Supervalu Outlines Transformation Initiatives

Boosting its value proposition and private brands, growing support for its independent retailers and expanding its Save-A-Lot format are among the goals of Supervalu Inc.’s strategic plan to deliver more profitable growth.

The plan, which supports the company’s vision to become “America’s Neighborhood Grocer,” is focused on improving the competitive performance at the company's traditional retail grocery stores, and on growing its Save-A-Lot and independent retail businesses, Supervalu executives said at an investor meeting in Chicago this week. To achieve its vision, the company is investing in and deploying new tools and capabilities to support its diverse variety of owned and licensed formats and the many different independent grocers through which consumers are served daily.

“We are focused on acting as one company, working toward a common goal of delivering increased value to all of our customers and meeting their needs neighborhood by neighborhood,” said Craig Herkert, president and CEO of the Minneapolis-based grocer.

The company’s senior management team outlined key initiatives the company is undertaking to reverse sales declines at its traditional retail banners and get them back on the path to growth:

- Sharpening the traditional retail banners' value proposition through a fair everyday pricing plus promotion strategy.
- Enhancing fresh offerings, which includes providing customers with more locally grown produce, introducing a new “Just Baked” program to ensure the availability of fresh-baked breads and rolls throughout the day, and improving deli department offerings with new products like grilled chicken.
- Developing and maintaining a portfolio of compelling private brand products that differentiate its retail outlets from its competition and provide more competitive value for customers.
- Better matching store assortment and format to the needs of each neighborhood.
- Providing a more hassle-free experience, both in-store and online.

Herkert said the company expects to deliver a 100 basis point annual improvement in private brand sales per year over the next three years. As part of its plans, the company announced that it intends to move to a new single national-brand-equivalent private brand – Essential Everyday – to replace existing banner-branded products. Through Essential Everyday, which will roll out in phases, the company will be able to realize significant savings through packaging and taking a more national approach to advertising and promotions, the management team said.

The company also plans to expand its Shoppers Value entry price-point private brand line and will be launching or relaunching 80 new items in the coming months.

As previously reported at, Supervalu plans to continue to aggressively support the national expansion of Save-A-Lot, its hard-discount format. Those plans include growing Save-A-Lot by 160 new stores in fiscal 2012, keeping the company on track to reach its goal of building a network of more than 2,400 stores by 2015.

The Save-A-Lot portfolio includes a blend of 30 percent corporate-owned and 70 percent licensee-operated stores. This multiple-ownership model supports the company’s aggressive growth strategy, while helping it conserve capital.

Meanwhile, the company announced the addition of the Save-A-Lot Today brand to its private brand program. The new Save-A-Lot Today brand is an opening price point line with most products priced under $1 to help its value-focused customers stretch their dollars.

Supervalu also outlined its plans to grow its wholesale distribution business through continued development and deployment of new value added services to support its independent retailers, while at the same time better leveraging the scale of the entire Supervalu store network.

In addition, Supervalu continues to seek new affiliations and expand its geographic reach into previously underserved markets. The recently announced affiliation with C&K Grocers, a 62-store grocery retailer located in northern California and Oregon, is an example of the success of this strategy.

Supervalu Inc. operates 4,294 stores composed of 1,114 traditional retail stores, including 805 in-store pharmacies; 1,280 hard-discount stores, of which 899 are operated by licensee owners; and 1,900 independent stores serviced primarily by the company's traditional food distribution business.


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