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David J. Livingston is a panelist for the Retail Wire Brain Trust and his comments are published frequently. He is an authority on the supermarket industry who is often quoted in the business press. |
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News articles for October–December 2004 |
Plummeting stock cause for alarm? Fresh Brands president says investors
still have long-term faith in company But David Livingston, owner of grocery store consulting firm DJL Research in Pewaukee, said the price cuts are much like taking a knife to a gunfight. “Lowering thousands of prices should generate more sales for Fresh Brands, but their gross margins will suffer,” Livingston said. “At the same time, they are admitting to the consumer that they have been overcharging them all this time.” A 212,000-square-foot Wal-Mart Supercenter, slated to open near South Taylor Drive and Washington Avenue in March 2006, is going to have a huge impact on Piggly Wiggly stores in this area, Livingston said. It could be a greater blow if Wal-Mart’s plans to build another Supercenter of the same size in the Town of Sheboygan become reality. Wal-Mart is putting up Supercenters in many places in Wisconsin where Fresh Brands has grocery stores, he said. “ Sometimes Piggly Wiggly execs will brag that they do not get much impact from a new Wal-Mart,” Livingston said. “They have even been quoted as saying sales actually went up. “ That might be true, but what they fail to disclose is that they had to close other nearby Piggly Wiggly stores to achieve this,” Livingston said. “But it’s not just Wal-Mart. Pick ‘N Save has been very aggressive with its growth plans.” Sale specualtion impacts Roundy's The management changes and headquarters relocation affected morale among some Roundy's employees, according to David J. Livingston, a supermarket consultant based in Pewaukee. "After the buyout, employees had trouble adjusting to the new rules," Livingston told SN, referring to certain polilcy changes instituted by the new management. "There were two groups of employoees—the old ones, and the new ones from Dominick's. The old employees felt the new ones did not thrust them, and thought they were inferior. The new people did not have to endure this 'step-dayddy' syndrome, and I think they have liked working for the company." While it remained unclear whether Roundy's was actively seeking a buyer, Livingston said it would be an appealing target for Kroger or Albertson's. "A good compnay like Roundy's is like an attrractive girl at the bar," he said. "With Roundly so successful, especially in Milwaukee where there are no [Wal-Mart] supercenters, Costcos or meaningful competition, they have a 59% to 60% market share. This is attractive to someone like Kroger or Albertson's." The pig with a plan: Supermarket chain slashing prices to compete
with bigger rivals David Livingston, a Pewaukee supermarket consultant, said the new ads for the Piggly Wiggly stores in his neighborhood were enough to get him to the nearest store.“I’m about as critical as you can get regarding supermarkets, so if they get me to drive over to Hartland, they are doing a good job,” Livingston said. On the other hand, the price cuts are going to take a bite out of the chain’s already slim margins, he said. And sales gains will be negated by a number of competitive openings in the state. Two Wal-Mart Supercenters are planned for Sheboygan, Fresh Brands’ home base. And new Pick ’n Save stores are planned for Oconomowoc and Hartland, where Fox Brothers, Fresh Brands’ premier operator, has two stores, Livingston said. “This is a good strategic move by Roundy’s to go directly at two of their best stores in an underserved area of Waukesha County,” he said. A new Wal-Mart Supercenter planned for Hartford will have a direct hit on Hansen’s Piggly Wiggly in Slinger, and Roundy’s opened a Pick ’n Save in Saukville, which hurt Hansen’s best store there, Livingston said. “In my opinion, due to all the competitive activity, I do not see any meaningful gains by Fresh Brands in the next two years,” Livingston said. Wal-Mart expansion might fade Rainbow Wal-Mart Stores Incorporated's aggressive Supercenter push into the Twin Cities will undoubtedly shake the ground beneath Cub Foods and Rainbow Foods, the area's two top supermarket chains.... To remain competitive, Cub will need to cut prices to within 10 percent of Wal-Mart's, said David Livingston, managing partner of DJL Research LLC, a consulting firm in Pewaukee, Wis. That will erode Cub's profit margins, he said. Livingston of DJL Research thinks