Survey: Dollar stores put increased competition on supermarkets

Fort Lee, N.J. — Supermarkets are facing increased competition from dollar stores, according to a new survey from Perception Research Services International.

Supermarkets continue to be the primary channel where consumers purchase groceries but are continuing to face challenges from other retail formats. PRS' survey results indicate that supermarkets are still where most shoppers (91%) have purchased groceries in the past three months (in line with last year's 92%), and mass merchandisers are still their largest competitive threat (73% purchase groceries there – down from 76% in 2011).



But this year's data shows that dollar stores are gaining momentum as the percentage of shoppers who purchase groceries at dollar stores has increased, from 32% in 2011 to 35% in 2012. Alternatively, levels at drug and convenience are holding steady relative to last year (46%/47% and 23%/24% respectively).



While consumers purchase beverages and food generally at the same rate across mass merchandisers and dollar stores, cleaning supplies and personal care items are purchased more often at dollar stores. In addition to these items, shelf stable products at dollar stores are most competitive with mass merchandisers.



This survey also revealed that shoppers prefer supermarkets for selection, mass merchandisers and dollar stores for price and drug and convenience stores for price.



During 2012, more shoppers utilized sales/coupons (83%) and quantity/size control (70%) to save money than in 2011, the survey found. Most importantly, this year significantly more shoppers claimed to have switched brands to curb costs (61% versus 49%).



“Our latest findings on grocery shopping indicate how very discerning today's shoppers are – about their venue preferences as well as brand choices,” said Jonathan Asher, EVP at PRS. “Retailers must understand their competitive strengths and capitalize on them, while also making the necessary adjustments to their offerings to seize opportunities for a larger slice of the pie as shoppers are more open to new shopping possibilities than they have been since the 1950's with the advent of large, supermarket chains.”