livingston said people who live in a big city like Chicago might place a higher value on a convenient location because they’re more likely to have to lug their groceries home by hand, or at least battle traffic and parking considerations.

For people who live in very drivable communities, low prices are likely to be a primary consideration, Livingston said. That’s one reason he said stores like Wal-Mart, Aldi and Target are attracting customers who may have previously shopped at more traditional grocery stores, like Safeway or Albertsons.
Livingston, the supermarket consultant, said addressing other customer complaints could literally come at the cost of their key advantage.

“(Wal-Mart’s) only appeal is price, and yeah, they do have a lot of shortcomings, but for them to correct those shortcomings, that would cost money,” he said.
Only about 13 percent of our readers said a lack of fresh produce or meat is their top concern. Livingston said those shoppers who do value quality over everything else may also be abandoning the traditional grocery chains in favor of more high-end stores. Whole Foods, known for its fresh and health-conscious items, also has seen strong sales improvements recently.

Liquor store outcry: Utah lawmakers having second thoughts
The Salt Lake Tribune, Salt Lake City, UT, April 6, 2011

. . . earlier this week, market analyst David Livingston of DJL Research in Wisconsin said it’s unlikely that all consumers will adjust to the closures. A more likely result will be a decline in alcohol sales, which put $100 million into state and local treasuries last year.

"When a liquor store near someone’s home is closed, you’ve given that person some discouragement from drinking," he said. "Maybe profits will go up at other stores, which could make up for the decline in sales, but without a comprehensive market analysis, the state is taking a risk.

"This certainly will be an experiment."

Livingston said that rather than calculating mileage between stores, auditors should have taken into account natural barriers such as freeways between stores and driving time that consumers would face before determining whether outlets should be shuttered.

Bing in talks to bring Whole Foods to Detroit
The Detroit News, Detroit, MN, April 4, 2011

At least one industry analyst is skeptical that the upscale market known for high prices and organic goods would choose to locate within Detroit's limits.

"You sure you got that right?" said David Livingston, a managing partner at Milwaukee-based DJL Research. "I'd think they'd go to Mars first."

"Anyone can be in discussions, but pulling the trigger and actually doing it are two different things," Livingston said.

Whole Foods, which has markets in Troy, West Bloomfield, Rochester Hills and Ann Arbor, builds stores in "affluent areas near major universities," Livingston said. "They're not just going to go into a difficult area and build a store out of the goodness of their heart."

Why Retailers Pay For Your Free Samples
The Street, Online, February 15, 2011

Supermarket analyst David Livingston says samples such as midshopping shots of juice and precheckout chunks of cheese are a recession-proof common denominator among successful supermarkets including Whole Foods(WFMI_), Trader Joe's, Safeway(SWY_) and Wegman's.

"Some stores can't afford not to give out samples," Livingston says. "It's something the customer has come to expect."

They're also a relatively cost-free way for a grocery retailer to give the consumer a little something extra. Livingston notes that it's common practice among many supermarket chains to take popular items that are a week to a few days away from expiration and cook them up for customers rather than toss them into the trash compactor out back. . .

. . . With the free sample, a company gets the customer to try a product without putting up a price barrier, while the customer gets a "free" item while not having to gamble a portion of that week's grocery bill on a product they may not even like. With all of that on the line, Livingston says dedicating sample-specific personnel and resources toward putting a supermarket's best foot forward is an investment everyone ends up enjoying.

"Retailers who do this for a while have samplers employed and put a little extra effort into giving out their samples," he says. "You can tell if a smaller retailer hasn't done much sampling if there's just a teenager behind a card table with toothpicks."

Costco shoppers come for the bargains -- and the samples
Marketplace from American Public Media, Online, January 17, 2011

The segment with David Livingston starts at 8:28 and lasts 2 minutes. Listen to this Story<

Partial transcript:
Giving out samples is part of Costco's business model, says supermarket analyst David Livingston. He notes other profitable grocers do it, too.

DAVID LIVINGSTON: There's just a high correlation with successfully run supermarkets and sampling.

Livingston points to Whole Foods and Trader Joes.

LIVINGSTON: And these two chains are probably two of the highest sales per square foot supermarkets in the United States.

So why doesn't every store do it? Livingston says a supermarket needs to have extra money and be certain that shoppers will like the food they're eating.

What the CEOs Need to Hear
The Street, Online, December 23, 2010

Supermarket analyst David Livingston, of DLJ Research, says A&P has long lacked financial discipline, something made clear by its overpriced purchase of longtime rival Pathmark.

"For reasons that I could only speculate, A&P overpaid for everything. Rent, transportation, goods and products sold in their stores, acquisitions of other stores and wages," he says.

Post-bankruptcy, the company -- once the dominant supermarket chain -- is in desperate need of a management overhaul. "Get out of the grocery business, because you are not very good at it," Livingston says to the top brass. "When I talk with other industry insiders they are just amazed at the total mismanagement of A&P. The punch line to all the industry jokes was 'Thank God for A&P,' meaning having them as an ineffectual competitor made life a lot easier."

Hundreds of stores should be closed or sold, and most likely will be, Livingston says.

"Most of the competitors completed their wish list a year ago of stores they would like to acquire," he says. "They couldn't reach a deal with A&P, but perhaps after bankruptcy, they can. Maybe the company can be more efficiently operated with [Executive Chairman Christian] Haub out of the way, renegotiated leases at market rates and supply agreements that are more fair."

