Super Dollar on Growth Track

CAROL ANGRISANI

ABINGDON, Va. — K-VA-T Food Stores is adding to its 11-unit limited-assortment format with a new store slated to open in the fall.

The next Super Dollar Discount Foods location is scheduled to open in September in Lynchburg, Va., already home to another Super Dollar. Super Dollar also operates in Wytheville, Abingdon, Hillsville, Christiansburg, Vinton and Rose Hill, Va.; Pikeville and Prestonsburg, Ky.; Knoxville, Tenn.; and other areas.

The Lynchburg opening is one of several others to come in the near future.

“We're committed to rolling this out,” Steven Smith, K-VA-T's president and chief executive officer, told SN.

The format was launched three years ago as a way to differentiate its stores. Market research shows that about half of the residents in K-VA-T's market have aggregate household incomes of less than $40,000. K-VA-T has responded to this by making its 94 traditional Food City banners price-focused. Super Dollar gives it an extra opportunity to serve its customers, according to Smith.

“We understand the challenges our consumers have,” he said earlier this month during a presentation at the Food Marketing Institute's Private Brands Summit. “That's why we got into this format.”

The average item costs $1.50 at Super Dollar, compared with $2.25 at Food City.

K-VA-T is able to keep prices in check with a strategy that includes low rent, overhead and labor thanks to no service departments.

Another factor is a strong private-label emphasis. Topco's Valu Time, an economy label, is Super Dollar's anchor brand, and accounts for the bulk of the 8,000-10,000 items carried throughout the 15,000- to 25,000-square-foot stores.

Valu Time is given prime shelf position in every section, Richard Gunn, K-VA-T's marketing and merchandising executive vice president, said at the Private Brands Summit.

“It's massively merchandised,” said Gunn. “As you walk up to any section, Valu Time communicates very well.”

The brand is the No. 1 and No. 2 seller in several categories. In tobacco, for instance, Valu Time is currently the No. 2 selling cigarette, but sales performance shows that it is well on its way to becoming its best seller, said Gunn.

Also present are other Topco corporate brands, including the upscale Full Circle and World Classics, as well as the national-brand equivalent Food Club.

Several categories at Super Dollar are comprised entirely of private label. Such is the case for the 12-foot soup section that includes the Valu Time, Full Circle, World Classics and Food Club brands.

The strategy is working, as soup represents 1% of total Center Store sales at Super Dollar, compared with 1.15% at traditional Food City stores, according to Gunn.

“This shows the category can be very successful without any national brands,” Gunn said.

The 32-foot paper goods section is also entirely private label (Food Club and Valu Time), except for an occasional in-and-out, 30-day promotion for Bounty or another national brand.

Super Dollar also merchandises K-VA-T's so-called “legacy” brands, regional brands that had been taken off the market, but resurrected by K-VA-T and available only in its stores. Such brands include Lay's packaged lunchmeats, Kay's ice cream, Terry's snacks, Kern's bread and, more recently, Farmbest milk.

All are manufactured locally and treated like national brands, and most are the No. 1 and No. 2 brands in their respective categories.