Executive to Watch: Save-A-Lot at a Crossroads for Santiago Roces

ST. LOUIS — Less than a year into Santiago Roces’ tenure as president and chief executive officer of Save-A-Lot, the limited-assortment banner that was a focal point of Supervalu’s growth strategy for the past few years is at a crossroads.

Save-A-Lot has been driven by its Minneapolis-based parent company to achieve aggressive growth targets, but the company has since tempered those goals to divert more resources toward its conventional stores. And while recent reports indicate the Save-A-Lot banner is performing well, some observers say Roces faces a big challenge in gaining the support of the banner’s licensees in a difficult business environment.

After Minneapolis-based Supervalu in January reported relatively strong sales at Save-A-Lot in the third quarter — identical-store sales were up “nearly 4%” — the company seemed to indicate that the business was on the right track.

The sales gains were driven by inflation “and the innovative merchandising and marketing programs we’ve implemented,” said Craig Herkert, president and CEO, Supervalu, in a conference call with analysts. He cited in particular the Save-A-Lot Today opening-price-point private label and the continuation of the chain’s Mix & Match and 10 for $10 promotions, as well as mid-month mailers.

However, he also cautioned that the banner would only open 50 to 60 locations in the fiscal year that ended in February, down from a previous forecast of 80 to 90 stores. Supervalu has said it planned to double in size — to some 2,400 units — by 2015. It currently has about 1,300 locations, some 915 of which are operated by licensees.

“While Save-A-Lot is a market leader in hard-discount retailing, hurdles for small-business financing and general uncertainty about the economic climate have factored into new store growth in the near-term,” Herkert explained.

Roces and Herkert both had worked in the international division of Wal-Mart Stores before joining Supervalu. Roces’ past positions included president and CEO of Wal-Mart Korea, and chief merchandising officer for Wal-Mart’s Argentina business. He also was senior vice president of Wal-Mart’s small-format division.

When Roces was hired, Herkert described him as being “the right individual to lead the business forward” and having a “wonderfully diverse” business background.

That background may or not be serving him well in his new position at Save-A-Lot, according to Jose Tamez, Denver-based managing partner in executive recruitment firm Austin-Michael.