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MINNEAPOLIS — In an effort to increase the stickiness of Supervalu shoppers, Supervalu president and CEO Craig Herkert on Tuesday spoke of the company’s “hyper-local retailing” concept during a conference call with analysts.
Supervalu’s commitment to growing its Save-A-Lot discount banner and its participation in First Lady Michelle Obama’s Partnership for a Healthier America campaign were other significant programs Herkert believes will help differentiate the grocer enough to drive trips and increase consumer loyalty.
Herkert also noted that emphasizing merchandising that locals would find appealing also will help prevent the erosion of customers in markets experiencing a surge in overall retail growth.
For example, in the Chicago market, there has been a steady inflow of new competition from gourmet operators to deep discounters, Herkert noted — retail square footage has increased by 4.5% in the past year, representing more than 2 million additional square feet of shopping space. In that time, Supervalu’s retail square footage in that market under the Jewel-Osco banner has remained stable, Herkert said, exposing the grocer to market share losses.
In response, Supervalu is stepping up its investment in its Jewel-Osco banners, Herkert said, and empowering store directors at the ground level. “Our store directors at Jewel-Osco have … embraced hyper-local retailing and are focused on meeting the needs of the broad range of rich ethnicities for which Chicago is known,” Herkert said.
Across all banners, Supervalu has incorporated locally relevant offerings to endcaps and displays. “In Q1, our traditional retail store directors, supported by new tools and training, were given control of [more than] 25% of their display space,” Herkert said. “This increased to 50% earlier this month.”
Initial results borne from this empowerment are encouraging, he added. For example, in Herndon, Va., under its Shoppers banner, one store is leveraging local consumer feedback to adjust shelf allocations featuring a Middle Eastern flavor. “While accounting for only 7% of the local population, this segment [Asian customers, mostly of Indian descent] represents a meaningful opportunity to the store, and in the past had been largely overlooked,” Herkert said. The store team populated an additional 8 linear ft. of a set specifically targeting Middle Eastern flavors with more than 100 new products.
“The sales impact is incremental to the store’s overall top line, but more importantly, we are better meeting the needs of a fairly sizeable portion of the trade area, which can only help build traffic, basket size and customer loyalty,” he said.
Looking forward, another potential boon for Supervalu is its participation in the Partnership for a Healthier America, a campaign directed by First Lady Michelle Obama to provide better access to better-for-you grocery products in inner-city markets. “Last week in a ceremony at the White House … Supervalu committed to opening more than 250 stores [over the next five years], in addition to the 400 we already have, in or around neighborhoods with limited or no immediate access to nutritional foods,” Herkert said. “Our hard-discount format Save-A-Lot will allow us to meet this pledge by providing healthier options and create 6,000 new jobs in the process.”
In the coming fiscal year, Supervalu expects to grow its Save-A-Lot banner by a net 160 stores.