SALISBURY, N.C. -- Food Lion here has been able to increase its sales of high-margin, "convenience store-type" items, such as cigarettes, by switching many of its stores to a 24-hour operation.
"Our very late night shoppers are buying many items that they might have purchased in a convenience store in the past, like chips, snacks, candy, chilled drinks and packages of cigarettes," Chris Ahearn, corporate communications director at Food Lion, told SN.
Though Food Lion declined to say how much sales increased, Jonathan Ziegler, a San Francisco-based vice president for Salomon Bros., New York, said Food Lion's shift to 24-hour shopping is responsible for about 1% of the retailer's same-store sales gains.
"Because we are open during the later hours we think we are just as convenient as a store that might have been a consumer's previous choice, but we're able to offer low prices that convenience stores can't always offer. That is why we have seen the increase," Ahearn explained.
"The other benefit is that we're able to stock when there are fewer customers in the store, so the stores look better and are better stocked when the majority of customers walk in the store in the morning," she said.
Ahearn described the extra sales that Food Lion is exhibiting during the off-peak hours as a "pleasant surprise." She said that about 86% of the chain's stores have switched to a 24-hour format during the past year, but not all locations will.
"We're looking at where stores are located, the kind of shoppers who shop in that store, and we're looking at risk factors in the area. If there is a high-crime area, we're not going to have a 24-hour store," she said.
Service departments, such as deli and bakery, are maintaining their traditional hours, she added.
Securities analysts who track the supermarket industry told SN that 24-hour shopping is increasing in popularity among consumers and retailers.
"The people who shop at 2 a.m. are not generally buying low-margin items. They are going to buy a bottle of Pepsi as opposed to a case. Margins are higher on individual units. A shopper at that hour is going to buy a pack of cigarettes as opposed to a carton and you get more margins on the pack," Ziegler of Salomon Bros. said.
"Winn-Dixie went to 24 hours last year and it upped its sales quite a bit," said Gary Giblen, managing director at Smith Barney, New York.
"The fact is with more two-income families there is a demand for shopping around the clock. Especially for Winn-Dixie's and Food Lion's clientele, which tends to be more blue collar, you are more likely to have someone working the graveyard shift, than suburban homemakers going to the store at 2 p.m.," Giblen noted.