In what may be the biggest-ever experiment in restoring a moribund retail brand, Save Mart Supermarkets, Modesto, Calif., is now re-bannering 72 of the Al-bertsons stores it acquired in the Bay Area as Luckys.
This situation isn't without a bit of irony: It was Albertsons that shut down the Lucky operation. Lucky had been owned by American Stores since 1988. Albertsons acquired American in 1998. A year later, in a move that was quickly viewed as a mistake, Albertsons converted Lucky stores to its own banner. Despite various forms of efficiency banner unification doubtless delivered, including advertising,and private label, sales dropped at the re-flagged stores. Save Mart's quest for success by revivifying the Lucky banner is described in a news feature in this week's SN, written by reporter Elliot Zwiebach. It starts on Page 14.
Will Save Mart succeed with Lucky? There can be no question that Lucky Stores is a venerable retail brand. The Lucky name was first used in 1935 in the Bay Area. From the beginning, and to the end, it was seen by customers as a neighborhood store that offered few frills, but low prices.
One former Lucky executive quoted in the news feature said the old Lucky operational methods included good inventory control, a multi-tiered private-label offer and a culture of making profits by selling product, not by buying product.
Another said, “Our customers always had a tremendous connection to the Lucky name. For many, Lucky was a favorite store that was recognized for everyday low prices. It was a neighborhood store.”
Despite Lucky's image as a neighborhood store, for a time Lucky was actually a far-flung enterprise. It grew through the region organically and by acquisition. It also had supermarket operations for a time in Texas (Eagle Food Centers) and Florida (Kash n' Karry). It operated Gemco in several Western states and Memco in Chicago and Washington, D.C. Both were membership discount stores. Lucky also diversified by acquisition into several other business forms too, as was common in the 1970s and 1980s.
Historical considerations aside, the important fact is that the Lucky name, heralded by its quaint script logo, retains a great deal of equity with consumers. The critical issue for Save Mart, however, goes to the exact nature of that equity: Could it be that Lucky has an aura of positive nostalgia precisely because it hasn't been in use for eight years? After all, much has changed since the banner fell into disuse, including patterns of competition, labor upheavals and evolving consumer preferences. Would Lucky be so favorably regarded if it had operated through those changes? Would it have successfully adapted? Might Lucky have failed during that time? All this brings us to the real question: What will happen to customers' favorable disposition toward Lucky when they realize the old Lucky experience can't be fully replicated today?
In recognition of that challenge, Save Mart is introducing three old-Lucky programs at the converted stores: Max Packs (large-pack product), Key Values (to underscore promotional prices) and the Three's a Crowd promise, the last being a pledge to open additional checkout lanes when more than three customers are waiting.
We'll see how the great experiment plays out. If it works, can Cardinal stores be far behind?