Albertson’s Shelves Lucky Name Today, Replacing It With Its Own
In this year’s $12-billion marriage between supermarket chains Lucky and Albertson’s, it’s Lucky that will be giving up its maiden name.
Beginning today, all 480 Lucky stores will be renamed Albertsons. The two chains combined will have more than 550 stores in California, making the Boise, Idaho-based grocer the largest in the state.
In keeping with its long-standing policy, Albertson’s also will discontinue Lucky’s club card, replacing it, company representatives say, with lower everyday prices.
The name change raised concern among some analysts who thought the switch to Albertsons could alienate Lucky’s core customers. In many parts of Los Angeles, where Albertson’s has opened only a handful of stores, shoppers are unfamiliar with the Albertsons name.
Albertson’s stock, which had soared as high as $67.13 in December, hit a 52-week low of $34.75 on Tuesday before inching up to close at $34.88 on the New York Stock Exchange. Many analysts have downgraded the stock in recent weeks.
Some on Wall Street believe the name change is disruptive and will raise the cost of the merger, therefore delaying the earnings gains expected from the combination, according to supermarket analyst Gary Giblen of Bank of America Securities.
But Giblen said he believes that the negative view of Albertson’s may be shortsighted. He thinks Lucky’s image as a low-price leader has been tarnished in recent years as more discount chains moved into the market, and customers might be receptive to a new player.
The switch has been alluded to for weeks in billboards, radio and television spots asking, “Lucky, will you marry me?” The company says that its $50-million media blitz--one of the most expensive ever launched by a supermarket chain to win customers after a merger--is critical given the chain’s aggressive plans for California expansion.
“We want customers to know that this is a blending of the two chains,” said Roe Cefalo, president of the California and Nevada divisions of Albertson’s. “It isn’t one gobbling another up.”
Cefalo said Albertson’s plans to build 20 to 30 stores a year in California, beginning with those already under construction in Irvine, Tustin, Ladera Ranch, Culver City and West Los Angeles.
Albertson’s purchased Lucky parent American Stores Co. earlier this year, creating the nation’s second-largest chain, behind Kroger, with 2,400 stores in 38 states. At that time, Albertson’s had not yet decided to change the nameplate on the stores.
About two weeks ago, the chain began running radio and television ads heralding the “Wedding of the Century” between Albertson’s and Lucky.
The company also erected teaser billboards and flew planes over stadiums with Albertson’s proposal, spending about one-third of its national advertising budget just in California.
“We’ve seen how badly other chains have handled their coming together,” said Hugh Duncan, chief executive of Venice-based ad firm Duncan & Associates, which is handling the campaign. “People are very sensitive about this whole merger trend.”
Beginning today, each of the stores will be draped with an Albertsons banner, with permanent signs to be placed in the next couple of months. Inside the store, there will be few changes.
Lucky’s private-label products will be replaced eventually by Albertson’s products, and its meat case and bakery will be slightly revamped.
The most touchy issue will probably be the discontinuation of Lucky’s club cards, which have provided shoppers with special discounts and incentives.
Although Albertson’s representatives say they will keep Lucky’s lower prices on most items, industry observers say customers could be skeptical.
To pacify shoppers, Albertson’s will make a charitable donation to the Susan G. Komen Breast Cancer Foundation for each returned card. The chain also has agreed to donate $25 million annually to community charities.
Sav-on drugstores, which were also acquired by Albertson’s as part of the American Stores deal, will keep their name.
