Lucky Name for Bay Area Stores

ELLIOT ZWIEBACH

MODESTO, Calif. — Save Mart Supermarkets here is getting Lucky.

The chain will begin later this week to convert the 72 stores in the San Francisco Bay Area that it acquired from Albertsons LLC to the Lucky banner — a name to which it negotiated the rights as part of its agreement to purchase 130 Northern California stores late last year.

Bob Spengler, president and chief operating officer, told SN he believes the conversions will result in sales increases of between 10% and 15%, part of which he said will be driven by the return of the Lucky name at those stores.

“Even after all these years [since the banner disappeared, in 1999], the Lucky name carries with it a great deal of consumer equity,” Spengler said.

Supervalu, Minneapolis, which acquired the highest-volume Albertsons stores in mid-2006 and owns rights to use the Lucky name, licensed the name to Albertsons LLC, which sub-licensed rights to use the name to Save Mart.

Supervalu uses the Lucky name at five neighborhood-style stores in Las Vegas and two in Southern California — marketing areas in which Save Mart does not operate.

A lawsuit involving use of the Lucky name by another Northern California operator is still pending in the courts.

Albertsons acquired American Stores Co., which operated Lucky, in 1998 and replaced the Lucky name with its own name in 1999.

According to Spengler, “We have taken a careful look at what made Lucky successful and are adding a few best practices of our own, and with this mix, we believe Lucky Stores will once again be a winner for Bay Area shoppers.”

He said the Lucky stores will offer “the most competitive prices of any full-service supermarket” in the Bay Area.

Save Mart does not have the right to use the term “everyday low pricing” — a marketing strategy that was one of Lucky's hallmarks — but it will use the claim “Lucky means low prices” in its marketing, Spengler said.

“We think we understand low prices as a result of operating our Food Maxx price-impact stores,” he explained, “though the Lucky stores will not operate at the same pricing levels, because Food Maxx has limited service and selection.”

Programs offered by the original Lucky chain that will be reintroduced by Save Mart in the Bay Area will include the following, Spengler said:

In addition, Save Mart said its Lucky stores will offer California-produced food products whenever possible and a variety of proprietary brands, including Sunny Select groceries, Sunnyside Farms dairy products, Sunnyside Farms chicken, Master Cut beef, Master Catch seafood, and Foxbrook and Piccinini wines. (Bob Piccinini is chairman and chief executive officer of Save Mart.)

Save Mart kept its decision to reintroduce the Lucky name in the Bay Area under wraps until last week, when it announced it to the stores' employees.

“We opted to use the Lucky name on those stores because of the tradition and culture that was developed by Lucky in the Bay Area over more than 60 years,” Spengler told SN.

“In addition, because Save Mart has never operated in San Francisco, it became obvious to us after talking with consumers there that we'd have a better run with the Lucky name. And when we talked with employees at those stores shortly after we purchased them and asked them what name they thought we should use, a large number, without prompting, suggested Lucky.”

Spengler pointed out that more than 50% of the employees at the Bay Area stores worked for Lucky before it was acquired by Albertsons, and more than 90% of the division's leadership team formerly worked for Lucky.

Save Mart will begin reopening stores under the Lucky name this week, with four stores scheduled to open Wednesday — in downtown San Francisco, Redwood City, Foster City and Millbrae — and four more scheduled to open Friday — in downtown San Francisco, Daly City, San Bruno and San Carlos.

The chain will continue to convert eight stores a week — four on Wednesdays and four on Fridays — through the summer, except for the week of Labor Day, and expects to compete the conversions on Friday, Sept. 28.

Of the 130 Albertsons stores Save Mart acquired, 41 have been converted to the Save Mart banner, 72 will be converted to the Lucky name and five are closed (including two that were shuttered at the time of the acquisition), leaving 12 stores in northern Nevada still to be converted.

Spengler said the company will decide in the next six weeks whether to convert those stores to the Save Mart or Lucky banner. “We're still evaluating that market, which is an isolated one,” he told SN.

Save Mart operates 252 stores in Northern California and northern Nevada, encompassing 134 conventional stores (operating as Save Mart, S-Mart and Albertsons), 44 Food Maxx price-impact stores and the 72 that will operate as Lucky.

While Spengler declined to pinpoint results at the former Albertsons locations that have been converted to the Save Mart name, he said the company has been “extremely pleased with the sales lifts at all stores, which are exceeding our expectations.”

He also said the mood among employees at the stores is very upbeat, “because we're in a hiring mode, and that always sends a positive message throughout a company.”

Grocery Outlet, a Northern California chain of discount supermarkets based in Berkeley, opted in 2005 to use the Lucky name on a single store in Rocklin after its attorneys said Albertsons had lost the right to the name by not using it for six years.

After Albertsons sued Grocery Outlet — a suit carried on by Supervalu after it acquired parts of Albertsons — a U.S. District Court judge initially ruled that the Northern California operator had the right to use the name, then reversed himself and enjoined it from using the name, prompting Grocery Outlet to cover up the Lucky name on the Rocklin store. Grocery Outlet appealed that ruling in February and is still awaiting the court's decision, a company spokesman told SN last week.