According to Save-A-Lot President and CEO Bill Shaner, the hard discount format is underdeveloped in the U.S., especially as compared to Europe and South America. Now is the opportunity to build market share, he says. Their stores, which average 15,000 square feet, currently have sales of about $80,000 per week.
Some interesting tidbits from the story provide good insight into Save-A-Lot's strategy:
- Save-A-Lot, a division of Supervalu (Acme), is experimenting with new opportunities to drive its expansion, including co-branded stores (with Rite Aid stores in South Carolina and a Hispanic-oriented operator in Texas) and new offerings, such as deli departments.
- The company has regionalized its real estate and development team by spreading them across the country rather than housing them entirely in St. Louis, as they had done previously. According to Shaner, this new structure provides Save-A-Lot with in-market expertise.
- According to a map of expansion opportunities on their website, Pennsylvania can expect 50-100 new Save-A-Lot stores in the next couple years, while New Jersey can expect 25-50 new stores. The biggest growth areas are California, Texas and Florida. Larger urban markets will see more corporate store openings, while smaller markets will see more licensed independent operators.
Incentives and Flexibility
- The company is supporting all licensees who open a Save-A-Lot by providing them with at least $200,000 in financing per store. They say it costs an average of $822,500 to open a new store.
- Executives have decided to be more flexible in the store's building requirements by "letting the building be the building," rather than imposing a proscribed design. General construction standards as they pertain to lighting, flooring and walls have been relaxed as well.
- A more localized product offering, including about 15% of the merchandise that can be customized to the market, has been introduced in an attempt to improve sales performance.
Here's the Supermarket News article: Thinking Outside the Small Box