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Supervalu CEO Sam Duncan talked with analysts this week about the success the company’s flagship private label line has shown, then took time to discuss a major opportunity for the company’s remaining retail banners – fresh foods.
Duncan said that Essential Everyday products continue to roll into stores, with about 350 new items in the line, and that they have been well-received.
“The other item I would like to comment on related to our independent business is the continued success we are seeing from our essential everyday line,” he told analysts on a conference call, according to transcripts from Seeking Alpha. “Since we launched this mega brand, 95 percent of our private label customers helped successfully transitioned to it and now have over 2,500 unique SKUs. … The feedback I have received from our retailers has been very positive.”
Duncan talked about two new hires at Save-A-Lot, Mark Van Buskirk and Steve Park, whom Duncan worked with at Fred Meyer. Van Buskirk is the executive vice president of sales and marketing, while Park is a senior vice president. Together with Save-A-Lot CEO Ritchie Casteel, Duncan said the group would immediately work on improving the deli and produce departments at Cub Foods, Farm Fresh, Hornbachers, Shoppers and Shop N Save.
“Our banners will be committed to winning on the fresh side of the store,” Duncan said, according to the Seeking Alpha transcripts. “By implementing a broader set of standards around operations and product specifications I believe we can better differentiate ourselves in these departments.”
Duncan said that as he and the review team looked at the retail banners before the sale to Cerberus, the biggest opportunity for profit growth was in the perishables departments.
“The amount of business that each one of those departments is doing compared to a more normal company is very low,” Duncan said. “And we are working to fix that. There is significant opportunity in these retail banners to grow the perishable business, especially meat and produce. And one of our banners, for example, we got no more than 36 feet of fresh meat case, we should have a minimum of 52 feet.
“In our produce profits departments we have small linear feet with multi-deck cases by that cases, which is the wrong way to go. We need to expand as much 20 feet or more in our produce department strictly on the wave rack, and that's what's going on to drive the customer into a store. So our perishable department is our biggest opportunity, and that's why we brought in Mark and Steve. And that’s what will drive the comp increases.”
But simply adding space or products is not the answer, he said. Changes within the department needed to be made, as well.
“There are simple things that were not in place that need to be in place, like standards in perishable departments,” he said, according to the Seeking Alpha transcripts. “Now what do I mean by standards? Standards such as what time we want departments ready for the customer, which needs to be 8, 9 o'clock in the morning. (I) went out and doing due diligence I was finding departments, produce, meat, bakery is not ready until 1, 2, 3 in the afternoon. You can’t have that.
“And also buying specs, what type of buying specs do you have in produce, the buying specs need to be and will be improved here in produce.”
Changing the standards and adding to the departments will pay dividends, he said.
“The fresh side of the business is where we have the most opportunities,” Duncan said. “It’s going to generate a lot of added extra profit in our company. We are going to have to do some things like add footage to meat cases and wet racks and produce what we need, because we just don’t have the footage there. But the opportunities are definitely there for us to grab on the retail banners.
“… That’s how Mark and Steve and I operated together at Fred Meyer. We know how to run perishable departments, and we know the standards to put in place, and the buying specs, and we are going to do that. We are not going to do it overnight. It’s going to take some time, but we are on this. It’s going to be a very big topic of ours and we are pushing hard on it, it’s going to take some time but we will get it fix.”