You want to enter the food selling business? Be careful what you wish for. It isn’t easy, and now that virtually everyone is doing it, it’s a pretty difficult market to penetrate. This is why Rite Aid (NYSE:RAD) and other drugstores have been struggling to integrate their food lines, as well as struggling to scrape off market share.

What’s the problem here, and what’s the stock play?

Shoppers are habitual. Once they decide on a given brand or store, it becomes difficult to shake them off of it, unless that brand is a commodity as grocers like Kroger (NYSE:KR) have become. Shoppers associate various thoughts with each brand. Here are examples from my own life that I believe illustrate the problem that drugstores are going to continue to have in the food arena.

When I think of food shopping, I think of Trader Joe’s. Cheaper and faster than all the other grocers, with good meat and chicken, and it carries virtually everything else I need. When I think of the grocers like Safeway (NYSE:SWY), I think of the stuff Trader Joe’s doesn’t have — mostly stuff my kids like. It’s more expensive to shop there, so I combine trips and hit both markets. When I think of Whole Foods Market (NASDAQ:WFM), I think of really expensive, high-end, high-quality produce, fish and meats, and I’ll shop there if I want fish for dinner or if I’m entertaining. I’ll hit the dollar stores like Dollar Tree (NASDAQ:DLTR) to stock up on consumer staples, and Target (NYSE:TGT) for random stuff. I might grab a carton of milk if I’m short, but that’s about it.

And Rite Aid? I think of it only when I need a prescription, or if I’m sick, or maybe to get stuff that goes in my bathroom. I think Rite Aid carries food. I just haven’t bothered to care or notice. Why? Because I don’t go the drugstore to buy food. That’s not my habit, I have a hard time believing their prices are better than anyone else’s, and I’m surely not going to get all my food shopping done there. As it is, I’m already going to two stores. I don’t want to add a third.

Even worse, my impression is that drugstores often are in the same shopping center as grocery stores. Which do you think of when you need to go grocery shopping? Duh.

And that’s how I think most everyone else behaves.

You might wonder, then, how the dollar stores have made such effective inroads into the food emporium. It’s simple — they are leveraging their existing customer base. Rather than make a second trip to the market, if they see Dollar Tree now carries Fat Karate Joe’s Cupcakes, and at $1 instead of $1.99, we know what they’ll do. And with dollar stores rapidly increasing their food selection, that’s only going to continue.

But Rite Aid’s existing customer base is going to use Rite Aid like I use Target — as a convenience store to pick up a stray item. Rite Aid customers actually aren’t in Rite Aid all that often, whereas folks are in dollar stores very often (That’s another thing: Dollar store product sizes are small, so it encourages repeat visits).

The stock play? There’s actually a few.

• Buy Whole Foods because the organic marketing juggernaut and high margins make it a winner.
• Sell the grocers because they just can’t compete anymore against the likes of Whole Foods and the dollar stores. In fact, consider shorting SuperValu (NYSE:SVU).
• You also should buy the dollar stores (I love Dollar Tree).
• Sell Rite Aid. You might even want to short it.

Rite Aid has its work cut out for it. The good news is that, at least here in California, it also sells alcohol, so management can drown its sorrows.

As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned stocks.