Supervalu knows it has a problem. Too many consumers are choosing to shop at stores other than those it owns.
According to a Star Tribune article, the company has pegged its recent un-Supervalu-like performance on outdated stores. The result is that the company has budgeted $1.2 billion to fast-track remodels and new unit openings to make it more relevant to shoppers currently in its stores and those going off to shop at the competition.
"We want the food to pop," said Duncan MacNaughton, executive vice president of merchandising and marketing for Supervalu. "We want the store to disappear."
Supervalu, according to the Star Tribune report, has looked to census information, sales/loyalty card data, consumer research and shopping behavior studies to help it determine the right products and store layouts for the markets it serves.
Supervalu's primary customers are women with children between the ages of 25 and 54. According to the paper, Supervalu classifies its shoppers into seven groups: "the convenience shopper, the luxury shopper who looks for gourmet products, the cooks, the healthy shopper, the aspiring shopper who wants to cook but doesn't know how, the deal-seekers and the one-stop shopper who does everything all at once."
With so many types of customers, it seems to make sense that Supervalu operates a variety of store formats (22 banners total), from upscale natural foods/organics stores to combo food/drug units and a limited assortment price impact concept.
The company is nearly done with the construction of a test store near its headquarters in Eden Prairie, Minn., where it will try out variations in floor plan layouts, interior design/lighting, merchandising and store brand products that may one day be rolled out to stores across the company.
One of the changes taking place at Supervalu is with its Cub format. The company is looking to move from its warehouse format to something more inviting. As others have done, Supervalu is placing a greater emphasis on perishables. The company is also looking to use its butchers and others more effectively to encourage interaction with shoppers.
"You romance the story of where the product came from a bit," said Mr. MacNaughton. "People have this desire to engage with food."
Cub customers are also seeking convenience and Chuck Lynch, vice president of operations at the chain, believes the company delivers in this area. "If you want to just come in and grab something and get out, we're not too big a store to do that," he said.
Supervalu is focused on taking chances to better serve its customers even though the company expects that not all its experiments will work out that well.
"It's OK to make mistakes," Mr. Lynch told the Star Tribune. "If we had home runs every time we're probably not trying hard enough."
Discussion Questions: Is Supervalu unique in its need to reinvent its stores? What do you see as the challenges facing the company and where do you see opportunities for success? Are there any particular Supervalu formats/banners that you are especially high (or not) on?