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Save A Lot’s Kevin Proctor: Discount grocery model has a lot to offer independents

‘Most important thing is how you differentiate in the market,’ COO says at NGA Show

Russell Redman

February 28, 2020

5 Min Read
Save A Lot-price promotion
Save A Lot said its discount grocery model can help independent supermarkets compete on value and convenience and differentiate themselves with localized product assortments.Save A Lot

As more grocery purchases go digital, it’s critical for brick-and-mortar retailers to establish a point of differentiation to keep shoppers coming into their stores, according to Save A Lot Chief Operating Officer Kevin Proctor.

To that end, discount grocer Save A Lot offers independent supermarkets a business model to compete with bigger players on value and convenience while differentiating themselves with localized product assortments, Proctor said this week at the National Grocers Association’s 2020 NGA Show in San Diego.

“Everybody knows digital commerce is changing the market. It's disrupting, and Amazon is resetting the transaction floor. They're offering customers choice, differentiation, personalization — they're offering a lot. But it's not an area where a lot of people are making a lot of money today. That’s the reality,” Proctor said. “Technology is going to be part of the future for every grocer, but brick-and-mortar is still where the profit is made today in grocery retail. So for independent retailers, the most important thing is how you differentiate in the market, because Amazon will pick away customers if you're not able to offer something on the shop floor that's different.”

Kevin Proctor-Save A Lot-NGA Show 2020

“Technology is going to be part of the future for every grocer, but brick-and-mortar is still where the profit is made today in grocery retail,

Big-box chains differentiate by offering wide variety, while high-end and specialty grocers entice customers with engaging in-store experiences, he explained. Meanwhile, discount and limited-assortment chains such as Aldi, Lidl, Save A Lot and Trader Joe’s — plus others like Price Rite Marketplace, Kroger Co.’s Ruler Foods and dollar store chains — compete with a well-defined, attractive value proposition that incorporates convenient shopping.

Related:Save A Lot eyes rebound with capital infusion

“Looking at the future of grocery, it really breaks down into three main buckets, in my eyes. No. 1 is big-box variety. Walmart is the leader in that space, and I think they're going to stay the leaders in that space. The second is high-end, specialty grocery. There are some fantastic retailers, and they do a great job. The only problem is you need a very specific demographic,” Proctor said. “And the last is value. Discount grocery is value and convenience, and there are a lot of operators in that space and certainly more coming into that space. But I think that's the area independents probably need to be most focused on.”

The value concept can be adapted by independents to energize their retail offering and fend off market share drain from larger operators and e-commerce, noted Proctor, a former Lidl executive.

Discount grocery has high growth potential in the United States, with only a 3% market share versus double-digit share in most of Europe, he said. What’s more, the format has among the highest growth rates in retail at 7%, compared with 7% for dollar stores, 4% for supercenters, 3% for warehouse clubs and 1% for traditional supermarkets. The winning formula for discount grocery — championed by fast-growing chains Aldi and Lidl — includes four key principles: a heavy focus on private label (with national-brand quality), limited assortment (approximately 3,000 items), a low-cost service model (ultra-efficient operation, minimal staffing, high productivity) and an easy-to-shop store layout (around 15,000 square feet, fewer aisles).

Related:Save A Lot partners with Amazon for pickup, payment

“Private-brand focus and national-brand quality. What does that do? It offers customers a better value for their money. It also makes the shopping experience more convenient. The experience in a large grocery store is great, but some customers don’t want that. Some customers just want to come in, do their shopping, and go home and spend time with their family,” said Proctor. “Limited assortment, similarly, provides a more efficient shop in a smaller space, something that’s going to drive higher volume and where you can get a better cost for product.”

Save A Lot-store exterior-2020.JPG

Save A Lot stores are typically sized at about 16,000 square feet and carry around 2,000 SKUs across more than 50 private brands. (Photo courtesy of Save A Lot)

St. Louis-based Save A Lot now has 14 distribution centers and more than 1,100 stores in 33 states, with the vast majority of the locations licensed by independent grocers. Proctor said the stores typically run 16,000 square feet and carry around 2,000 SKUs across more than 50 private brands. Through an everyday low pricing (EDLP) strategy, Save A Lot said it offers savings of up to 40% over traditional supermarkets on private-label and national-brand products, USDA-inspected meat, farm-fresh produce and non-food items.

Where Save A Lot differs from other discount grocery models, according to Proctor, is its stores’ localized assortments and local ownership, allowing independent operators to better cater to customers and build relationships in their communities.

“What Aldi and Lidl can’t do is they can't differentiate on the shop floor to a local community. And what that means is they can't bring in local DSD product. It doesn't make sense. They can never do that. They will never do that. That's an opportunity that every independent has — how do I localize my store on the assortment front? How do I localize my store to the community?” Proctor said. “You can read the market research, but more than 90% of customers will shop a retailer because they trust the retailer. And I think that's the edge in our business. We say you need to compete on price, win on convenience and differentiate on localization.

“No matter what you're doing, there's elements of this that you can take into your store,” he added. “Everything within those four [discount grocery] principles makes sense. To what level you do that is up to you in terms of what you think makes sense for your store and your community and demographic. But I do think the key is differentiation.”

Owned by Canadian private-equity firm Onex Corp., Save A Lot in January announced that it obtained new financing to help support operations and spur efforts to modernize stores and enhance the shopping experience.

The chain, which in December shifted to a new headquarters in St. Ann, Mo., has been updating its St. Louis-area stores and exploring new customer-facing digital technologies under a plan to transform its business model. For example, a partnership with Amazon calls for Save A Lot to make more than a third of its stores pickup and payment sites for Amazon.com purchases.

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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