Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Deborah Weinswig – Citigroup.
Deborah Weinswig - Citigroup
You’ve laid your vision for Sav-A-Lot. Can you elaborate in terms of the unit potential in the U.S.? And is that geographically skewed at all or how should we think about that?
Craig Herkert
Well, what we’re looking at today, Deborah is doubling over the next five years our store count. So if we start at 1,200, which is our base today, it’s fairly simple math. Where we can go from there we haven’t laid out at this plan. We do know that there is a broad opportunity in this country, given the demographics of the United States of America. We’re looking right now at the next five years and we think there’s an opportunity to double it.
We have a detailed geographic plan that Bill Shaner and his team have put together. I do not want to share that with you today, but I will tell you there is a very thoughtful, detailed plan that encompasses both the parts of the country where we are very strong today and it would include many smaller markets, some rural areas. Importantly it would be growing in some of the markets where we have existing retail stores, which is something that’s a bit new for us. Where we’ve had a presence for example in Chicago we think that there’s an opportunity for a much more significant presence than we’ve had historically.
Deborah Weinswig – Citigroup
And then what are you doing to drive traffic to the stores which I think has been in positive territory at most of your competitors. What do you think the real key is there?
Craig Herkert
Well interestingly enough, traffic across most of our banners is either flat to slightly up, across most of our traditional retail banners. Our real challenge, Deborah, has been converting those customers who are in our stores to putting everything that we want them to put in their basket. There’s been certainly deflationary pressures, we’ve all heard about, it affects the whole industry primarily in milk and dairy. But there’s also been a fairly notable drop in the number of items that the customer are putting in their basket.
We think there’s a couple of reasons for that. One is certainly the economic [inaudible] are just meeting customers more value focused. They’re being more thoughtful on their spend. But quite frankly some of its been self directed. That is we’ve allowed as I’ve said before our regular retails to get too out of whack with what a customer thinks is a fair price. We’ve taken a lot of actions specifically with Big Relief to try to address that, but as I said in my statements this morning we’re looking beyond Big Relief, category by category, brand by brand, item by item in some cases, to look at how we more accurately spend the dollars that we have between regular pricing and promotional pricing.
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