Save-A-Lot looking to improve performance in south Texas with new partnership
by Chip Carter | October 05, 2010
In late July, Save-A-Lot and its parent company Supervalu made a move to
strengthen its position in south Texas, partnering with Rafael Ortega, owner
of Texas-based El Ahorro Supermarkets and La Michoacana Meat Markets, to
form a new company, Adventure Supermarkets LLC. The company will own
and operate six former Save-A-Lot stores in the Houston and south Texas
markets under a co-branded format, El Ahorro Save-A-Lot, with a focus on
Supervalu previously announced plans to double the number of Save-A-Lot
stores to 2,400 from 1,200 over the next five years. Half of those new stores
are planned for underserved, lower-income urban markets. New Save-A-Lot
stores are slated to open in the next three months in Alabama, Florida, Texas
and St. Louis.
The Produce News recently talked with Bill Shaner, chief executive officer and
president of Save-A-Lot, about the new partnership in south Texas and the
The Produce News. What were the reasons for this partnership?
Bill Shaner. Save-A-Lot continuously evaluates its stores to identify
opportunities to strengthen our overall business. We are looking for
innovative opportunities to bring the "Save-A-Lot" brand to specialized
communities, and we think this partnership best enables us to serve the
Latino community in this area. This partnership is a new business model for
Save-A-Lot, allowing us to combine Mr. Ortega’s local insights with the
power of Save-A-Lot’s network of stores to provide our Latino customers in
this part of the country with the products and services they need and want.
From a consumer perspective, we gauge our success on what we hear from
our customers so that we understand their needs. We have certainly found
over the years that one size does not fit all. Our stores are tailored to meet
[specific] neighborhoods’ needs, and a prime example of this is our
partnership with Rafael Ortega.
TPN. Why now?
Mr. Shaner. Save-A-Lot has operated in the Houston and south Texas market
for several years with minimal success. The stores are located in highly
Hispanic populated areas where we never seemed to have attracted this
important consumer on a consistent basis. We realized we needed to make
drastic changes to succeed in this highly competitive market.
TPN. How will the new stores address the needs of the local Hispanic
Mr. Shaner. We’re confident that this partnership will help Save-A-Lot
continue to make a difference in the communities we serve by providing great
food and great prices for the diverse Hispanic community in Houston and
south Texas. We stock the most frequently purchased grocery items in the
most frequently purchased sizes, making our stores smaller, easier to
navigate and operationally more efficient. On average, we have 1,500 SKUs
per store, which allows for much greater efficiency, higher velocity and lower
prices. We actively pursue new store locations in neighborhoods largely
overlooked by our competitors — locating in diverse neighborhoods, hiring
from within those communities and stocking products tailored to the
TPN. How will the new stores cater specifically to Hispanics?
Mr. Shaner. The partnership is in the early stages; however, we are already
seeing positive results. We believe this alliance will help us better understand
the Hispanic consumer and allow us to implement best practices in other
large Hispanic communities across the U.S.
TPN. It is assumed that the new brand will follow the Save-a-Lot mantra of
lower pricing in order to provide access to healthier choices in “food deserts”
— areas that have little access to healthier food choices.
Mr. Shaner. In regards to demographics, Save-A-Lot targets urban and
suburban neighborhoods with household incomes less than $45,000. We
actively pursue new store locations in neighborhoods largely overlooked by
our competitors — locating in diverse neighborhoods, hiring from within
those communities and stocking product tailored to the neighborhood. Our
commitment to bringing healthy, nutritional food at affordable prices to
underserved communities is a hallmark of the “Save-A-Lot” brand. We
recently opened a store in Pagedale, MO, an economically challenged
community that has not had access to a grocery store for 40 years. We
received overwhelming support from the community and local city
government leaders. Our store is the beginning of an overall community
revitalization project. It was great to see what a positive impact Save-A-Lot
can bring to a community.
TPN. Where will produce for the El Ahorro Save-a-Lot stores be sourced?
Mr. Shaner. Our strategy is to source produce as locally as possible while
adhering to our quality standards. As a part of delivering our commitment for
providing the lowest prices, we always evaluate local options first. In the case
of the “Ortega” brand, some products are sourced from the Texas area, while
others are more available outside of the general market.
TPN. What kind of niche-specialty items will be carried to cater to the
Mr. Shaner. You will see a significant increase in meat, produce and freshly
baked selections, an area critical to the Hispanic consumer.
TPN. What is Mr. Ortega’s background?
Mr. Shaner. Mr. Ortega has 24 years of experience in serving the Hispanic
community in Texas and currently owns and operates 15 El Ahorro
Supermarkets and almost 100 La Michoacana Meat Markets.
TPN. Where are the six stores located, specifically? Are any of these operating
as El Ahorro Save-A-Lot yet? If so, which ones; if not, when will that occur?
Mr. Shaner. Brownsville, Victoria, Harlingen and [three stores in] Houston.
TPN. Are there future additions to the “El Ahorro Save-A-Lot” brand on the
books, or are there any that are under consideration?
Mr. Shaner. At this time, we do not have anything to announce regarding new
sites. However, this partnership is working well, and we will continue
evaluating our market planning and strategy moving forward. We see a great
deal of opportunity for building the brand.