Moran Foods (dba Save-A-Lot, Ltd.) is growing a lot because its customers don't have to pay a lot. The extreme-value grocery chain operates more than 1,280 stores in about 40 states under the Save-A-Lot banner. About three-quarters of the stores are licensed; the rest are company-owned and -operated. Save-A-Lot stores offer a limited assortment of items (about 1,250 of the most frequently purchased grocery products) at prices up to 40% lower than conventional grocery stores. The company has sold its Deal$ - Nothing Over A Dollar chain of stores, acquired in 2002, to Dollar Tree. Founded in 1977 by William Moran, today Save-A-Lot is owned by the grocery retailer and wholesaler SUPERVALU.
Key markets for Save-A-Lot include the Midwest, the Eastern Seaboard from Maine to Florida, and Texas.
The Save-A-Lot chain rang up nearly $4.2 billion in sales in fiscal 2013 (ended February), a decline of less than 1% versus the prior year, and representing about 25% of its parent company SUPERVALU's total sales. Same-store sales fell 3%. Earnings declined 37% in fiscal 2013 versus 2012 to $146 million from $232 million.
A leader in the extreme-value grocery market, Save-A-Lot's niche is getting crowded as rival ALDI expands throughout the US, and non-traditional purveyors of groceries, including the dollar stores operators Dollar General and Dollar Tree, sell more consumable products. The deep recession in the US has been a boon to discount retailers, including retail giant Wal-Mart, as shoppers look to save money on basic needs. Turning the tables on dollar stores, Save-A-Lot offers plenty of general merchandise and consumables priced at $1 in its Dollar Departments.
Fast-growing Save-A-Lot has ambitious growth plans. Indeed, the discount grocer aims to increase its store count to 5,000. Much of that growth will be in urban areas, including Washington, D.C., that are underserved by food retailers in general. Eventually about half of Save-A-Lot stores will be located in metropolitan neighborhoods.
Indeed, Save-A-Lot targets households with incomes of $35,000 or less. As a result, the no-frills grocer will locate stores (typically about 15,000 square feet in size) in poor urban areas that are often bypassed by larger discount chains, such as Wal-Mart. Currently, about one quarter of Save-A-Lot stores are located in urban areas. City stores may eventually account for half of the company's locations.
While parent SUPERVALU has largely retreated from grocery retailing (selling five of its supermarket chains in 2013) it held on to several regional, hard-discount operators, including Save-A-Lot.