Bottom Dollar Food stores to close by year’s end and be sold to Aldi
The discount food store war in Pittsburgh has its first casualty.
The Belgium-based owner of Bottom Dollar Food stores said on Thursday it plans to close all of its 66 stores by year-end and sell the assets to competitor Aldi Inc. for about $15 million.
Bottom Dollar has about 20 stores in the Pittsburgh market, including four in the Youngstown-Warren, Ohio, area, and 46 in the Philadelphia market, employing 2,200. The Pittsburgh-area stores employ about 600.
In the last three years, the discount food concept quickly spread across Western Pennsylvania, with four chains establishing or expanding a presence, including Aldi, Bottom Dollar, Save-A-Lot and Good Cents Grocery + More, owned by Giant Eagle Inc.
“We did have a huge influx of discount grocery stores — we were saturated,” said Audrey Guskey, a marketing professor at Duquesne University. “The ones that were going to survive were those that offered better service and quality merchandise at lower prices. I just don’t think Bottom Dollar was providing what people were looking for.”
Delhaize Group of Brussels said the sale of its stores and leases to Aldi is expected to be completed by March 31.
Aldi said the purchase is part of an expansion plan that will add 650 stores nationwide by the end of 2018, but it did not commit to reopening all 66 of the closing stores.
“It’s premature to share any plans specific to the purchase of these assets,” Aldi spokeswoman Julie Ketay said. “Aldi welcomes Bottom Dollar Food employees to consider applying for open positions.”
Mike Thomas, a customer who had just finished grocery shopping Thursday at the Bottom Dollar on McKnight Road in Ross, said an employee at rival Good Cents Grocery a few doors down in the same shopping center had predicted the chain’s demise.
“They said they would put this store out of business, and it looks like they did,” said Thomas, 69, of Ross.
Bottom Dollar employee Brooke Taranto, 18, said employees were told of the closing Wednesday.
“I don’t have to work here,” she said of the Ross store. “I’ll bounce back.”
Bottom Dollar opened its first seven stores here in January 2012, standing behind a “We Won’t Be Beat” guarantee, pledging to better any competitor’s price on the same item by a penny.
Discount grocers require customers to bring their own bags or purchase them and bag or box their own groceries, and many offerings are private-label items with unfamiliar names. Discounters have no bakery, bank, pharmacy or dry cleaning counter that consumers find at full-service supermarkets.
“Consumers will see the market filled with Aldis — they will be the clear leader in food discounting across America,” said retail analyst Burt Flickinger III, managing director of Strategic Resource Group in New York.
“Aldi, Save-A-Lot and PriceRite will continue to be a bigger and bigger factor in Pittsburgh and nationally,” Flickinger said. PriceRite operates 56 stores in eastern Pennsylvania, New Jersey and six other eastern states. Save-A-Lot, the national discount chain of Eden Prairie, Minn.-based food supplier Supervalu Inc., has 10 stores in the region, among 1,300 nationwide.
Delhaize said it expects the sale to result in a write-down and other expenses of about $180 million. Spokeswoman Christy Phillips-Brown declined to comment on whether Bottom Dollar was profitable.
“I would like to thank our Bottom Dollar Food associates for their hard work and dedication to their customers,” Delhaize Group CEO Frans Muller said. “The divestiture of Bottom Dollar Food … is consistent with our strategy, announced in March, of investing in and focusing on our core markets.”
Delhaize operates supermarket brands Food Lion in the South, with 1,100 stores, and Hannaford in New England, with 186. There are a half-dozen Food Lions in the Harrisburg area.
Batavia, Ill.-based Aldi said its purchase includes land, buildings and store leases.
In a statement, Aldi said it is in the “early stages of an accelerated strategic growth plan,” because of rising demand. Its plans include expanding to southern California, bringing total stores in the United States to nearly 2,000. The expansion is expected to add more than 10,000 jobs at stores, warehouses and division offices, Aldi said.
Aldi operates more than 1,300 stores in 32 states, primarily from Kansas to the East Coast, including more than 20 in the Pittsburgh region and 85 in Pennsylvania. It has a division warehouse in Saxonburg and employs 19,000 nationwide.
John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or [email protected].