RETAIL VIEW: Save Mart Hopes to Capitalize on Lucky Name

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RETAIL VIEW: Save Mart hopes to capitalize on Lucky name

July 30, 2007

Lucky Stores was a well-known and respected name in the California supermarket industry for many generations until Albertsons bought the chain and retired the name in 1999. Many thought that Albertsons should have kept the Lucky name, which had a better reputation than the Albertsons moniker, especially in Northern California.

Albertsons has since sold most of its stores to Supervalu, and the 130-store Northern California division was recently purchased by Save Mart Supermarkets, a privately owned central California chain.

In late July, Save Mart began converting many of the Albertsons locations in the Bay area back to the "Lucky" store brand. Save Mart announced that over the next few months it would convert an average of eight stores a week to the new name. Each store will be closed for 48 hours as construction and cleanup crews change the name and do a quick internal makeover.

In total, 72 stores will be switched to the Lucky name. Most of the other Albertsons have been or will be changed to the Save Mart moniker. When the conversion is finished, Save Mart will operate more than 250 stores under four names: Save Mart, Lucky, Food Maxx and S-Mart Foods.

Retail consultant Ed Odron, who spent many years with Lucky as its top produce executive, called resurrecting the Lucky name a "very smart move" for Save Mart. He said that the Save Mart name is basically unknown in the Bay area, while the Lucky name conjures up good memories, even eight years later.

"A lot of people shopped there, and they worked there or their kids worked there," he said. "It's a good name."

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Mr. Odron said that Save Mart can leverage that name, but it must also deliver on what the Lucky name means to its customers. Lucky was an innovative chain that is associated with a number of different slogans, including "the low price leader" and "three's a crowd." The old Lucky Stores unabashedly competed on price, claiming that it had the lowest supermarket prices. And the "three's a crowd" concept referred to the chain's promise to its customers that it would open another checkstand any time there were three or more people in a line.

"They don't have to have the lowest price on everything," said Mr. Odron, "but they do have to have low prices."

In announcing the move to the local media, Save Mart President Bob Spengler indicated that the chain does know the responsibility that goes with resurrecting the name. He said that prices would be reduced on almost every item in the store, and the "three's a crowd" concept will also return.

Mr. Spengler, however, said that Lucky Stores would not resurrect the loyalty card, which was another of the old chain's innovations. The Save Mart president said that it is his philosophy that all customers -- not just those carrying a card -- should be rewarded with low prices.

Another produce industry retail executive-turned-consultant, Dick Spezzano, agreed that bringing back the Lucky name was an astute move. "It would cost much more to establish a new name than resurrect an old one," he said. However, he quickly added that he could recall no other circumstance when a retired supermarket store name was brought back. Conversely, however, he can think of a number of instances when one store bought another and mistakenly retired a name.

"When Ralphs [in Southern California] took over Hughes and changed all the names to Ralphs, that was a big mistake. I understand they lost $50,000 to $100,000 [in sales per week] per store."

Mr. Spezzano said that the switch in name from Albertsons to Lucky is a good idea, but he cautioned that it probably would not result in a big boost in sales unless there is a dramatic change inside the four walls. He remembers when Vons took over some Safeway stores in Southern California while he was an executive at Vons. "We changed the name on the outside of the store and expected an immediate boost in sales. It didn't happen."

Mr. Spezzano said that the boost in sales didn't come until the inside of the store was changed to resemble other Vons supermarkets, which clearly had a better name and operation in the Southern California marketplace at the time. "When we changed the inside, we got a 30-40 percent boost [in sales]," he said.

In today's environment, the newly named Lucky Stores will once again be competing against Safeway. But both Messrs. Odron and Spezzano said that these Lucky stores would be competing against an entirely different Safeway than a decade ago.

Over the past several years, Safeway has upgraded many of its stores -- and the majority of its Northern California stores -- to its "Lifestyle" concept, which includes upscale decor and offerings with many value-added and prepared items, as well as new lighting, flooring and display cases.

But Mr. Odron predicted that the Save Mart Luckys could compete "if they get back to basics and make sure they are clean, fresh and full, and have sharp pricing. If you give them value, price it right and have friendly people that offer good service, you can compete. Don't get me wrong, the Lifestyle stores are great, but you don't have to do that to be successful."

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Mr. Spezzano agreed, saying that Safeway's Lifestyle stores have carved out the upscale niche. He said that the low price niche is available to the Save Mart Luckys, and that fits well with the Save Mart philosophy. Like Mr. Odron, he believes that the new Luckys can compete.

Mr. Odron still has many connections in the Bay area, and he said that a surprising number of management people who were formerly with Lucky have survived as the company has moved through Albertsons and onto Save Mart. "I understand that the Lucky Stores will be managed out of Dublin (where Lucky was formerly headquartered) by old Lucky people who know the Lucky way. They are excited about it. They will do a good job."

He said that as the Northern California Albertsons went through the ownership changes and rumors in the last couple of years, the stores did get a bit "tired," as staffing was cut and upkeep lagged. He believes Save Mart has a great opportunity to revive the Lucky name and create some very successful stores.