Getting Lucky Again

One of my favorite Flickr-ites, Roadsidepictures, recently shared the photo displayed above to announce that grocery shoppers in Las Vegas and Southern California are getting Lucky again. That's right -- Lucky, a beloved supermarket chain thought to be relegated to the retail graveyard -- is making a comeback under the aegis of grocer Supervalu, which also operates Albertsons and Bristol Farms stores in the Southland.

For decades, Lucky was one of the largest supermarket chains on the West Coast, priding itself on a budget-conscious reputation as "the low price leader." Many folks remember its television and radio ads featuring spokeswoman Stephanie Edwards, such as this one from 1997, presented by David Gwynn of supermarket history site Groceteria:

Lucky was acquired by American Stores, a Salt Lake City-based retail conglomerate, in 1988. American Stores, in turn, was merged into Albertsons, based in Boise, Idaho, ten years later. While Albertsons kept American Stores' Jewel-Osco banner in Chicago and its ACME banner in Philadelphia, it decided to dump the Lucky name in California and Nevada and re-brand the units as Albertsons because the company already operated its namesame stores in those markets. The 1999 "marriage" of Lucky and Albertsons proved to be a marketing blunder, as Lucky had a stronger market position in most of the markets the two chains had shared.

The once high-flying Albertsons, having grown into the second largest supermarket chain in the nation, encountered severe problems due to the same type of mismanagement that led to the arrogant dismissal of the Lucky brand. After speculation that the company would sell out to Kroger, its largest competitior, earlier this year Albertsons management announced a complicated deal in which it would be sold to three seperate entities. CVS gained the Osco and Sav-On drug store chains while Supervalu acquired most of the supermarkets, including ACME, Bristol Farms, Jewel-Osco, Shaw's, and Star Markets. A group of investment firms led by Cerberus Capital Management grabbed what was left, a group of poorly performing Albertsons stores in second-tier markets like Arizona, Florida, Northern California, and Texas.

While the dismantling of Albertsons was underway, "extreme value retailer" Grocery Outlet decided to place the Lucky name on its store in Rocklin in Northern California, taking advantage of the brand's reputation for low prices. Albertsons quickly filed a lawsuit, claiming it owned the Lucky name and that Grocery Outlet was breeding confusion; Grocery Outlet countered that Albertsons had abandoned the name 6 years prior and that copyright law dictated the name was fair game after 3 years. Desperate, Albertsons put the Lucky logo back on its Web Site, asked employees to scout shopping carts and stockrooms for any mention of the name, and announced plans to open new stores with the old banner. Many observers felt that Albertsons had blundered again, including rights to the Lucky name as part of its sale to Supervalu when it didn't actually own them.

The Courts have decided that Supervalu (nee Albertsons), and not Grocery Outlet, can use the Lucky name while the legal drama is sorted out. The Lucky name was quickly hoisted over 5 Supervalu stores previously known as MaxFoods (Albertsons' "low price" banner), including 2 Southland units in Alhambra and Montebello. Quite literally, the jury's still out on whether this move is a genuine effort to reinvigorate the Lucky brand as a new discount format or if it is simply a legal ploy to gain the upper hand over Grocery Outlet. I certainly hope that Lucky is here to stay, as its optimistic name and distinctive logo still resonate after nearly 7 years of absence from the local retail scene.

In a related development, Supervalu's Southern California Albertsons division has purchased advertising on billboards throughout the region. The message "Sav-On Pharmacy: We'll Always Be Here" is meant to let folks know that while free-standing Sav-On Drugs stores will soon be converted to CVS units, Albertsons in-store pharmacies and drug departments will still proudly display the Sav-On name. This "co-branding" strategy is a hold-over from American Stores, which exported the concept from its successful Jewel-Osco stores in Chicagoland after buying Lucky and Sav-On.

It should be noted that Sav-On has nearly as much cachet as Lucky in the Southern California region. In the late 1980's, American Stores renamed the units Osco Drug only to change them back after 3 years of declining sales. It will be interesting to see if CVS is successful in converting Sav-On to its namesake banner without alienating customers. As strange as it may seem, folks are very attached to local store names; witness the controversy over the renaming of Marshall Field's to Macy's.