Save-A-Lot is serious about making a positive difference in its customers' lives by saving them money and time. And its own brands are critical to that mission.
Shoppers exploring the aisles in a Save-A-Lot food store will not find a full-service deli, fancy made-to-order cakes or sophisticated end-cap displays. What they will discover, however, is a carefully selected assortment of high-quality food and non-food staples — at rock-bottom prices. They also will notice oversized signage throughout the store that reinforces that value mission, promising "savings made easy" and "shockingly low prices."
Save-A-Lot's store brands are critical to its low-cost proposition. The Earth City, Mo.-based retailer notes that shoppers can reap significant savings by purchasing its exclusive brands.
And shoppers will find plenty of such products from which to choose. According to Mark Kotcher, Save-A-Lot's director of brand marketing and design, exclusive brands account for approximately 75 percent of the total SKU count.
These attractively priced products — showcased in small, easy-to-navigate stores — have helped Save-A-Lot build a loyal customer base since founder Bill Moran opened the first store in 1977. But in recent years, they also have attracted the attention of newly budget-conscious consumers forced to navigate rough economic seas.
That's one reason Save-A-Lot, now a wholly owned subsidiary of Minneapolis-based Supervalu Inc., was singled out for growth by Supervalu CEO Craig Herkert. In late 2009, Herkert laid out a plan to double the number of Save-A-Lot stores (to 2,400) by the end of fiscal 2015. In a Sept. 11, 2010 earnings conference call, he noted that progress on the banner's growth plan was "on track."
"Our own brands are part of what makes Save-A-Lot unique and are one of the major elements in our brand promise: 'Savings made easy,'" Kotcher says. "Our exclusive brands, which cannot be found anywhere else, allow our shoppers to save up to 40 percent versus national brands at conventional stores, without having to sacrifice quality."
SAVE-A-LOT, AT A GLANCE
Headquarters: Earth City, Mo.
Top Executive: Bill Shaner, president and CEO
Grocery retail banner: Save-A-Lot, Save-A-Lot/Rite Aid Pharmacy (cobranded and owned by Rite Aid)
No. of Stores: 1,260 in 39 states/70 percent licensed; 30 percent corporate-owned
Exclusive Brands: Kaskey’s, Ginger Evans, Jade Dragon, McDaniel’s, Port Side, Shaner’s, World’s Fair and many, many more
But Save-A-Lot's success within the store brand arena can be attributed to much more than attractive pricing. For one thing, the retailer goes out of its way to understand consumers' wants and needs — and all of that homework is reflected in the store brand assortment that makes its way onto the shelves.
"We do both quantitative and qualitative consumer research," explains Andrea Wagner, Save-A-Lot's vice president, fresh. "We are committed to understanding our shoppers."
The chain's typical shopper (referred to as "her") has a family with children at home. According to Bill Shaner, the retailer's president and CEO, Save-A-Lot aims to prove she doesn't need to shop multiple stores. The retailer's commitment to value and low prices is designed to make it easier for her to save.
Save-A-Lot also works hard to localize assortments, merchandising and even packaging for shoppers in each specific community. Nearly three-quarters (70 percent) of Save-A-Lot stores are owned and operated by licensees, who work closely with the company to bring what Chief Operating Officer and former licensee Thomas Lenkevich calls a "local flair" to each shop.
"It's their business," he stresses. "They follow the corporate plan, and we also assist them in finding a location. ... These 'hyper-locals' are local and relevant to the operation."
An eye on quality also adds to the appeal of Save-A-Lot's corporate brands.
"It is quite literally our reason for being: to deliver shockingly low prices with surprising quality, equal to or above the national brand," Shaner says. "We can't afford not to please a customer."
Kotcher adds that the retailer wants to dispel the notion that store brands are somehow inferior to national brands.
"Oftentimes, our own brands are coming off the same manufacturing lines as national brands, so they are virtually the same product," he says. "Through package design, we will continue to communicate our product quality at a fantastic price."
Shaner notes that shoppers can see Save-A-Lot's dedication to value and quality when they walk through the store.
"Each product is like a work of art," he says. "Our shoppers are proud to put them on their shelves. Even versus [other retailers'] store brands, our prices are substantially better."
Fresh meat and produce also are a draw for our customers, Wagner notes.
"Save-A-Lot is really the only small-box operator in the country that brings quality fresh meat and produce to the areas we serve," she maintains.
