While many American grocery chains are setting up olive bars, stocking up on gourmet cheeses and adding organic food departments to appeal to upscale shoppers, one store, Save-a-Lot, is quietly achieving success by following a completely different approach.
Save-a-Lot is known in the grocery business as an extreme value store. Its stores are relatively small and its target shopper has an average family income of less than $35,000. A Save-a-Lot store stocks only about 1,250 items, a low number compared with more than 30,000 in a typical supermarket. By keeping the selection simple, the company keeps prices down. And the business model seems to be working. Save-a-Lot is currently the fastest growing retail food chain behind Wal-Mart, with more than 1,000 stores nationwide.
According to retail food analyst Jason Whitmer, of FTN Midwest Research in Cleveland, the lack of a sushi bar or coffee kiosk is what makes Save-a-Lot unique in the grocery industry. "Most [grocery stores] are trying to move up the pricing ladder than down [where they can be] least vulnerable to Wal-Mart," Whitmer says. But Save-a-Lot is going head-to-head with the retail giant and holding its own. Oddly, Whitmer notes, the success has been quiet. "I'd say most people on Wall Street have no idea what this concept is because they've never really bumped into it."
NPR's Debbie Elliott recently talked with shoppers in a Save-a-Lot in Mobile, Ala. Customer Dan Hudson started coming to the store after hearing about the low prices. "We should have come here instead of Wal-Mart," Hudson remarked. "It's not very big, but it doesn't need to be. If it's big you're going to miss something."
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