Save-A-Lot supermarket chain will double in size
Supervalu’s earnings release yesterday was full of bad news, including a revenue decline and a dividend cut, but it contained some good news for the Save-A-Lot division, which is based in suburban St. Louis. The reason the dividend is being cut, the company said, is to
provide annual cash of approximately $75 million that the company expects to utilize to accelerate the growth of its Save-A-Lot banner, as well as support other general corporate purposes.
According to a Wall Street Journal account of Supervalu’s conference call, the deep-discount chain will double in size, to 2,400 stores. The Pioneer Press reports that, in a change in strategy, Supervalu will open Save-A-Lots in markets where its other chains, such as Cub Foods and Jewel-Osco, operate:
Until now, Supervalu has avoided mixing store types in the same market, fearing one would steal sales from the other. But that was before big inroads from Germany-based Aldi, coupled with aggressive expansion of discounters like Wal-Mart and Target.
(6 votes, average: 3.5 out of 5)
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David Nicklaus has covered St. Louis business for more than 25 years. His column appears three days a week on the Post-Dispatch business page. 
Bad bad capitalist, how dare you expand.
I haven’t found the prices at Save-A-Lot all that spectacular. In fact, I do better at the supermarket, by reading the sale circulars and clipping coupons. Capitalism is indeed great, as long as there’s competition.
The question is whether a deep discount box store with limited selection will still be the retailer of choice when the economy recovers. Their house brands are priced the same as ALDI’s, their quality doesn’t compare well, and they are not nerarly so adept at adjusting product mix to submarket demographic.
I have made one trip to Save-A-Lot at the corner of Loughborough and Morganford. The store is disgusting. The frozen food section smelled bad and they had buckets sitting around to collect water. I was looking for miracle whip (for BLTs) and didn’t know they only had store brand stuff (mostly). I will not do store brand miracle whip/salad dressing - YUCK.
Lest you think I’m snob, I much prefer the Aldi near Kingshighway and Gravois. Actually, there is a new Aldi on Lemay Ferry that is very nice shopping experience.
It sounds like Supervalu is embarking on an even lower price strategy based on an economy in which buyers are looking for lower prices on life’s necessities. In all likelihood, by the time they these new stores are in place, the economy will have improved and buyers will have returned to old food purchasing habits. That doesn’t bode well for Supervalu’s financial future or it’s stockholder returns. Don’t be surprised if Wal-Mart’s future suffers for the same reason.