BrainTrust Query: Supervalu – Can it grow on multiple fronts?
note: Gene Hoffman was chairman and president of Supervalu Wholesale Foods
Companies for a decade, following his tenure as president of The Kroger Co.
Mr. Hoffman looks back to that era as the company’s “halcyon days.” He
writes, “Jack Crocker was our insightful and inspirational leader back
then and I was head of all operations save for its two low impact subs back
then, Shopko and County Seat.”
Supervalu, which once had a laser-like focus
on its business model with a “total
commitment to serving customers more effectively than anyone else could serve
them” seems unsure of what it is today. Is its current strategy to be
one of the largest and most successful wide assortment supermarket chains or
to be one of the largest limited assortment store chains, or both?
In the mid-70s
to the mid-80s, Supervalu was America’s largest food wholesaler, a multi-billion
dollar corporation and the envy of the food industry. Its sales tripled and
net profits compounded at 20 percent annually, resulting in three stock splits.
Today, Supervalu is a much larger, more diversified, debt-burdened, low-achieving
conglomerate — a food wholesaler, operator of numerous regional supermarket
chains and an expanding limited assortment chain, Save-A-Lot.
At an investor
event on May 3rd, after two years under the leadership of its current CEO,
Craig Herkert, Supervalu detailed its strategic plan to deliver profitable
growth in the future for shareholders. It also put out a press release that
reads like Retailing 101.
It would have to “improve sales growth at the company’s traditional
retail banners,” Supervalu said. It would also need to “improve promotion
of our value pricing, enhance such fresh offerings as locally grown produce,
develop and maintain a compelling collection of private brands, adjust store
assortments and format based on the needs of each neighborhood, and improve
the customer experience in stores and online.”
In addition, the release
stated that one of Supervalu’s long-term goals is the natural expansion of
its Save-A-Lot banner and that it intends to grow by 160 new stores in fiscal
2012, keeping the company on track to have 2,400 stores by 2015. Thus, while struggling
for sales and to retain share of market, Supervalu’s intent still seems to
be to follow a multi-front growth strategy.
Discussion Questions: What must Supervalu do to grow successfully between now and 2015? Is its multi-front growth strategy sound?