Grocery chains fight for customers in an intensely competitive market
Ocala Business Journal, Ocala, FL, November 24, 2010

David Livingston, a Milwaukee-based supermarket analyst, said grocery stores are using several strategies to increase sales, including quality of service, price and convenient locations. For example, he said, Aldi likes to locate its stores next to Wal-Mart.

"They are not afraid of Wal-Mart because they are competitive on price," Livingston said. "What they care about is Wal-Mart Supercenters bring in a lot of traffic. They are a parasite of Wal-Mart, feeding off the traffic."
Livingston said Aldi does well because the grocer know its role in the marketplace.

"Being near Wal-Mart, will they get a big market share?" Livingston said. "No. They're not going to get a huge market share, between 3 and 4 percent. Nothing that upsets the apple cart. Don't make any waves, do their own thing and they're happy."
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Save-A-Lot has a deep-discount- grocery presence in Marion County predating Aldi's by more than a decade, with four local stores. Livingston said Save-A-Lot has a philosophy similar to Aldi's and their prices are about the same as Wal-Mart. Save-A-Lot has a niche, but not a very big one.

"They usually don't take much of the market share," Livingston said. "They're trying to be a low-price operation and have a lower price structure than Aldi."

Livingston said he doesn't expect any major changes to their current operations, describing SuperValu, Save-A-Lot's parent company, has having struggled lately. Company officials did not respond to requests for comment.

Meanwhile, Livingston said, those in the grocery business looking to expand already are doing so.

"Publix and Wal-Mart will continue to grow," Livingston said. "Those are the ones that have the ability to grow. The rest, I don't see them doing anything. The companies that are contracting are Winn-Dixie, Albertson's. I think eventually Sweetbay will probably fold their tent."
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"They've been fairly price competitive, but they can't touch Wal-Mart," Livingston said. "They're lower than Publix, Winn-Dixie, but if you can't roll with Wal-Mart, you're not going to be able to compete on price."

Livingston said it's tough for other grocery stores to compete with Publix and Wal-Mart. One reason is because Publix does a great job on service, while Wal-Mart does a great job on price.

"Publix is employee-owned and morale is very high," Livingston said. "It's very difficult for companies like Winn-Dixie and Sweetbay to compete with Publix on quality of service."

Livingston said Publix, which has nine stores in Marion County and is clearing land on Maricamp Road for a new store, like to find high traffic locations in densely populated areas.

"If they see where a Winn-Dixie has any type of success, they like to jump right in on top of it," Livingston said. "For them, it's like taking candy from a baby."
Livingston said Winn-Dixie, which had another round of store closings in September, none in Marion County, will probably continue as they're doing now.

"They'll probably every year have another round of store closings, year after year after year, and they'll probably continue to remodel stores and tread water," Livingston said. "I expect them to continue losing a little market share every year. They're just going to be treading water for a while."

Eventually, Livingston said, they'll have to do something different. Financially, he said they're fairly strong because they eliminated all their debt after filing bankruptcy.

"Publix views Winn-Dixie as an ineffectual competitor," Livingston said. "I think Winn-Dixie only exists because Publix allows them to. I think Publix would rather have Winn-Dixie as a competitor than somebody else."
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Fresh Market, a specialty grocery store, had plans to build an Ocala location, but those plans have been put on hold. Livingston said Fresh Market, and similar specialty stores, open here and there, but don't make a significant impact on market shares.

"Generally, in any given market, they usually have just one store," Livingston said. "In a very large metro area they might have more. They're about to get some IPO money. I think you'll see Fresh Market burn through the cash they get, build a few stores, but they haven't made any kind of meaningful impact on market shares."

A super shift in grocery habits
Star Tribune, Minneapolis, MN, July 7, 2010

The Twin Cities area is by far Target's largest grocery market by share. Normally in its stronger markets, Target commands a 4 percent or 5 percent share, said David Livingston, a Wisconsin-based supermarket consultant. In Dallas, where SuperTarget has more stores than it does here, it still captures less than half the market share it has in the Twin Cities, IRI data show.

"They have the home-field advantage up there," Livingston said. Part of the Minneapolis-based company's success in the Twin Cities stems from shoppers' familiarity with the Target brand, which got its start here in 1962.

Supervalu Shares, Options Surge on Talk of Buyout
Business Week, Online, March 12, 2010

A possible buyer may sell the banner stores and use the proceeds to pay down debt so that Supervalu could focus on its wholesale distribution business, according to David Livingston, a supermarket consultant with DLJ Research in Waukesha, Wisconsin.

“Buying up Albertson’s and some of these other banners has done nothing but bring them negative sales and a lot of debt,” he said.

Grocery stores go super in battle for shoppers
Journal Sentinel, Milwaukee, WI, January 2, 2010

...competing with Woodman's on price is difficult, said supermarket consultant David Livingston of Waukesha. Woodman's prices are similar to Wal-Mart Supercenter's, typically the lowest in any market region....

"They used to have a 1.25% market share for each store," Livingston said. He expects that share to decline to about 0.75% per store in the future. Each Woodman's store takes about 3% of the market, Livingston said.



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“Most analysts will evaluate the competition using either a microscope or telescope. I use a proctoscope.”

— David J. Livingston