Save A Lot has sold all 51 of its corporate-owned Tampa Bay stores to another another company as the discount grocer shifts to a wholesale business model.
The Tampa Bay stores will still operate under the Save A Lot banner, but are now owned and operated by Ohio grocery company Fresh Encounters, Inc. Fresh Encounters has a licensing and wholesale grocery agreement with Missouri-based Save A Lot.
The retailers announced the sale this week as part of Save A Lot’s broader plan to franchise out nearly all of its corporate-owned stores. The discount grocer announced the business model shift earlier this year as it worked to shed millions in debt.
“Through the re-licensing transactions we are executing across our footprint, we believe that we will be even better positioned to continue to serve the communities in which we operate,” Save A Lot CEO Kenneth McGrath said in a statement. “We currently have a dedicated group of retail partners that we support and we look forward to helping other entrepreneurs own, operate and succeed in their own business.”
More than half of Save A Lot’s roughly 1,000 locations were already operating under licensing agreements with deals to carry the chain’s private label products. The chain’s plan is to have all 300 of its existing corporate-owned locations under the new model in 2021. The only exception will be 21 corporate St. Louis stores that will serve as the corporation’s test market for new products. Counting the Tampa sale, 82 former corporate stores have already transferred over to the new model this year.
Onex Corp., the Canadian equity firm that once had a majority stake in Save A Lot, announced in April that it cut the grocer’s debt by $500 million and brought in $350 million in investments. It has all been part of the retailer’s rebound strategy, which includes running 14 wholesale grocery warehouses to serve its 33-state footprint.
“The wholesale model in the grocery business has been successful for Kroger,” said Mark Thompson, grocery expert and owner of real estate tracking website GroceryAnchored.com. “This is not lost on companies like Save A Lot, which is empowering local franchisees to customize the units. Save A Lot looks at that as a really nice marriage.”
Kroger, which does not franchise out stores, still has several store brands under its company umbrella. All of them stock its private label goods, sales of which exceeded $2 billion last year.
Thompson said Save-A-Lot’s model could work well in Tampa’s diverse communities. A smaller-scale operator can more easily adjust product assortment to the meet the demands of the neighborhoods it serves. Hispanic grocer Bravo Supermarkets, which started expanding its local foot print last year, already runs under a similar model. Krasdale Foods, a New York grocery operator, is a food and branding supplier to the independently owned Bravo locations.
“Over the past several months I have toured stores in the greater Tampa market and I’m impressed with the Save A Lot team,” Fresh Encounters CEO Michael Needler, Jr. said in a statement. “I am truly humbled to be joining them in delighting our customers, nourishing the communities and inspiring pride in the team.”
Editor’s note: This story has been updated to reflect that Onex Corp is no longer a majority investor of Save A Lot.