Supervalu Sees Progress at PL-dominated Save-A-Lot

January 17, 2011
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Supervalu continues to expand its Save-A-Lot banner, where private label products are a major feature, the company’s CEO told analysts in a recent conference call.
“During the quarter, we opened 41 new stores, bringing our total to 79 stores for the year, which keeps us on track to realize our goal of adding 100 new stores by the year end,” said Supervalu President and CEO Craig Herkert.
“For those who have not visited a Save-A-Lot store, I want to be clear about what this format is. Save-A-Lot is a limited assortment food store that carries about 1,800 SKUs including grocery products, fresh produce, meat, frozen foods, and dairy. Over 60 percent of our sales from this format come from private label products that are priced to save our customers up to 40 percent compared to traditional grocery retail prices. A family can do a full shop at Save-A-Lot, which is a very different experience from a convenience or a dollar-type store,” Herkert said.

Herkert characterized sales momentum at Save-A-Lot stores over the past few months as good.

 “We believe the increased focus on sharpening prices, improving in-store merchandising, and the customers’ experience along with more aggressive marketing programs have been impactful. In September, we introduced a network-wide media campaign and we also started circulating mid-month mailers across our corporate network in November. This latter strategy allows us to modify merchandising and emphasize more value-oriented products during the back half of the month when many of our customers are most financially vulnerable,” he said.
Speaking of Supervalu and private label more generally, Herkert says, “We’ve got a great private label team here, and I mentioned that since I’ve arrived we’ve grown private label penetration by over 200 basis points in our traditional banners. You will continue to see us do some really great things in private brands, both in our main tier and our value tier. As customers need to find value products, we want to be that retailer where they can find value products or branded products. There are going to be price increases, but we plan on making sure that our customers have a range of offerings on the shelf to suit her needs, depending both on where they are or what time of the month it is, and how they need to complete their shopping trip.”

For its FY 2010 third quarter, Supervalu announced disappointing results, including net sales of $8.7 billion, down 5.4 percent from the same period last year. Less-than-expected earnings results were primarily pinned to promotion investments that failed to deliver returns.


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