Roundy's might have to rethink opening a store in Shakopee to avoid going head-to-head with Wal-Mart. If anything, Wal-Mart's Supercenters will benefit Cub by weakening Rainbow, he said. "When a fat guy gets on a crowded bus, somebody has to get off," Livingston said. Wal-Mart plans 3 Supercenters in metro area David Livingston, president of a Milwaukee-based supermarket research firm, said local SuperTargets also will feel Wal-Mart's sting. "SuperTarget does well in the Twin Cities because it's their home state and there are no Wal-Mart Supercenters," Livingston said. "But around the country SuperTarget does poorly when it's had to compete against Supercenters." A typical Wal-Mart Supercenter does about $80 million in sales annually, with about $34 million coming from groceries and other supermarket items such as dog food, he said. A SuperTarget's grocery sales are typically half of a Wal-Mart Supercenter, Livingston said, citing research by Trade Dimensions Data. Downtown
Minneapolis getting a grocery store—twice Analysts said Lunds' foray into downtown Minneapolis makes sense. "If there is strong population growth and no competition, it's a no-brainer," said David Livingston, founder of DJL Research LLC, a consulting firm in Milwaukee.... Experts say Lunds will have to take a different approach with these smaller stores. "You can't have 50-pound bags of dog food," Livingston said. "People who live downtown tend to have smaller pets. You would want to target single people or small households." New Kmart
Leader Seen as Unlikely to Save Grocery “I don’t believe Kmart will be willing to spend their new-found fortune on the stores they have left—these are stores most competitors would consider closing,” David Livingston, preside of DJL Research, Pewaukee, Wis, told SN. “They’ve already sold off their highest-volume and most profitable stores, and the money they’ve been spending on renovations on existing stores isn’t much more than a coat of paint.” Target joins food fight: SuperTargets emerge as low-price leaders
for groceries, tapping into the one-stop-shopping market Some question whether SuperTarget has given Target Corp. nearly the same lift as rival Wal-Mart Stores Inc. has enjoyed from its mega-stores, which retail observers expect some day to hit the Twin Cities. Wal-Mart isn’t saying when. “The best SuperTarget would perform far below the average Wal-Mart super center,” contended David Livingston, a Milwaukee grocery consultant for more than 20 years. Based on his market research and store visits across the nation, Livingston said SuperTarget grocery departments average sales of $6 per customer accessible square foot while Wal-Mart's figure is $12 to $15. Bottom line: The average SuperTarget grocery department produces $200,000 to $300,000 per week in sales while those at Wal-Mart generate about $650,000 to $700,000 per week, Livingston said. Livingston said SuperTarget does better in the Twin Cities, where there is a higher density of stores, with the super centers generating weekly grocery-related sales of up to $550,000 at some locations. But “outside of the Twin Cities, it (SuperTarget) is a disaster as far as grocery sales,” said Livingston, who has visited stores across the country and conducted market research. Surviving Wal-Mart—How a Burlington Pick 'n Save used
ingenuity and hustle to avoid layoffs David Livingston, who monitors the grocery industry as owner of DJL Research, agreed that Wal-Mart will kill one of the three grocers. And he predicted that Piggly Wiggly would be the one to close. “The weak link is Piggly Wiggly,” he said. The company has cut a lot of labor and is trying to get by splitting employees’ time between its Burlington and Delavan stores. Fresh Brands has had financial difficulties as well, Livingston noted. “If you’re Schmaling’s, you’ve got one problem, and now you have a wholesaler that’s supposedly backing you, but they’re having problems themselves.” He said Pick ’n Save was already dominating the other two stores and is doing the best job in Burlington against Wal-Mart. “They're really in tune with their consumer,” Livingston said, through data they get from the Pick ’n Save loyalty card. A&P
in area 1 of 6 trying device to end loss of cart “Every retailer I’ve ever worked with has had this problem,” said David J. Livingston, a supermarket analyst in Pewaukee, Wis. “Once you get (the cart) off the parking lot, a lot of bad things can happen."” |
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“Most analysts will evaluate the competition using either a microscope or telescope. I use a proctoscope.” — David J. Livingston |