Rite Aid Corp. is teaming up with Supervalu Inc.’s Save-A-Lot chain to try out a new twist on the food/drug combination store idea.

Rite Aid, Save-A-Lot, Supervalu, food/drug combination store, co-branded format, pharmacy, grocery, Ken Martindale, Scot Meyer, discount grocery, Greenville, Bill Shaner, food stores, grocery store, Walgreen, Duane Reade

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Rite Aid, Save-A-Lot to test co-branded format

September 27th, 2010

GREENVILLE, S.C. – Rite Aid Corp. is teaming up with Supervalu Inc.’s Save-A-Lot chain to try out a new twist on the food/drug combination store idea.

The two retailers plan to co-brand the pharmacy chain’s 10 stores in Greenville, turning them into drug stores that include an extensive offering of low-price groceries. The stores will operate under the Save-A-Lot Food Stores/Rite Aid Pharmacy banner, but they will be owned and operated by Rite Aid, the companies say.

“We believe this new co-branded concept meets the needs of today’s consumers, who continue to search for value, quality and convenience, and we’re excited about the chance to offer our customers high-quality grocery products, including fresh meats and farm-fresh produce, at great prices,” says Rite Aid chief operating officer Ken Martindale. “We chose to add Save-A-Lot because of its strong sales record, wide selection of attractively priced exclusive brands and solid reputation for discount grocery. Plus, it’s a model that’s efficient for Rite Aid associates to operate.”

Rite Aid said the test is being conducted in Greenville because its stores there are medium size (ranging from 9,500 to 15,000 square feet), with healthy pharmacy sales but weaker health and beauty aids departments. The revamped stores will have smaller H&BA sections to make room for the expanded food offerings.

The 10-store test is part of a segmentation strategy at Rite Aid, which is seeking to tailor its business strategy to the needs of different markets, rather than take a one-size-fits-all approach. “This is one of those unique opportunities, and we’re excited about the test,” Martindale comments.

Save-A-Lot president and chief executive officer Bill Shaner echoes that enthusiasm.
“This new format, featuring aspects of both traditional Rite Aid pharmacies and Save-A-Lot food stores, will provide added convenience and value to consumers in the Greenville, S.C., area. This relationship is an opportunity for Save-A-Lot and Rite Aid to test a co-branding strategy and the integration of Rite Aid pharmacies into our traditional Save-A-Lot grocery store model.”

The new format comes as Walgreen Co. prepares to test its own expanded food departments. Walgreens’ Duane Reade subsidiary in New York has already added expanded food sections — including frozen entrees, prepared meals, salads and sandwiches — to a number of stores.

The 10 Save-A-Lot/Rite Aid stores will stay open during the conversion process, which is expected to be completed in October. Rite Aid says that it plans to keep the pharmacies accessible while the store remodeling work is going on.