Dive Brief:

• Discount chain Save-A-Lot has appointed former Lidl executive Kenneth McGrath as its new CEO, according to Supermarket News. McGrath formerly led Lidl’s Ireland division and was the chain’s first U.S. CEO before departing in May 2015 to work for cell company Digicel.
• The move, which comes as a surprise, is seen by some as a sign that Save-A-Lot doesn’t want to watch from the sidelines as discounters Aldi and Lidl expand. “To me this signals Save-A-Lot is going to knuckle up and compete,” one industry analyst told SN.
• McGrath will have to turn around a flagging Save-A-Lot, which has been hit hard by deflation and cuts to the Supplemental Nutrition Assistance Program. 

Dive Insight:

With this ambitious hire, Save-A-Lot is making clear it won’t sit idly by as Aldi and Lidl make waves in the U.S. market. But the hard discounter has a long way to go if it hopes to compete with the European imports.

With more than 1,300 stores, Save-A-Lot has a formidable U.S. footprint. Heated competition, deflation, and recent cuts to SNAP, however, have put a serious dent in the chain’s sales. These recent struggles forced former parent company Supervalu to sell Save-A-Lot after it had initially sought to turn the company into a standalone entity, and they were a big reason why current owner Onex Corp. recently canceled the chain’s westward expansion plans.

Kenneth McGrath, Save-A-Lot’s new CEO, certainly has his work cut out for him. As the former head of Lidl Ireland, he clearly knows how to operate limited assortment, private label heavy stores. Onex likely hired him, though, because he also knows how deliver on other Lidl values, like quality and freshness. Save-A-Lot has traditionally enjoyed steady traffic, but customers typically shy away from doing a full shop there because it doesn’t carry many national brands, and its private label products aren’t viewed as favorably as other retailers’.

McGrath may ultimately continue down the path forged by his predecessor, Eric Claus. Last year, Claus unveiled a five-point plan for revamping Save-A-Lot that included adding more national brands, enhancing fresh departments and creating a “treasure hunt” atmosphere in stores.

It remains to be seen what, exactly, McGrath’s plan will be. But with his former employer’s first U.S. openings imminent, and all signs pointing to an end to deflation this year, one thing’s for sure: He’ll have to move quickly.