After one visit to the Aldi discount grocery store in Delta Township, Shirley VanDorp was hooked.
With gas prices closing in on $4 per gallon, the Eaton Rapids woman was looking for ways to offset the cost to fill he new sport utility vehicle's tank.
"The first time we came, we were impressed with the food, and it's cheaper," said VanDorp, 27, as she browsed Aldi's freezer aisle with her 3-year-old daughter, EllaSondra, sitting in the cart. "I can do twice as much for less of a price and that's including the gas coming here. With gas prices going up, we're just trying to save a little bit of money."
VanDorp visited the store, part of Germany's Aldi Group, for the second time earlier this month. With her new Dodge Durango getting 14 miles per gallon, VanDorp has started doing her main grocery shopping at Aldi to save money for gas.
With food prices at historic highs, a growing number of shoppers are flocking to discount grocery stores to buy basic staples such as milk and tomatoes, along with private-label items. Stores such as Aldi, known in the industry as limited assortment stores, often sell items at about 40 percent below a traditional grocery store's prices, said food and retail consulting firm Willard Bishop in Barrington, Ill.
Supermarkets decline
The nation's 2,789 limited assortment stores accounted for about $16.8 billion in sales in 2006, a figure expected to climb 9 percent during the next five years, the firm reported.
At the same time, traditional supermarkets lost market share last year because of increased competition from Bentonville, Ark.-based Wal-Mart Stores Inc. and limited assortment stores. Traditional supermarkets are expected to drop in market share to 37.3 percent over the next five years, from 44.1 percent in 2006.
Aldi's stores in Lansing and Delta Township have experienced a "significant increase" in customer traffic," Dan Sefton, vice president of Aldi's Michigan division, said without elaborating.
"I think they're just trying to stretch their food dollar and we're able to offer that to our customers," he said. "I think the state in general is hurting."
Lansing resident Deborah Oliver, 47, has shopped at the Delta Township Aldi since it opened about six years ago.
"I shop here a lot because it's cheaper," she said earlier this month at Aldi, where she bought white and orange roses for gifts. "With the gas prices, you have to cut corners where you can cut corners at."
Aldi, a privately owned company, has 44 stores in Michigan and more than 900 in the United States. The German chain, whose U.S. headquarters is in Batavia, Ill, offers about 1,300 items, mostly private label, Sefton said.
Competition has increased among all grocers as commodity prices continue to rise, said Jaime Powers, spokeswoman for another discount grocer, Save-A-Lot, which lists local stores in Haslett, Lansing, Mason and St. Johns.
Eden Prairie, Minn.-based Supervalu Inc., which operates most Save-A-Lots, says on its Web site the chain's 1,170 stores have more than $4 billion in annual sales combined.
"Save-A-Lot is well positioned and we expect another solid year on Save-A-Lot this year," Supervalu Chairman and Chief Executive Officer Jeff Noddle said.
Finances tight
One-third of adults surveyed in March indicated their financial situations were worse than a year ago, according to research firm NPD Group Inc. in Port Washington, N.Y. Of this group, 47 percent said they were buying more private label goods and 54 percent were stocking up more on sale items compared with a year earlier.
But the search for grocery deals is not limited to Aldi, Save-A-Lot or others in the discount grocer category.
"We have seen a trend where people are taking advantage of all the ways to save money these days," said Frank Guglielmi, director of public relations for Walker-based regional retailer Meijer Inc.
Guglielmi said some promotions, such as a program that gives customers 5 cents off each gallon of gas when they use MasterCard credit cards at Meijer gas stations, are becoming more popular.
"We work very hard to keep our prices as low as possible and to offer our customers as many ways as possible to save money in our stores, and because of that we have very loyal customers," he said.
U.S. prices on all food soared 4 percent last year, the highest increase since 1990, according to the U.S. Department of Agriculture. The culprits are higher commodity and energy costs.
A larger demand for corn for ethanol production caused corn to rise to $3.34 per bushel last fall, up 83 percent from the fall of 2005. And the average price of milk was 13.3 percent higher than in March 2007, according to the March consumer price index.
Nick Infante, Michigan senior manager of public affairs for Wal-Mart, said the world's largest retailer has been able to keep prices low enough to compete with other discounters despite the company's mammoth size.
"Customers are always looking for value in their products, and with gas prices getting to $4 and things getting more and more expensive, I think they're realizing we've got everything they need," he said.
At Lansing-based L&L Food Centers, shoppers - even those with tight budgets - are looking for fresh and locally grown perishable goods, rather than processed foods with less nutritional value, Marketing Director Jim McNelly said in a statement.
"Most shoppers are looking for greater values, which means better, fresher perishable items than are found at most limited assortment stores," he said. "We are bringing in more and more local items, which customers like, and it also has a positive impact on our local economy."
Tennessean reporter Wendy Lee contributed to this report. Contact Kathryn Prater at 377-1063 or kprater@lsj.com.
By Kathryn Prater, Lansing State JournalIn your voice
