Supervalu Looks to Save Millions on Bags
It’s no longer a question of paper or plastic at Supervalu.
It’s strictly plastic at the chain’s stores unless customers bring their own
bags or specifically request paper. Double bagging is also out. What this all
comes down to is Supervalu looking at ways to cut costs — an estimated $6
million a year if it applies a little discipline at the checkout.
“We’re in a very competitive industry. Anything we can do to lower our
expenses will help us keep our prices as fair as possible,” Mike Siemienas,
a spokesperson for Supervalu, told The Wall Street Journal.
According
to the Journal, managers from Supervalu’s nine chains review
bagging figures on monthly conference calls. Cashiers and baggers in the Northwest
all “take a 41-question quiz on bagging.” The quiz has been made
available for use across the country.
Supervalu has taken a number of steps
under CEO Craig Herkert to improve its balance sheet and value proposition,
including closing stores (Shaw’s is probably the most high profile example),
selling the Bristol Farms chain, engaging in SKU rationalization and focusing
on opening more of its limited assortment Save-A-Lot stores. The company has
taken these actions while enduring 11 straight quarters of declining same-store
sales. Comp stores were down nearly five percent in the most recent quarter.
Seventy-five
percent of respondents to a RetailWire survey on Feb. 3
thought it was “somewhat” or “very unlikely” that Supervalu’s
turnaround efforts would gain traction over the next year.
Discussion Questions
Discussion Questions: What do you think of Supervalu’s plan to save costs on bags at the checkout? Is this approach common at retail?
Let’s see…we’re going to make money by inconveniencing consumers and by only offering bags that many cities around the country want to ban. I don’t see the logic in Supervalu’s thinking. How about focusing on product selection, customer service and differentiating the brand?
Cutting bag costs and the pressing need to generate new customers are confused soldiers in a retail conflict. Supervalu, just like many supermarkets, needs to reinvent itself and its stores. Sav-A-Lot is only a partial answer, Mr. Herkert. Want to have lunch?
Sounds like Supervalu is going to cost cut themselves right out of business. Grocery shopping is thankless and an increasingly expensive weekly task. All I really ask from the grocer is that I get in and out in relatively short order and that I can get my groceries from the car to my kitchen counter in one piece. If you have ever experienced a grocery bag explosion in your driveway, you’ll definitely think twice about returning to a market that almost ensures it happening again. I certainly would.
Supervalu will have to deal with possible bans on plastic bags that many communities are launching or considering. Also they will receive some bad publicity for only using a product that doesn’t biodegrade and is harder to recycle than paper. However, at the end of the day, not many customers are likely to switch over because of the bags so if there are enough savings it may make sense. Supervalu should definitely heavily promote bag recycling with initiatives, clearly marked bins at checkout, etc.
This made the local papers here in Chicago yesterday with a headline indicating Jewel’s new policy is to limit customers’ access to bags to save money. Talk about bad spin!
If Supervalu had rolled this out as a “green initiative” and focused on the reusable bags they have been selling for a year or two now (at least in Jewel) it would have flown right under the radar. But instead they wind up with a “chintzy curmudgeon” label in the press. Just another example of how poorly everything is going for them right now.
Washington DC took this a step further. To reduce the number of plastic bags floating in the Anacostia River, the city instituted a 5-cent bag tax. Customers griped at first, but now just store plastic bags in their trunk and re-use them at the store. The river is much cleaner and inconvenience is minimal. It can be done!
Could I be so far out of the loop? I can’t remember the last time someone asked if I wanted paper or plastic. I don’t even remember seeing a paper grocery sack. So I asked my wife, when was the last time you were asked if you wanted paper or plastic? She said, “Maybe 10-years ago. Maybe more?”
Obviously neither of us are going to places where this is an issue. But, there is a much better solution. Some retailers in the U.S. use it. It is universal throughout Europe. Provide plastic if the customer wants a bag, but charge a penny or two. Otherwise, they use their own bags. It cuts cost and is eco-friendly.
Well, if you are broke, I guess you will try anything to survive. I look at a local chain in Milwaukee called Sendiks. You should see the bags they GIVE you. They are nice and colorful. They are one of the primary things shown in their TV commercials. I’ve seen people use them as carry-ons on airplanes. A store should be proud of their bags, not eliminate them. I recall a few years ago at a Stew Leonard’s, they had people send in pictures of themselves all over the world with their Stew Leonard’s shopping bag. For a long time now I have been questioning some of Supervalu’s moves. At first others told me not to worry, the CEO came from Wal-Mart so he must know everything. I’m not so sure about that.
Looks like the accountants are running the show at Supervalu. Did anyone consider the customer in this decision? The marketing spin? The PR potential?
If the trend continues towards banning plastic bags, what will be their next move?
Interesting article on several levels. First one on my takeaways was that Supervalu was training its store associates how to properly bag an order. I saw that as an attempt at providing better customer service. The rules outlined in the article are the same ones I was trained on as a part-time grocery clerk at First National many years ago.
Second, we all know you cannot save your way to prosperity. That being said, it makes good economic sense to determine whether money is being wasted on bags and then taking steps to address the issue. Long term, neither paper nor plastic is the answer–reusable bags are.
Would you agree this is a very small step to gain this type of press? As Max said earlier, they are saving by inconveniencing their customers. Supervalu is not exactly the destination of choice for most shoppers. So, wouldn’t you think they could gain more profits by finding ways to draw rather than repel customers? Sorry Madam Spender of the family’s food dollar, we can’t double bag your wine and sodas because we are saving millions on bags. Right!
