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A Leader in Value Retailing
by Beverly Dykes
One of the nationís leading hard-discount grocery chains, Save-A-Lot, had its beginning in 1977 when the first store made its debut in Cahokia, IL. The grocery storeís edited assortment, extreme value format was conceptualized and successfully executed by founder Bill Moran (who retired in 2006). The Save-A-Lot model was the inspiration for smaller, independent grocery retailers to begin competing effectively with larger format expanding retail chains. Within the first year, General Grocer Co. adopted and replicated Moranís format, opening additional stores serving the St. Louis, MO market region. This vision of retailing, emphasizing price, quality and convenience, had taken hold, enabling Save-A-Lot to grow by dozens of locations throughout the late 1970s and early Ď80s.
In 1983, General Grocer sold the chain exclusively to Moran. Five years later, Wetterau Inc., of St. Louis, an influential food wholesaler and retailer, acquired Save-A-Lot, Ltd. 1993 was a notable turning point as well, when the company became a wholly owned subsidiary of SUPARVALU INC. (NYSE: SVU) when it acquired Wetterau. The opening of the chainís 1000th store was celebrated in 2001. As of mid-2013, Save-A-Lot boasted serving 5 million shoppers weekly at its 1330+ stores in 41 states nationwide, served by a network of 16 dedicated distribution centers strategically positioned across the U.S.
Save-A-Lot has gained a loyal following among customers in the marketplace by utilizing smaller footprint stores, power buying, self-distribution, and operating efficiencies, to be able to offer savings of up to 40% in comparison to conventional grocery stores, without its shoppers having to compromise on quality. Further increasing its appeal, the storeís addition of general merchandise (incorporated into the offerings beginning in 2002) further addresses consumers needs, by sparing them an extra trip.
Given todayís constrained economic circumstances, shoppers are looking to get the best value they can for their allotted food budget. Save-A-Lot fits the bill, with a commitment to delivering great value on the items consumers tend to purchase most often. The storeís assortment of name brand items meet exacting standards for quality, and the companyís buying power and operating efficiencies result in shoppers seeing appreciable savings on their grocery tab each week.
The savings are the result of a number of strategies, most significant being a smaller store footprint than conventional grocery chains, reducing excessive overhead and costly inventory. There is also no floor space dedicated to ďfrillsĒ like coffee kiosks, or floral counters. Save-A-Lot also stocks its own lines of exclusive branded products, manufactured for substantially less, and which donít involve the high advertising and marketing costs associated with conventionally branded comparable products. In addition, the companyís focused buying power translates to carrying only the most popular size of each item stocked on the shelves. On the operational side, having a substantial network of distribution centers ensures deliveries that are streamlined and cost efficient. Finally, labor costs are reduced owing to the merchandise being procured, shipped and merchandised using custom designed cartons that minimize shelving and related costs.
Sav-A-Lot stores carry an average of 1,200 to 1,500 SKUs (versus the 30,000+ that typify conventional grocery stores). As an innovator and leader in the industry, the company continues to refine its methods of retailing and buying strategies in order to maintain its policy of offering exceptionally low prices on high quality products. Save-A-Lotís buying power is phenomenal from an industry standpoint. The company is a significant customer for many vendors, which secondarily benefit in reaching millions of consumers weekly through this single retail source. The edited assortment format enables the companyís buyers to negotiate the lowest prices on Save-A-Lotís own trademarked brands and select leading name brand items. With regard to quality, a company spokesperson has noted, ďCustomers want and deserve the best quality they can afford. One of the things weíve done differently is go for quality first, and then negotiate the best price we can.ď
The Save-A-Lot vision is to help customers live richer, fuller lives by saving them money and time. Save-A-Lotís categories of merchandise encompass farm-fresh fruits and vegetables, USDA-inspected meats, dairy, frozen foods, smoked and packaged meats, snack foods, bakery goods, household products, health/beauty aids, pet food and general merchandise. The product assortment includes popular, in demand everyday grocery essentials, among which are labels produced exclusively for Save-A-Lot by many of the countryís leading food manufacturers. The stores are well-lit and offer wide, uncluttered aisles and easy-in, easy-out shopping within a mile or two of where targeted consumers live and work. A majority of Save-A-Lotís stores are operated by licensed retailers (ranging from single store operators to ownership groups overseeing dozens of units), providing the opportunity for independent grocers to compete in the marketplace. Underscoring the conceptís continued success, many of its retailers own multiple stores and continue to open additional units.
Save-A-Lot supports development of new real estate sites by assisting with site selection via assessments of mapping, competition and demographic data. Once a potential site is identified, a site application package is reviewed by a corporate license development manager, who determines its acceptability. As one of the fastest growing grocery chains in the nation the company is aggressively searching for suitable locations to meet its expansion needs. Save-A-Lot stores can range in size from 10,000-20,000 sq. ft. (with preference for existing freestanding or in-line locations). Co-tenancy with other value oriented retailers is desired. Its targeted operating markets can be urban, rural or suburban. Among ideal characteristics will be: a population of 35,000+ in primary trade area (20,000 in rural areas); a high percentage of families with children in the trade zone; a minimum traffic count of 15,000 cars per day; parking ratio of 5 spaces per 1,000 sq. ft.; primary positioning of signage on a pylon or freestanding monument sign; a receiving dock for 53 foot semi-trailers; and an excellent line of site for visibility, with good ingress/egress.
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