Consumers Want More
January 11, 2010
In approaching this issue of RFFR, we asked a question: What do consumers really want?
Our answer was, in a nutshell, Save-A-Lot. We answered with a retailer not only because Supervalu and its new skipper Craig Herkert believe it is what consumers want, but also because Save-A-Lot represents a fine example of the direction a lot of smart folks see food retailing taking.
Consumers want a more effective shopping experience, one that is quicker, faster and better, which is why Supervalu decided it needed to double the size of Save-A-Lot from its current 1,200 units. Walmart agrees with the assessment, or at least that’s what its actions suggest, given the smaller, more efficient supercenters the retailer has declared will be its major growth vehicle going forward.
Aldi obviously is thinking along the same lines, given its store expansion in the United States.
As noted in our cover story, Save-A-Lot is a product of the stagflation ‘70s, and that background might be one reason it is so well prepared for a rotten economy. Yet Save-A-Lot’s prospects might be evaluated against another tale of economic gloom.
In the 1990s, Germany faced an economic malaise just as the United States does today when it confronted the costs of reunifying the country after the Berlin Wall fell. During that period, middle-class Germans, who once shopped in hypermarkets and looked down on so-called hard discounters such as Aldi and Lidl, began to re-evaluate their spending priorities. They chose to cut back on everyday spending so they could afford occasional luxuries and began turning up at Aldi and Lidl in increasing numbers.
Walmart entered Germany as this process gathered steam, and although it had other problems operating in the country, the shopper shift to hard discounters certainly weighed against it. Walmart shut its German operation down in 2006.
Founder Bill Moran conceived Save-A-Lot based on an Aldi model. A distributor to independent grocery stores, he envisioned Save-A-Lot as a format that could help his customers compete with expanding supermarket chains such as Kroger.
Moran developed a scaled-down food and consumables concept that emphasized low cost of operation and sales efficiency, one that used the money saved on expenses to serve consumers who wanted to save on everyday necessities. Soon after Save-A-Lot launched, Moran knew he had a winner.
Supervalu acquired Save-A-Lot in 1992. Moran retired from his CEO post in 2006, but he got to see his operation climb to 1,000 stores from the executive suite.
The Save-A-Lot of today is not identical to the store of the 1970s. It isn’t the Aldi of 20 years ago, either. Yet Save-A-Lot, with its focus on providing customers with a price that beats the competition and an experience that exceeds what that price suggests, continues to operate in a successful tradition.
Of course, getting more for less is what consumers always want, but, in these times, they may want it with a greater sense of urgency.
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