BOISE, Idaho -- Albertsons may already be operating the price-impact format it plans to introduce nationwide -- the Super Saver format it developed for Hispanic customers -- industry observers told SN last week.
Albertsons officials could not be reached last week for comment on the expectation that Super Saver is the price format it will roll out nationally.
"But that's my assumption," Chuck Cerankosky, an analyst with McDonald Investments, Cleveland, said, "because Super Saver would fit into different markets, with a full supermarket offering that encompasses low prices, less service and less selection, combined with an emphasis on perishables that might be more than one might expect in a price-impact store."
Andrew Wolf, an analyst with BB&T Capital Markets, Richmond, Va., also told SN he believes the Super Saver formula may serve as a working model for Albertsons to develop nationally "because it's given the chain experience with a format that's price- as well as perishables-driven. However, because those stores have been restricted to ethnic markets, it might not be sufficient as a model to serve other consumer segments," he added.
According to Jonathan Ziegler, principal at PUPS Investment Management, Santa Barbara, Calif., "Super Saver is a great vehicle for doing what more of the industry needs to do, which is switch to an everyday-low-price approach.
"With the Super Saver format already in operation, Albertsons will now test it on a broader basis to see what works to bring costs down and get customer traffic."
Albertsons, which operates three Super Saver locations in Southern California, reported last June that sales at those stores were up 20% since their conversion from conventional to price-impact stores within the prior 12 months.
Analysts told SN they believe the price-impact stores will appeal mostly to a blue-collar demographic.
Albertsons operated a price-impact format several years ago under the Max Food banner, Wolf said, "so the company has access to the financials [from those stores] and other information to help them in this move."
Another analyst said operating a price-impact format requires a management staff that understands the model, "and while Albertsons will tell you it's a matter of how you structure the operation, I believe it's a question of whether the people executing it understand it and are disciplined enough to do what needs to be done."
Cerankosky offered another point of view. "I think one management group can oversee both formats, but there will need to be a lot of input from store managers and merchandisers to be sure they keep the formats separate because Albertsons will be dealing with a different demographic, different items and possibly a different private-label selection at the lower-priced model," he said.
Ziegler also said Albertsons won't need a separate buying staff, "but it will have to use different methods of purchasing and shipping."
In announcing the new price-impact stores last month, Larry Johnston, chairman, president and chief executive officer, Albertsons, said the division "will be completely autonomous and operated separately from Albertsons' traditional food and drug operations," under the direction of Mike Clawson, former president of Albertsons' Northwest division.
Albertsons' price-impact stores will also require concessions from the union if they are to succeed, Ziegler said -- the kind of concessions other price-impact operators have been able to achieve, including Kroger Co., Cincinnati, at its Food 4 Less stores and A&P, Montvale, N.J., at its Food Basics stores. "To make it work, Albertsons will need a separate contract at stores with a union workforce," Ziegler explained.
The track record for conventional chains that opt to operate price-impact stores is mixed, another analyst added. "The most successful company has been Kroger, whose Food 4 Less stores have a separate organization with a lot of experience dedicated to that format."
According to various analysts queried, other successful operators of both conventional and price-impact stores include Supervalu, the Minneapolis-based wholesaler, which operates Shop 'n Save stores in St. Louis and Pittsburgh, and Shoppers Food Warehouse in the Washington-Baltimore area; Spartan Stores, Grand Rapids, Mich., which operates The Farm, a deep-discount drug store with a large grocery assortment; and A&P, Montvale, N.J., which operates Food Basics stores in Ontario.