THE FRIDAY 5: Costco’s Winning Formula; Dollar Tree’s Road Ahead Amid Store Closures

Readers were also interested in Kroger and Albertsons' legal date and Trader Joe's growth plans
Emily Crowe, Progressive Grocer
Richard Galanti
Costco CFO Richard Galanti is retiring after 40 years with the company.

Welcome to The Friday 5, Progressive Grocer’s weekly roundup of the top news and trends in the food retail industry. Each Friday, we’ll take a look at the stories that are most important to our readers and also keep tabs on the trends that are poised to impact grocers. 

1. Outgoing Costco CFO Gets Candid With PG

Richard Galanti, who started at Costco Wholesale Corp. 40 years ago and is stepping down effective March 15, spoke with Progressive Grocer Senior Editor Lynn Petrak about his impactful career at Costco, including serving as the company’s literal voice on earnings calls, and some of his favorite things about the organization, its people and its products. Galanti is handing the reins to former Kroger Co. SVP and CFO Gary Millerchip, but staying on through January 2025 to assist in the transition. 

In other Costco news this week, readers flocked to a story about the warehouse retailer’s winning formula – which happens to include cookies and gold. Amid its Q2 earnings report, which showed a membership fee income of $1.111 billion, an increase of 8.2% year over year, Costco shared that its food court and the 1-ounce gold PAMP Suisse Lady Fortuna Veriscan gold bars it began selling in September were among the biggest earners during the quarter.

2. Dollar Tree’s Tough Road Ahead

During the fourth quarter of fiscal 2023, Dollar Tree Inc. announced it had initiated a comprehensive review of its store portfolio to address locations that are not aligned with the company's transformative vision. As a result of this review, the company plans on closing approximately 600 Family Dollar stores in the first half of fiscal 2024. Approximately 370 Family Dollar and 30 Dollar Tree stores will also close over the next several years at the end of each store’s current lease term. 

Dollar Tree took a massive loss in its fourth quarter ended Feb. 3, reporting a net loss of $1.71 billion. The company’s fiscal 2024 outlook reflects approximately $0.15 of EPS benefit from the anticipated Family Dollar store closures, mostly in the second half of the year as it closes underperforming stores throughout the first half of fiscal 2024.

CES 24
PG's 75th annual Consumer Expenditures Survey explored not only what shoppers are buying in supermarkets, but also why they’re making certain decisions.

3. Deep Dives Into Grocery Trends and Consumer Sentiment

PG readers were very interested in the results of our 75th Annual Consumer Expenditures Study, which for the first time in its history explored not only what shoppers are buying in supermarkets, but also why they’re making certain decisions. We went directly to 1,001 grocery shoppers to find out not only what they’re buying, but also where they’re buying groceries, why they choose the stores they do, what they like and don’t like about the shopping experience, and other factors that go into their decision-making. 

Market Force's study also took a deeper dive into which grocers are meeting consumer expectations. The company’s Consumer Preference Index looked at spending across more than 40 grocery brands, with H-E-B, Fry’s, King Soopers, Brookshire Grocery and Food Lion receiving the highest proportion of spend, respectively. As for loyalty, Trader Joe's, Wegmans, Publix, ALDI and Sam's Club ranked highest. 

Additionally, 84.51°, the retail data science, insights and media arm of The Kroger Co., took a look at current food retail trends that reflect rising customer expectations and a massive technology evolution. Retailers and brands that pay attention to these trends can adapt to a new customer reality to be best positioned to drive relevance and growth. Check out those trends.

4. Finally, a Court Date for Kroger and Albertsons

hearing date of Aug. 26 has been set by Judge Adrienne Nelson of the U.S. District Court for Oregon regarding the FTC’s request for a preliminary injunction against the proposed merger of The Kroger Co. and Albertsons Cos. As part of the March 11 announcement, Judge Nelson said both sides must file a proposed briefing schedule by March 15.

The August hearing date will come exactly six months after the FTC filed suit to halt the $24.6 billion merger and divestiture proposal with C&S Wholesale Grocers, stating that the move "falls far short of mitigating the lost competition between Kroger and Albertsons" and would increase grocery prices for millions of Americans. 

During Kroger’s Q4 and fiscal year 2023 earnings call on March 7, CEO Rodney McMullen said the company is “committed to defending the merger and litigation, because we believe this is the best outcome for America's families.” McMullen also noted that the merger can't close while these actions are pending. 

5. Trader Joe’s Growth Trajectory

Cult-favorite grocery chain Trader Joe’s has released a slew of locations for new stores that the company plans to open this year for its loyal customers. Although no specific opening dates have been provided yet, the list of upcoming Trader Joe’s stores includes five locations in California, including in South Pasadena, Santa Clarita, Santee, Sherman Oaks and Poway.

Other new locations include Middletown Township, N.J.; Sugar Land, Texas; and West Springfield, Va.

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