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Supervalu Thinks Shoppers Will Save-A-Lot

By Jim Carper

Shoppers seeking value are buoying sales at Supervalu's price-impact chains.

According to Supervalu ceo Jeffrey Noddle, the company's Shoppers Food & Pharmacy, Cub Foods, Shop 'n Save and Save-A-Lot chains "tend to be well positioned in the current economy." Speaking to investors during an October conference call, Noddle said that the company's Save-A-Lot chain has "perhaps one of the best positions of any food retailer to serve economically distressed consumers.

"As I look forward right now, I don't see anything that says we shouldn't have a great few years ahead of us in Save-A-Lot," Noddle said later in the conference call.

Despite the potential for growth, Save-A-Lot's store count actually declined by two corporate-owned stores (to 317) and two licensed stores (to 863) in the second quarter of fiscal 2009 (ended Sept. 6).

In other activity discussed during the conference call, Supervalu followed through with plans (see "Supervalu Cooks Up Another Private Label" in Related Articles) to launch its first direct-marketing program based on data gleaned from frequent-shopper cards. "These customer-specific offers were mailed out to more than two million households featuring more than 23 million relevant offers to customers shopping our Acme, Albertsons and Jewel-Osco banners," Noddle explained.

One example is a Jewel-Osco mailer that carried coupons for Kimberly-Clark products, an incentive offer ($5 coupon with $20 purchase of Kleenex, Cottonelle, Scott, Kotex, Huggies or other brands) and a certificate for 40 bonus Box Tops for Education with a $20 purchase of select SKUs. (Kimberly-Clark is a partner of the General Mills program.)

Speaking about Supervalu's private-label business, Noddle reiterated the company's expectation to reach its goal of 17% penetration by the end of fiscal 2009 -- "four months ahead of our original expectation." He acknowledged that, as sales of lower-priced private label products increase, identical-store sales might decrease in the short term. But increased penetration means stronger customer loyalty and higher gross margins in the long term, he said.

Elsewhere, Supervalu's "Good Things Are Just Around the Corner" national branding campaign has launched at various chains with targeted executions. It is playing out, for example, as "Cub, Tasty Prices Are Just Around the Corner," "Holiday Traditions Are Just Around the Corner at Jewel," and "Food Lovers Food is Just Around the Corner at Albertsons."

Noddle also mentioned two noteworthy Jewel-Osco openings in Chicago. The first is Urban Fresh by Jewel, a small-format (16,000 square feet) concept focusing on prepared meal solutions, fresh produce (including organics), fresh meats and seafood, and offering basic grocery items. (Noddle said the inner-city location is the chain's "highest-volume store.")

The other is an environmentally friendly Jewel-Osco built with such features as recycled building materials, energy-efficient HVAC systems and a roof with live vegetation, which reduces heating/cooling costs. Jewel-Osco is seeking Leadership in Energy and Environmental Design certification for the building. (A Cub Foods store that opened in St. Paul, MN, on Oct. 31, is also seeking the designation.)

In other news, Supervalu last month signed on as a national supporter for the American Heart Association's Go Red for Women campaign through 2011. Beginning next year, stores will hold events and create displays showcasing heart-healthy products.

Supervalu's willingness to work with national brand marketers (something Noddle discussed in a conference call earlier in 2008) was evident in several recent campaigns conducted with H. J. Heinz:

  • Shaw's and Heinz co-hosted a month-long "All About The Family" sweeps awarding five grand-prize $1,000 gift cards to Toys "R" Us. Loyalty cardholders were entered automatically when they bought five eligible SKUs in a single transaction from Oct. 3-30. Secondary prizes were five $500 Toys "R" Us gift cards and 10 $100 gift cards.
     
  • Acme delivered a free Ore-Ida SKU with purchase of three Heinz products.
     
  • Jewel-Osco dangled $5 in instant savings with a $15 purchase of eligible items.

Among other recent chain-specific activity at Jewel-Osco:

  • The chain is giving away one 2009 Chevy automobile each week in a "Preferred Card's 16th Birthday" sweeps from Oct. 19 to Nov. 22. Cardholders are automatically entered with any purchase of $25. Secondary prizes are five $1,000 store gift cards and five $500 cards.
     
  • Tea maker R.C. Bigelow awards a grand-prize fortwo Smart Car from Mercedes-Benz in a sweeps running through Dec. 10. Tearpad entry forms are found on dedicated shippers.
     
  • The chain partnered with a Chicago-area Bonneville International radio station for a "Strike a Pose" contest awarding tickets to a Madonna concert in Las Vegas. Entrants submitted digital photos online from Sept. 29 to Oct. 26; judges selected the grand-prize winner.
     
  • The Prescription Plus rewards program, which offers loyalty cardholders a 10% discount on one future grocery receipt after filling five prescriptions, was extended through Jan. 31, 2009.

Elsewhere at Supervalu:

  • Acme supported a "Guitar Hero" sweeps from Kellogg awarding a 37-inch flat-screen TV, video-game console and Guitar Hero World Tour game package. Loyalty cardholders were automatically entered when they bought four Kellogg's SKUs in a single transaction from Oct. 17-23. The sweeps was promoted in the chain's October Big Book, a monthly publication offering savings, contests and coupons. Elsewhere, Acme re-introduced its online shopping program, which lets consumers schedule deliveries or pick up their orders at stores. Sister chain Albertsons made a similar announcement.
  • Cub Foods tied into the DVD release of Marvel Studios' Iron Man by dangling five free items -- Georgia-Pacific's Dixie plates and paper napkins, Kimberly-Clark's Kleenex tissue, Dr Pepper Snapple Group's 7UP and American Pop Corn Co.'s Jolly Time popcorn -- with purchase.
     
  • Farm Fresh conducted a sweeps awarding gasoline for a year (via 52 gift cards for 10 gallons each) to 10 winners. Shoppers completed entry forms printed with receipts. The 13 stores with fuel centers awarded one $50 gift card in a corresponding weekly sweeps from Sept. 3 to Nov. 8. (The chain encompasses 45 supermarkets in Virginia and one in North Carolina.)

Supervalu, Eden Prairie, MN, reported sales of $10.2 billion in second-quarter 2009 (ended Sept. 6), flat compared with the previous year. Net food sales were likewise flat at $8.0 billion, while comparable-store sales fell 1.3%. As of Sept. 6, the company had 2,500 owned and licensed stores, 900 in-store pharmacies and 130 fuel centers.

Published: November 2008

Source: In-Store Marketing Institute

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