Save-A-Lot Pays Big Dividends

Discussion
Apr 16, 2004
George Anderson

By George Anderson


A report in the Star Tribune says that Save-A-Lot has become the “star performer” in Supervalu’s portfolio.


Burt Flickinger III, managing director for Strategic Resources Group, told the paper, “Next to Wal-Mart Supercenters, Save-A-Lot is the fastest-growing retail chain in the country.”


The limited assortment chain, which sells food (primarily private label) at prices well below conventional supermarkets, currently has about 1,200 stores across the country.
It has expanded its selling floor space by roughly 10 percent a year since it was first purchased by Supervalu in 1993.


Save-A-Lot has begun to expand its product selection to included general merchandise. The chain has begun rolling out combo stores selling both groceries and fixed-price general
merchandise.


Moderator’s Comment: Does Supervalu’s Save-A-Lot limited assortment have a competitive edge over other discount stores?
What are the keys to its success?


Edouard Aubin, an analyst with Deutsche Bank Securities, is a believer in Save-A-Lot. “We believe that Supervalu’s focus on growing the limited assortment
banner, a format that has proven to be tremendously successful for food retailers in other countries, will drive earnings … as investors reward the growth prospects of the division.”

George
Anderson – Moderator


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