O'HARA, Pa. --Giant Eagle Inc. is abandoning its foray into the discount grocery business, reported TribLive. It is closing its eight Good Cents Grocery + More stores at the end of March.
"After careful consideration and much deliberation, the decision has been made to discontinue operations of all eight Good Cents Grocery + More stores throughout western Pennsylvania and northeast Ohio. All eight of the company’s locations will cease operations by the close of business on Thursday, March 26," the company said in a statement provided to CSP Daily News.
"While our Good Cents locations initially gained popularity, numerous business and economic factors have made it difficult to continue to successfully deliver the shopping experience customers have come to expect from Good Cents," said Giant Eagle spokesperson Dan Donovan.
Giant Eagle entered the discount grocery business in 2012 with its Good Cents brand. Beside its traditional Giant Eagle chain, the company also operates the upscale Market District concept, smaller Giant Eagle Express stores that focus on ready-to-eat foods and GetGo convenience stores.
The discount grocery space is very competitive, said the TribLive report, with four chains establishing or expanding a presence in Western Pennsylvania since 2012, including Aldi, Bottom Dollar, Save-A-Lot and Good Cents.
Giant Eagle's decision followed the closing of the Bottom Dollar Food stores at the end of 2014, according to the newspaper. Delhaize Group of Brussels, Belgium, said in November that it would close its 66 stores, including about 20 in the Pittsburgh area, and sell the assets to Aldi.
The closure of Good Cents will solidify Aldi as the dominant player in western Pennsylvania in the segment, the report said, leaving Save-A-Lot as Aldi's main competitor in the region.
"It's hard for anyone to compete with Aldi's size and scale," Burt P. Flickinger III, managing director of Strategic Resource Group, told the paper. "Often when Aldi comes into a market they'll start price wars. So everyone makes very little money or loses money for a lengthy period of time."
Discount grocers also face competitive pressure from dollar stores, which increasingly are selling food, and traditional big-box stores, such as Wal-Mart, which use their size to keep prices low.
Save-A-Lot, the national discount chain of Eden Prairie, Minn.-based food supplier Supervalu Inc., has 10 stores in western Pennsylvania. Aldi, a German-owned company, that has its U.S. base in Batavia, Ill., operates more than 1,300 stores in 32 states.
Aldi has said it is in "an accelerated strategic growth plan" because of rising demand, expecting to bring its total store count to nearly 2,000.
Flickinger said Giant Eagle has much better expansion opportunities for its Giant Eagle and GetGo brands, particularly in Ohio. "Giant Eagle's capital will get a far superior return on the Giant Eagle food, drug and fuel store model than they will with the lower-margin Good Cents store," he said.
Meanwhile, Giant Eagle also announced that it will close the Giant Eagle Express convenience-store grocery and gas station in Indiana, Pa., at the end of March, one of only two locations. The other is in Pittsburgh.
In a statement obtained by CSP Daily News, the company said that the adjacent GetGo gas stations and small convenience stores will remain open, providing 12 fuel pumps for redemption of fuelperks! rewards.
O'Hara-based Giant Eagle, with annual revenues of $9.9 billion, has a total of 420 retail locations in various formats. It has nearly 200 GetGo convenience stores and gas stations in Maryland, Ohio, Pennsylvania and West Virginia. In December 2013, Giant Eagle launched the Market District Express concept, designed to be a hybrid of the flagship Market District grocery format it launched in 2006 and the Giant Eagle Express format it launched in 2007. It is a channel-blurring grocery/convenience store/restaurant/pharmacy hybrid.
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