DUBLIN, Calif. -- Lucky Stores here opened its first Price Advantage warehouse-style store in a former Lucky location in Vacaville, Calif., late last month.
Price Advantage is the price-impact format Lucky's parent company, American Stores, Salt Lake City, said earlier this year that it planned to develop.
The 50,000-square-foot Price Advantage store in Vacaville -- between San Francisco and Sacramento -- is the first of 11 units set to open in converted Lucky stores throughout California this year.
Six of those are scheduled to open in northern California and five in southern California, company officials said. Trade observers told SN the stores are positioned to compete primarily with Safeway's Pak 'N Save chain in northern California and Food 4 Less Supermarkets' warehouse stores in southern California.
American also may decide to roll out the Price Advantage format at its other divisions, observers said.
Judie Decker, Lucky's communications manager, said the stores' decor, service and other aspects will reinforce a low-price image. During the conversion to the Price Advantage banner, the Vacaville store was closed for six weeks while warehouse shelving was installed and other decor changes were made, she said.
Jonathan Ziegler, a securities analyst at Salomon Bros., New York, said the new format allows Lucky to recycle older stores. Price Advantage should be able to deliver on its low-price promise because of a combination of warehouse fixtures, slashed-carton displays and favorable labor contracts, he said.
Ziegler estimated the stores are likely to achieve weekly sales of about $500,000. Chuck Cerankosky, an analyst with Hancock Institutional Equity Services, Cleveland, said the Price Advantage format allows Lucky to "bring a price-impact approach to bear on competitors in a site-specific manner. "Lucky can open a price-impact format at one location under the Price Advantage name without bringing price levels down in a larger area," he said.
He said he sees southern California as the likeliest venue for the new format, "because that's where most of the major players have special union clauses that allow them to convert to these stores to respond to specific competitive situations."