There is a 2-year-old bylaw in Toronto that forces retailers to sell, not give away, (10 cents a piece) bags to customers. The first month the bylaw went in effect, plastic bag demand dropped 75%. Customers have adjusted and are now using reusable cloth bags (which the retailers sell and make a profit on). Talk about a win-win situation. Just like there is no free lunch, there are no free bags. There is a (needless) economic and environmental cost to plastic bags. I hope other large North American municipalities join Toronto in passing similar laws.
Sustainability arguments aside, I prefer paper to plastic because at my local store, the baggers tend to put only one or two items per plastic bag. So on a weekly stock up trip, one ends up with several dozen bags whirling about.
My supermarket has solved the bagging problem by buying paper bags with poorly glued handles which invariably break leading all but the hardest core paper advocates (like me) to relent and convert to the hundreds of plastic bag options.
As to whether choice should be taken completely away–I don’t see it.
If you’re not making enough money, the way to improve performance isn’t to cut visible service offerings to customers who have grown attached to them. That’s a formula for losing customers, not saving money.
Some retailers–like Border’s–have made bags entirely optional. Does it save them some money? Sure. Does it discourage multiple book purchases on rainy days…probably.
The point here isn’t that a new bag policy can’t save money. Rather it’s that saving money that way is always accompanied by the scent of desperation.
It’s no wonder this organization continues to struggle–really struggle. It’s an old phrase, but it fits: “What were they thinking? Really, what WERE they thinking?
Sure, maybe it’s a good idea. Maybe, you work it under the radar through your organization. Certainly, you don’t go to the press and talk about it. It actually might well be a positive, but it in no way can be perceived that way in its current portrayal.
If we as a group thought they wouldn’t gain traction this year, what about next? With this type of tone-deafness, the outlook isn’t great for next year either.
What about the statement “cut our expenses and keep our prices as fair as possible”? Fair? Are they unfair now? Are you telling your customers you are charging unfair prices simply because you gave them a paper bag? Really? No. Maybe not. However, that jumped off the page when I read it. “Fair”?
If you think as a retailer that it’s the right thing to do–do it. If there is $6 million in it and you think this action is one leading to returning to positive comp-store sales, do it. There are certainly a lot of actions that can be taken, including this one, while enduring 11 straight quarters of declining sames store sales. Do I hear twelve? There is nothing in this action or the ones mentioned that makes customers swing the doors open. That’s the problem.
Save the $6 million. However, if they don’t start doing something that will swing the doors open, they might not be bagging at all.
A good idea for a Green Initiative (promote it), and an operational step to benefit baggers and consumers. Too often we walk out of stores with 20 items and 12 bags (train the baggers and let them know of the benefit). A financial plan of cost savings (discuss the benefit internally and the importance of taking cost out of the system) that has gone bad; this type of piece had no need to be in the press, unless it was for Green purposes.
There are still stores with baggers that routinely ask “paper or plastic?” Sunset Foods in the Chicago suburbs and the Dominick’s (Safeway) which are in close local competition to those Sunset stores do, too. But, with respect to milk or detergent jugs, I have noticed that they are likely to ask “do you need that in a bag?” and most shoppers say, “no.”
Frankly, I don’t think Supervalu’s bag experiment is all that bad a policy. I see more and more shoppers are taking reusable cloth bags to the checkout and regular Aldi customers have been reusing and filling their own plastic bags there forever. People in general are much more flexible and savvy about grocery bag ecology than they used to be. If Jewel’s baggers can safely add a few more items to each plastic bag and thereby use fewer, then good on them.
“It’s strictly plastic at the chain’s stores unless customers bring their own bags or specifically request paper”
So it’s “strictly” plastic … except when it isn’t; I agree with everyone else: a bad idea handled even worse. (And Bernice’s article segues neatly into this one, not only answering the “if” of not wanting to work in food service, but providing the “why” as well.)
I’m so with Ben Ball on this. Bad spin and unforced error.
Obviously, SV knows its customers well enough to make this decision. It only sounds risky to opinionated consultants, like me. No doubt, when asked, “would you rather save money on food and have plastic bags?”, the SV customer’s answer was, ‘you bet’. SV is a smart organization, it’s below us to think otherwise.
While Craig Herkert sounds like a stand up honest guy, he should remember that when Supervalu speaks, the customer is also listening. Tone deaf? Clueless?
Supervalu would be well served to change the experience and provide more value for its customers. You cannot cut your way to profitability. After 11 quarters of decline, the company should focus on finding ways to grow and technologies, like mobile self-shopping and checkout, can drive growth and cost reduction. Supervalu could reduce front-end labor costs by up to 15% while driving basket lift of 10%-16% through highly relevant, personalized offers. If they continue to cut, it’s going to be at the expense of the customer experience. And, that will have an even greater negative effect on loyalty and same-store declines.
Serve the customer less, give them less choice, and make the business more about cost-cutting and less about the delighting the customer. Not a great strategy for gaining a competitive edge; more like a strategy to right a sinking ship.
You can’t control your way to profitability! When is the leadership of this company going to realize that cost cutting only goes so far when it comes to remaining profitable? There comes a time when you must grow top-line sales. That is something this company has ignored for too long and the results speak for themselves. But then, when you have major retail decisions being made by accountants, lawyers and buyers instead of those who know retail; I guess this is what should be expected.