Michigan-based regional retailer and food distributor Spartan Stores is developing a “value store” format under the Valu Land banner as it looks to see off the challenge presented by discount retailers.

The company, which booked a decline in full-year net earnings last week, has indicated it will invest in the continued roll-out of its pilot Valu Land outlets throughout 2013.

Over the past year, Spartan has been “experimenting” with the format, president and CEO Dennis Eidson said. To date, the group has converted three outlets to the banner and opened one Valu Land store. In the coming year, the firm intends to open an additional five locations, Eidson added.

“While we are still very early in the development and testing of this store format, we are excited about the potential organic growth opportunity it could provide in certain existing markets and locations outside the state of Michigan. Additionally, we hope to leverage our learnings from this format to benefit our distribution customers,” Eidson commented.

Eidson said that the format was developed in response to increasing demand for value from consumers who have seen their finances squeezed by rising unemployment and price inflation.

“We didn’t have anything in the portfolio that appealed to the value conscious consumer like an Aldi, Save-A-Lot or in some degree a Dollar Store in that regard,” he said during a conference call with analysts.

However, Eidson insisted that Spartan’s Valu Land was differentiated from the hard discounters by its wider range – including national brands as well as the Spartan and Value Time brands – and greater focus on fresh produce and meat.

“We think we have differentiated it to be very, very appealing to that consumer who wants value but feels like she isn’t getting enough choices in the current planting,” Eidson told analysts.

Eidson insisted the expansion of the Valu Land format would not put it in greater competition with its wholesale customers, mostly independent retailers.

“This new store concept allows us to target an increasingly value conscious consumer by leveraging either our existing market or markets not currently served by our distribution customers or corporate retail,” Eidson said.