Cub Foods Celebrates 40 Years in Business
When Cub Foods opened its first store 40 years ago, it was short on frills and big on savings for consumers in Fridley, Minn.
Cashiers at the 27,000 square-foot store used 10-key adding machines to tally the purchases of consumers who used grease pencils to copy the cost of products marked on store shelves. Cub, which stands for “Consumers United for Buying,” focused on delivering low prices every day to its shoppers by buying in volume.
The original store was successful and within two years the founders, including brothers Jack and Charlie Hooley, Culver “Cub” Davis and Bob Thueson, opened a second location in Brooklyn Park. At the time, the store boasted the largest frozen food department of any grocery store in the Twin Cities.
Today, as part of Supervalu, Cub maintains its focus on meeting the needs of its customers at its 76 locations.
“Consumers have continued to embrace the store’s commitment to high-quality goods at low prices, and a diverse range of communities welcomed the addition of a warehouse grocer,” said Brian Huff, president, Cub Foods, in a company press release.
“Over the years, we’ve listened carefully to consumers,” he said. “The marketplace is always changing and so are customers’ tastes. We strive to stay attuned to those developments and satisfy our increasingly diverse customer base.”
Discussion Questions: Was Cub Foods a revolutionary concept, as some have suggested, in its early years? What is your assessment of the chain’s place in grocery retailing today?
Cub was a revolutionary concept when it opened in competition with more conventional supermarkets in the late 60s and 70s.
Cub offered lower prices with many “frills” eliminated. Prices were designated by customer-applied greased pencil markings, self-bagging was introduced, etc. Later with the logistic support of Supervalu, Cub captured the dominated share of the Twin Cities market, which it still firmly holds today.
In the late 80s and 90s the retail grocery industry changed led by Wal-Mart who promoted its low-price philosophy and larger one-stop shopping stores. This not only arrested the growth and dynamics of the independent grocer but it created potent new retail competition for Cub, which impacted on Cub’s growth outside the Twin Cities.
Cub now has the opportunity to re-create itself in an unique, new and contemporary paradigm in those markets where it retreated, as identified above by David Livingston. And the $64,000 question is: Is Cub Foods today up to the innovative methodology it initiated in the late 60s and 70s under Jack Hooley and his pioneer team? Time will answer that question.
I remember when Cub Foods first opened. Boy, could they move merchandise! During promotional periods, Cub could move as much with 4 stores as the rest of the Twin Cities market.
Cub Foods was the club store of their time. Was Cub revolutionary? Maybe…not by itself, but it broke the traditional mold and led other retailers to look for other than traditional segments. What followed Cub? Aldi, Basics, Warehouse Clubs and Walmart. But it also opened the minds of retailers to look at the consumer more closely, the result of which are the Wegman’s, Whole Foods and Trader Joe’s.
Every retailer, food or otherwise, should follow what Brian Huff’s says, “Over the years, we’ve listened carefully to consumers. The marketplace is always changing and so are customers’ tastes. We strive to stay attuned to those developments and satisfy our increasingly diverse customer base.”
Cub started it’s tremendous sales growth in the early eighties. It had large stores in a market dominated by small stores and independents. Cub was able to achieve price dominance by forward buying and warehousing at the store. The small competitive stores had limited space to keep their forward buy. Cub decimated chains such as Country Club, Penney’s, Red Owl, Applebaum’s and many independent SuperValu’s.
When they entered cities such as Denver and Indianapolis, they were up against large chains who could forward buy and warehouse in a warehouse, not expensive retail space. Cub lost their cost advantage and you know the rest of the story.
In the Twin Cities, Cub has protected its market share with an aggressive building program and continued innovation.
Cub is and has always been a great blend of value and service. For the record, Chicago and several other Midwest markets mentioned above lost their Cubs when the parent SuperValu purchased Jewel. It was required for the Jewel deal to be approved by regulators. SuperValu has done a nice job with Jewel and it is thriving, but I (and many others) shopped and miss Cub. SuperValu’s experience and knowledge gained in the Chicago market foretold their success with Jewel. Safeway’s purchase of Dominick’s in the same market did not have this experiential benefit and Dominick’s is still struggling with customer acceptance after several years.
Today, Cub Foods enjoys a following as strong as other concept stores such as Whole Foods and Trader Joe’s. Its concept was not only on the leading edge but its long term strategy was solid, as we can see in the present. Cub still deploys its mission in a very solid and successful brand-loyal way.
Cub is one of those chains that enjoy deep customer loyalty. People who shop Cub have been doing so for years and they really do capitalize on the word of mouth network. By offering very competitive price points and low frills (I can’t say no frills because Cub’s layouts seem to be moving upscale), they are able to capture and retain customers based on that value proposition. Customers who shop Cub, truly love Cub.
In the Twin Cities, Cub still enjoys a very commanding market share and high level of loyalty. But in other markets such as Indianapolis, Columbus, South Bend, Kalamazoo, LaCrosse, Appleton, Denver, Chicago, and Milwaukee, they seem to have found excuses to pack up and leave. Over the past decade, we have seen Cub fold in one market after another. During the 70s and 80s, Cub was changing the industry. Then in the 90s with the onslaught of Meijer and Walmart Supercenters, we saw Cub start packing it in. Now the only major market where Cub has a dominant market share is the Twin Cities where they enjoy having the home court advantage. Here they still have a strong market share lead but it is slowly eroding as Walmart Supercenter, Super Target, and Aldi continue to add more square footage.
55 of Cub’s 75 stores are in Minneapolis/St. Paul. Proof that high market share in a concentrated area is worthwhile, and expansion often isn’t, unless high market share is also achieved in other concentrated geographies. Many more retail chains have gone broke by expanding than by “staying home.”
Cub is a fascinating study on the retail life cycle. They opened as a no-frills concept that took manufacturers’ ad monies, billbacks, etc, into the cost of goods to create a below market retail price, which was ground breaking at that time. Their top selling items in that era were the below cost National Brand SKUs (Do you remember 79 cent Miracle Whip?) and their two entire aisles of black and white generics.
Their store traffic was phenomenal as consumers flocked to get these low prices in the poor economic times of the early 80s. But as Cub grew, the team that worked and created this successful format succumbed to Supervalu’s wholesale influence and greed over short term profits. Eventually Cub became a large conventional store much like its competitors, offering a high low strategy instead of the EDLP that made them so successful.
Proof of the original concept is still alive, but it is not in the Twin Cities where its competitors are other Supervalu-supplied stores. It’s in the Great Northwest, based in Salem/Woodburn, OR. They bought into the original Cub Franchise and kept the basic strategy alive. They ended their relationship with Supervalu and renamed themselves for the states of Washington, Idaho, Nevada, California and Washington (Winco).
Somewhere in this great land there are ex-Cub people who still wonder, what if? And their question can be answered by asking Winco’s competitors.