Albertsons Looks To Make Impact With Price Format

Aug 06, 2004

By George Anderson

Albertsons officially announced its entry into the limited-assortment (price impact) grocery store format with seven Super Saver stores to be opened in the Dallas and Baton Rouge markets.

The stores will be operated as an autonomous division of Albertsons called Extreme Inc. Mike Clawson, who previously served as president of Albertsons’ Northwest Division is the Extreme Inc.’s president.

Mr. Clawson told the Idaho Statesman the seven initial locations were chosen because consumers, “told us they want a supermarket that offers them limited assortment, high quality products, low prices, minimal services, and a bright, clean and uncluttered retail shopping environment.”

In the Dallas/Ft. Worth market, Super Saver will go up against limited-assortment grocery competitors such as Minyards’ Sack’n Save. Save-A-Lot, the nation’s largest limited-assortment chain, plans to open 17 stores in the Dallas-area according to the Dallas Morning News.

Albertsons’ chief executive, Larry Johnston, said in a prepared statement, “This new price impact format coupled with our traditional format will serve the needs of a broader range of food and drug shoppers in many markets across America.”

Burt P. Flickinger III, managing director of Strategic Research Group, believes that Mr. Johnston and Albertsons are on the right track.

“This is another positive example of how Larry Johnston is taking a company that was behind the curve when he came in and putting it ahead of the curve,” he said.

Mr. Flickinger said he expects Super Saver to “be extremely successful.”

“When that happens,” he added. I expect to see them go 50 stores, then 100, then really take off, well beyond 100.”

Not everyone, however, shares Mr. Flickinger’s bullish attitude on the new format.

Barbara Walchli, portfolio manager with the Aquila Rocky Mountain Equity Fund questions whether Super Saver will be profitable enough. She believes Albertsons would be better served focus on getting someone with a discount store background to run the retailer’s non-food business.

“They need to see if they can tune up the merchandising more and leverage the existing floor space in their stores to turn the merchandise over faster,” she said. That would go directly to their bottom line.”

Moderator’s Comment: What are your thoughts on the prospects for Albertsons new limited-assortment Super Saver grocery business? What will it need to
do if it is to be successful?

Aldi, the second leading limited-assortment grocer in the U.S., does not currently operate any stores in either the Dallas or Baton Rouge markets, according
to the company’s Web site.

George Anderson – Moderator

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