Save-A-Lot also recognizes that consumers want certain national brand items, and these carefully chosen items help complete the assortment within stores.
"Our customers like that they can come to Save-A-Lot for Banquet pot pies or Totino's pizza," says David McDaniel, vice president, consumer segments and sourcing — grocery, dairy, frozen. "It makes saving easy for them so they don't have to visit multiple stores."
Save-A-Lot now counts more than 100 brands as its own. Kotcher says the brands are modeled after the way the retailer's consumer shops in different categories. The Ginger Evans brand, for example, covers a full line of baking products, while the McDaniel's brand is found on coffee and creamer products.
A number of the retailer's products are named after employees. The McDaniel's brand pays tribute to David McDaniel, for example, while the Shaner's frozen chicken lineup honors Bill Shaner. The World's Fair ice cream/ frozen novelty brand, meanwhile, recognizes the chain's St. Louis roots.
"We are a consumer-driven company, and our brand tiering strategy reflects that," Shaner says. "If she is looking for a premium ice cream topping and Save-A-Lot can have it produced at a shockingly low price, you will find it in our store. As an organization, we will do whatever we can to fill the gap while staying true to our limited-assortment business model."
Among Save-A-Lot's newest exclusive brands are the Jade Dragon line of frozen Asian-style entrées/ appetizers and soy sauce, as well as the Splash Out! brand of fruit drinks and iced teas. The fruit drink pouches are similar to Kraft Foods' Capri Sun offerings, but retail for only $1.79.
"Many consumers don't realize what a great assortment we have despite our small format," Kotcher says. "Jade Dragon is a perfect example of something you think you might have to go to a traditional grocery store to find."
What's more, Save-A-Lot frequently brainstorms new product concepts and reassesses what is already on the shelves. The company relies on consumer research, McDaniel notes, to determine if it needs a different size of ketchup, for example, or something completely new.
"We must keep existing products fresh, vibrant and relevant to her," Lenkevich adds. "We must ask, 'What does our customer want? What does our customer need?'"
For 2011, Kotcher says the retailer expects to introduce more new items than it has in any of the past five years.
"It's exciting and challenging, and we expect great results from keeping our assortment new and fresh," he says.
Packaging design also plays a huge role in Save-A-Lot's store brand success story — and it shows. In fact, the Private Label Manufacturers Association (PLMA) recently awarded the Jade Dragon brand two of its 2010 Salute to Excellence awards.
"Almost 100 percent of design is done in-house," Kotcher notes. "It's a core competency of ours."
Save-A-Lot's design team is a diverse combination of traditional graphic designers, illustrators and more, Kotcher explains. One staff illustrator even boasts prior experience with Disney.
"Packaging design is the silent salesperson," he says, "as we know that most decisions are made at the shelf. So we focus a lot of our efforts there."
Packaging inspiration for the "small, talented and passionate" design team comes from many places, Kotcher adds, ranging from brainstorming sessions and store-aisle strolls to sneak peeks at overseas design efforts. And the team also must ensure the packaging pops on the shelf from the cardboard cases in which it sits.
"We design facings," he explains.
To speed up the checkout process for the shopper, the team also ensures each packaged product includes three or four UPC codes, Kotcher says. That way, the cashier is able to locate a code and scan it quickly and easily.
Eye on costs
Much of Save-A-Lot's success, of course, depends on its ability to keep costs down — and deliver on its "savings made easy" brand promise. Kotcher admits that it can be difficult for the retailer to stay ahead of the consumer trend curve and offer extreme value while competing with multibillion-dollar consumer packaged goods (CPG) companies.
"We think of our business as managing dozens of small CPG companies, and if we don't have good information flow — from our suppliers, from consumers themselves — we won't be as successful," he says. "Fortunately, we have a great support network and a merchandising/marketing team dedicated to the success of this program."
Save-A-Lot's store brand-related teams work closely with their supplier partners for optimal decision-making. While the retailer works hard to understand shoppers, Wagner says, it values and leverages the category-specific knowledge of its suppliers.
Save-A-Lot's team approach to category management and product sourcing also gives the retailer the product knowledge and flexibility it needs to switch directions very quickly, Wagner says. Category managers review the category and advise the sourcing team.
"It keeps costs as low as possible and quality as high as possible," she notes.
The two teams require very different skill sets, Wagner says.
"The category segment has a deep understanding of consumers and hands that over to the sourcing team," McDaniel adds. "We also have a replenishment team here in St. Louis to manage inventory."
