Save-A-Lot Case Analysis

In 1977, Bill Moran, was the Vice President of Sales for a food wholesaler in St. Louis. After recognizing how the weak economy had affected his customers during the most competitive time, Bill Moran decided to become a hero. He invested his times and finally developed a retail strategy that would generate an extreme value for his customers by providing limited assortments of SKUs of the most popular items and not every brands out there in the larger traditional supermarket chains.. By doing this over the years, Save-A-Lot has expanded to over 1,300 stores across the United States and are continuing to grow.

Save-A-Lot is operates in a foodservice industry that serves as retailers within a niche marketing segmentation. Save-A-Lot target market consists mainly of value seeking and convenience oriented psychographic segment. These consumers usually seek quality products at lower prices. They want valuable low prices like Costco but without the bulk, and a convenience of a mama and papa stores but much bigger, meaning that it is small enough and convenience enough that consumers don’t need to park and walk as far. For this mean, Save-A-Lot’s retailing concept meets the shoppers’ needs and expectation with smaller grocery stores.

Within a year, through word-of-mouth advertising, Save-A-Lot spread to 29 locations. — (Save-A-Lot ) The constraints of Save-A-Lot in the foodservice industry comparing to its competitive retailer is that they lack the wide assortment of products to choose from. Another is the friendly customer services that helped customers around the stores or bagged the things the buy. The necessary cut-back is because they aim to offer values to their customers by saving them 40 percent from traditional grocery shopping.

Save-A-Lots’ consumers may choose to go elsewhere, but they most likely not find a better saving as they will with Save-A-Lot. Save-A-Lot Food Stores, the nation’s leading extreme value, edited assortment grocery chain and the nation’s fifth largest grocery banner, operates more than 1,150 value-oriented stores in all types of neighborhoods: urban, rural and suburban, and delivers up to 40 percent of savings compared to conventional grocery stores”—(Fintland ) The issue here as mentioned before, they stock much less inventories than other retailers. Comparing to other traditional supermarket chain stores stock approximately 30,000 SKUs vs. Save-A-Lot inventory of only 1,250 SKUs.

As a part of the retail format, they carry less items with the same or similar high quality but at a more affordable price. The stocking and pricing are just some of the many things in their retailing format strategy. Aside from that, their main focus is affordability, not some pretty organizing shelves that is why their inventory remains in cardboard boxes that are cut off and stacked onto the shelves. Due to not having to sort-out the inventory, Save-A-Lot are able to cut-back on shelves costs, and creating a relationship with their vendors.

With the vendor relation , Save-A-Lot benefits from low prices in returns for free advertisement and shelves spaces. Save-A-Lot does in fact saves a lot since they don’t have the typical numbers of employees compared to traditional stores. Customers pay to bag their own items, or they can just carry out their items with empty cardboard boxes laying around. The last biggest factor that contributes to Save-A-Lot profitability is the location. With their tightly controlled operation expenses, they are able to find inexpensive property to open business.