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Looking ahead, Supervalu emphasizes ‘hyper-local retailing’

BY Michael Johnsen

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.

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Supervalu’s Q1 net sales drop, chain focuses on ‘8 Plays to Win’ strategy

BY Michael Johnsen

MINNEAPOLIS — Supervalu on Tuesday reported first-quarter fiscal 2012 net sales of $11.1 billion (down 3.7% versus last year) and net earnings of $74 million (up 10.4%), or 35 cents per diluted share. Posted net earnings beat the analyst consensus of 33 cents per diluted share.

“First-quarter results reflect the progress we are making on our ‘8 Plays to Win’ strategy, and we remain on track to deliver our fiscal 2012 guidance,” Supervalu CEO and president Craig Herkert said. “A hyper-local focus [is being implemented] to help us meet the needs of today’s consumers, while reducing shrink and improving our operations.”

Those “8 Plays to Win” strategies include simplifying operations and logistics to make it easier for Supervalu to operate as one company; improving the shopper experience through more-consistent value pricing; a focus on fresh, localized merchandising and hassle-free shopping; and committing to the growth of the Save-A-Lot banner and the number of independents utilizing Supervalu’s supply chain services.

“Bottom line here is that results were better than low expectations, especially after Safeway’s disappointing quarter,” Credit Suisse research analyst Ed Kelly said prior to Supervalu’s conference call held this morning. "That being said, Supervalu’s fundamentals remain extremely challenging. … Cost control is encouraging and saving the company from much weaker bottom-line results, but Supervalu can’t cost-cut its way to prosperity.”

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Economic downturn took greatest toll on Hispanics’ household wealth, research finds

BY Antoinette Alexander

NEW YORK — The bursting of the housing market bubble and the recession that followed took a greater toll on the wealth of minorities than whites, especially Hispanics, whose median household wealth plunged 66% from 2005 to 2009, according to a Pew Research Center analysis of newly available government data from 2009.

The median household wealth among Hispanics fell from $18,359 in 2005 to $6,325 in 2009. The percentage drop — 66% — was the largest among all racial and ethnic groups, according to the new report released Tuesday by the Pew Research Center’s Social and Demographic Trends project. During the same period, median household wealth declined 53% among black households and 16% among white households.

As a result of these declines, the typical black household had $5,677 in wealth (assets minus debts) in 2009; the typical Hispanic household had $6,325 in wealth; and the typical white household had $113,149, according to the data.

These lopsided wealth ratios are the largest in the quarter century since the government first published such data, according to Pew Research, and roughly twice the size of the ratios that had prevailed between these three groups for the two decades prior to the Great Recession.

The Pew Research report, which provides the first look at how the Great Recession impacted household wealth, found that plummeting house values were the principal cause of the erosion in wealth among all groups. However, because Hispanics derived nearly two-thirds of their net worth in 2005 from home equity and a disproportionate share reside in states that were in the vanguard of the housing meltdown, Hispanics were hit hardest by the housing market downturn.

Among the report’s other key findings:

  • About one-third of Hispanic (31%) and black (35%) households had zero or negative net worth in 2009, compared with 15% of white households. In 2005, the comparable shares had been 23% for Hispanics, 29% for blacks and 11% for whites;

  • About one-quarter of all Hispanic (24%) and black (24%) households in 2009 had no assets other than a vehicle, compared with 6% of white households. These percentages are little changed from 2005; and

  • During the period under study, wealth disparities also increased within the Hispanic community. The top 10% of Hispanic households saw their share of all Hispanic household wealth rise from 56% in 2005 to 72% in 2009.

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