A 10-store test in which Save-A-Lot grocery offerings have been added to existing Rite Aid drug stores are doubling grocery and HBC volumes at the locations, Rite Aid officials said.
“The stores have done extremely well since opening and as a group are comping up over 100% on the front end, with pharmacy running consistent with the trends before the conversion,” said John Standley, president and chief executive officer, Rite Aid, based in Camp Hill, Pa. “Feedback from our Rite Aid customers has been extremely positive, and adding Save-A-Lot to these stores has attracted many new customers.”
He added that Rite Aid, based in Camp Hill, Pa., is adjusting to the lower margin that the grocery business brings.
“I think we still need a few more months to kind of get to the bottom of the economics on this thing,” he said. “My gut is, when the thing sort of settles out and we get the margin mix kind of figured out, that we're going to have a fairly decent return.”
The company became a Save-A-Lot licensee for the tests, all in the Greenville, S.C., market. Rite Aid does not have an agreement to roll the co-branded locations out nationwide, Standley added.
John Boyd, group vice president and treasurer at Save-A-Lot parent Supervalu, recently said at an investor conference that “both parties were encouraged” by early results of the tests.
“We look for this to be an interesting partnership and concept as we go forward,” he said.
Save-A-Lot also launched a test last year with the operator of El Ahorro supermarkets in Texas to test six co-branded stores called El Ahorro Save-A-Lot, targeting Hispanic customers.
Those converted stores — former traditional Save-A-Lot locations in Houston, Brownsville, Victoria and Harlingen — are “doing double-digit increases” in sales, Boyd said.
The stores carry much of the typical Save-A-Lot offering, with some merchandising tailored specifically to Hispanic consumers, such as prepared foods, a bakery and fresh, thin-cut meats, he explained.