To reduce risk on the licensee side, the company depends on its corporate stores for regional experimentation, SKU testing and more, Lenkevich notes.
The corporate stores really serve as a proving ground for Save-A-Lot, Shaner adds. Successful product and merchandise concepts then can be rolled out to licensed stores after testing.
To streamline operations on the distribution side, Save-A-Lot operates 15 distribution centers (DCs) scattered across the country, Shaner says. Moreover, it is able to tap into Supervalu's vast resources whenever needed.
The company-owned DCs also allow Save-A-Lot to package without shrink wrap, Lenkevich notes. Products go from the manufacturer to the DCs — and then straight to the store shelves — in their carton cases. The simplified system helps the retailer keep costs as low as possible.
Still, Save-A-Lot is willing to spend money when necessary to get its low-cost/high-quality message out to new consumers. Although it traditionally has relied — and thrived — on word-of-mouth advertising, the changing competitive landscape has prompted some stepped-up promotional activity on the retailer's part.
"In the last few years, we have seen a heavy increase in promotional activity from some of the world's largest retailers, as evidenced by circular distribution in the grocery channel increasing more than 30 percent last year," Shaner says. "Clearly, print is not dead; not in this channel.
"As a result, Save-A-Lot, for the first time in many years, launched a brand campaign to increase awareness, drive sales and ensure people know that we deliver 'Savings made easy,'" he adds.
In addition to its ongoing circular program, Save-A-Lot is investing in TV, radio and in-store programming that communicates value throughout the store, Shaner says, as well as in digital communications.
"We want to ensure that wherever our shopper is consuming media, Save-A-Lot will be there, in a targeted way, to participate in the conversation," he adds.
It's worth noting that Progressive Grocer's Store Brands recently honored Save-A-Lot with a Store Brand Achievement Award for creativity on the marketing front. As the "new kid on the block" in Opelousas, La., the retailer wanted to introduce itself and its store brands to its neighbors. So Save-A-Lot took its message to the streets, assembling almost 4,000 bags of groceries, filled with its exclusive brands, and delivering them — unannounced — door to door.
Although the lousy economy might have jump-started Save-A-Lot's recent growth spurt, the retailer expects the expansion to continue even after better times return. After all, shoppers appreciate the low prices — and are unlikely to return to their spendthrift ways anytime soon.
They also appear to recognize the high quality of the retailer's exclusive brands. Case in point: A shopper recently sent an e-mail to a Save-A-Lot quality assurance employee, thanking her for putting a "whole lot of cherries" in a store brand canned cherry product. Like many other exclusive Save-A-Lot items, this product exceeded shopper expectations, McDaniel says.
What's more, Save-A-Lot boasts a talented, enthusiastic family of employees who truly believe in and are excited about the company's vision: "To help customers to live richer, fuller lives by saving them money and time through a compelling, convenient shopping experience featuring great food, great prices and great people, every day."
As Shaner, a former Kroger executive, puts it, "There is something special about our company and our team. We deliver great quality food at great prices. We get a kick out of getting up every day and knowing we made a difference."
'Oftentimes, our own brands are coming off the same manufacturing lines as national brands, so they are virtually the same product.'
Testing the Cobranding Waters
In September 2010, Camp Hill, Pa.-based Rite Aid Corp. announced the opening of the first cobranded Save-A-Lot/Rite Aid Pharmacy, located in Easley, S.C. Since that debut, the chains have added nine more cobranded stores in South Carolina as part of what is to be a 10-store test operation.
Although the stores are owned and operated by Rite Aid, approximately 75 percent of the non-pharmacy part of each store is devoted to Save-A-Lot. Grocery products include both Save-A-Lot exclusive brands and national brands, Rite Aid said. Rite Aid continues to offer a variety of health and beauty products within the stores, including national and Rite Aid private brands.
"By cobranding with Save-A-Lot, we're able to continue offering the Rite Aid pharmacy services and health and beauty items people have come to expect and, at the same time, offer high-quality grocery products like fresh meats and produce at great prices," said Ken Martindale, Rite Aid's chief operating officer, in an October 2010 press release.
"This exciting new format, featuring aspects of both a traditional Rite Aid pharmacy and Save-A-Lot food store, provides added convenience and value to our consumers in the Greenville area," added Bill Shaner, Save-A-Lot's president and CEO.