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Q&A: CEO Ritchie Casteel

As the guiding force behind Save-A-Lot’s mission of serving value-seeking consumers, president and chief executive officer Ritchie Casteel draws on his extensive experience working within a variety of retail formats, from conventional grocery and warehouse to drug and convenience stores. Grocery Entrepreneur talked to Casteel about his plans for Save-A-Lot and how the company will continue to meet the challenges of a competitive marketplace.

GE: Please tell us a little bit about your 40 years of experience in the retail business.

Casteel: I have seen a lot of change in the retail environment over the years. I began my retail career as a courtesy clerk for Albertsons’ Southern California Division, and then spent the next 33 years with the company in positions of increasing responsibility, primarily in the areas of merchandising and operations. In 2004, I completed my tenure as vice president of operations for Albertsons’ Intermountain West Division.

Following my career at Albertsons, I provided expertise and leadership to Associated Retail Stores of Salt Lake City, Utah, and Shopko Stores of Green Bay, Wis. Later, I served as director of sales and operations for Grocery Outlet of Berkeley, Calif., from 2005 to 2009, where we worked closely with independent owner-operators to improve sales, margin, shrink, operating standards, marketing, expense controls and financial balance.

GE: What do you see as the most important industry challenges for Save-A-Lot in the current grocery business environment?

Casteel: Over the last decade, competition in the U.S. supermarket industry has never been greater. The conventional supermarket and food/drug combination stores typically associated with grocery shopping have lost a great part of their market share to retailers like Save-A-Lot, in addition to other competitors such as Walmart Supercenters, Sam’s Club, Costco and a variety of dollar stores. Convenience stores and fast-food restaurants have also dramatically expanded their reach into this competitive space in recent years. But alternative shopping formats like Save-A-Lot continue to lure value-driven shoppers, and all indicators show continued growth in this arena.

GE: How is Save-A-Lot differentiating itself in this environment?

Casteel: We have learned that one of our clear points of differentiation is our hard discount model. To find our niche, we have targeted our store growth toward diverse “neighborhood markets” offering extreme value and price and an easy place to shop.

Staying one step ahead of our competition is also critical to Save-A-Lot’s success. Nearly every survey consistently indicates that today’s customers expect grocery stores to:

  • Sell what they need and have it in stock when they want it
  • Make it easy for them to shop and find what they are looking for
  • Price the product competitively and create value
  • Have friendly, helpful people available to make the shopping experience a pleasant one

Finally, with labor costs the single greatest controllable expense in the business, Save-A-Lot continues to perfect this budget item. Our labor costs run about half of what it takes to operate a conventional grocery store. We also provide our new retailers with training, and we provide ongoing operations support, something you do not see a lot of in the grocery industry.

GE: What improvements have you implemented at Save-A-Lot?

Casteel: One of the keys to our brand identity is to have one of the best selected grocery assortments in the industry. For the past six months, we have worked aggressively to broaden our appeal and create more consistency in our product assortment, store appearance and operating standards in our licensed and corporate-operated stores.

The way we are merchandising our stores is another initiative that is driving our customer counts and sales, starting with our product assortment. It’s also imperative that we differentiate our offerings through Save-A-Lot’s extensive portfolio of private label brands. We are currently building our fresh meat category brand and expanding our Hispanic category. We are working to expand our private label lines across all product categories as we raise consumer awareness of our high-quality store brands. Our customers are taking notice, and we are seeing good results.

In addition, we are enhancing our product packaging to reinforce our quality. For example, we changed our So-Cheezy Mac & Cheese packaging to better convey the quality of the product. Our granulated sugar packaging was very generic, and it was recently updated to reinforce our national brand equivalency. We are also adding more bilingual messaging on our labels and packaging to acknowledge our growing Hispanic customer base.

GE: Supervalu has experienced a lot of change during the past year. What course of action are you taking to reinforce confidence in the Save-A-Lot brand with your retailers?

Casteel: When I first joined Save-A-Lot, I noticed the strength of the brand and the quality of people it attracted, both within our own organization and with our independent retailers. Save-A-Lot has a strong track record of growth over the past 35 years, and that says a lot to me about the foundation we have as a brand, our retailer network and organization.

However, actions speak louder than words. Investment in price by Supervalu and Save-A-Lot has been one of our first initiatives to reinforce our commitment to our retailers and assist with their profitability and competitiveness in the marketplace.

Although Supervalu is now a smaller, leaner company much like it was prior to 2006, I believe the company is solid and headed in the right direction. The new leadership team at Supervalu and subsidiaries, our shareholders, our employees and our retailers all have a vested interest in seeing the “new Supervalu” succeed.

GE: What do you like most about Save-A-Lot?

Casteel: This may sound cliché or overused, but it is the people. A common denominator in any successful business is the people who run the operation, which in our case is here in our office, in our distribution centers and at our network of licensed and corporate stores. Our goal is to provide extreme value and savings to our customers so they can enjoy other things in life rather than spending more than they need to on a grocery bill. All this starts with people sharing a common goal.

GE: What makes Save-A-Lot the right choice for new retailers?

Casteel: I believe that Save-A-Lot is more than just a business opportunity. It is a business model that is designed for those invested within their communities. Our business is very local in nature. Giving our ongoing support to local retailers invested in the community—that’s our ongoing path to success.

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