Talking shop with… Mike Stout

The director of new business development for Save-A-Lot says the company plans to double its grocery network over the next five years.

Grocery Headquarters: How does Save-A-Lot help entrepreneurs enter the grocery business?
Mike Stout:
Save-A-Lot is one of the nation’s leading hard discount grocery chains offering customers a carefully selected assortment of products. We operate more than 1,200 stores in all types of neighborhoods—urban, rural and suburban. Save-A-Lot delivers terrific savings—up to 40% compared to conventional grocery stores—for its customers.

Independent licensed retailers own and operate about 75% of our locations and are the primary drivers of Save-A-Lot’s continued growth. Save-A-Lot recently announced plans to double the size of the chain over the next five years though the recruitment of new licensees and corporate store development. This is the most aggressive expansion plan in our company’s history.

Save-A-Lot has spent the past 30 years examining, simplifying and improving our stores, which has resulted in a better customer experience and successful business model. Our smaller stores, hard discount model, exclusive private label brands, buying power and handling efficiencies enable us, along with our independent licensed retailers, to compete effectively in today’s ever-changing grocery industry.

What sets the Save-A-Lot store apart from other retailers?
Fortunately, Save-A-Lot’s business model and format have allowed us to expand even during a tough recession. We have done an excellent job in positioning ourselves as a leader in the hard discount, value-oriented segment.

We stock the most frequently purchased grocery items in the most frequently purchased sizes, which are among the things we have done well compared to our competitors. The result is that our stores are smaller (our average size is 15,000 square feet), making them easier to navigate and operationally more efficient. On average, we have fewer than 2,000 SKUs per store. Fewer SKUs allows for much greater efficiency, higher velocity and increased buying power, which results in lower prices for our customers.

Another difference is that Save-A-Lot targets urban and suburban neighborhoods with annual household incomes under $45,000. We actively pursue new store locations in neighborhoods that are largely overlooked by our competitors—locating in diverse neighborhoods, hiring from within those communities and stocking product tailored to the neighborhood. I believe we have a special niche in the market place that is rather difficult for other retailers to duplicate.

What incentives do you offer these entrepreneurs? Tell us about the Licensed Store Incentive Program.
To encourage new development, Save-A-Lot is offering a financial incentive program to new and existing licensees. Under specific terms and qualifications, eligible licensees can qualify for a minimum $200,000 towards equipment purchases, cash back or rebate options. The response to this incentive offer has been tremendous.

In addition, for new retailers we are offering management training for two employees, 24/7 POS technical support for the first year and basic accounting services for the first year, all at no additional charge.

What is the next step for interested entrepreneurs?
Save-A-Lot looks for a proven track record of successful experience in management. Many of our licensed retailers have grocery experience. Others have been successful in a wide variety of other industries. As a next step, visit our website at www.save-a-lot.com/own or email me at mike.stout@save-a-lot.com

What do you see the future like for the supermarket industry? How does Save-A-Lot fit in?
As everyone knows, the supermarket industry is extremely competitive and cyclical. Value is the trend today, which makes it very difficult for traditional and independent supermarket operators to compete on price and remain profitable. You are seeing conventional grocers undergoing SKU rationalization, expanding private label brands and seeking to reduce the size of their buildings, Save-A-Lot has already perfected these initiatives.

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