Supervalu’s same-store sales dip as wholesale sees growth

EDEN PRAIRIE, Minn. — Same-store sales at SuperValu dropped 4.9% for the first quarter of 2018, but the company has a few irons in the fire that may help it bounce back — perhaps as soon as the second quarter.

Net sales in the first quarter were $4 billion, up 6.3% from the same quarter last year. Total net sales within the wholesale segment were even better, soaring 12.4%.

“The results generated this quarter by our wholesale business were outstanding and demonstrate our ability to deliver on our strategy and commitment toward growing this segment,” said president and CEO Mark Gross. “Additionally, we're thrilled that we closed on the acquisition of Unified Grocers shortly after the end of our first quarter, and we're now working together as one team to drive the business and integration efforts forward. We'll begin reporting results in our second fiscal quarter that include the Unified business.”

Despite the disappointing same-store sales numbers, the company’s customer retention rate has remained very high, and it has also been able to add new customers from its recent acquisitions. The Unified customers, according to Gross, have shown interest in SuperValu’s marketing and merchandising programs. They may also start to see SuperValu’s private brands, Wild Harvest — which Gross said performed strongly in Q1 — and Culinary Circle, on their store shelves. So may customers who shopped at grocery stores previously served by Central Grocers. Just one day after SuperValu reported its first-quarter results, the Chicago Tribune reported that the company was in the process of buying Central Grocers' Joliet distribution center for $61 million. Central Grocers operated as a wholesaler for more than 400 independent stores in the Chicago area, according to the report.

The company also is determining how it can best leverage the Market Centre business across its existing customer base.

“Market Centre is a dedicated operation that supplies some of the fastest growing categories in the industry, such as specialty and ethnic products. And we plan to move quickly to take advantage of the knowledge and experience Market Centre has developed around these products,” added Gross.

Of course, there is still the matter of the stabilizing the retail business by tackling soft traffic and boosting same-store sales. Part of the company’s focus, explained Gross, is on meal kits and grab-and-go options — a strategy that has been very successful at grocery retailers in Europe and particularly in the United Kingdom. No stranger to meal solutions, SuperValu has offered them for a long time, but Gross has realized now is the time to breathe new life into the line. Marketing the expanded offering as “quick-and-easy,” SuperValu will be appealing to the consumer need of balancing convenience with healthier food options.

“We'll have meal kits, heat-and-serve, grab-and-go versions — all geared to the level of preparation and precooking, or not, that best fits our customers' needs,” Gross said. Many of the recipes, he added, are developed in SuperValu’s test kitchens, refined in its retail stores and will now be made available in the company’s retail and wholesale operations. “In fact, quick-and-easy is a great example of a program developed and tested in our retail business that can then be rolled out to our wholesale customers,” he said.

Organics in the center store and fresh departments have the potential to increase traffic and sales. “Our data tells us that our retail banners have some good opportunities to further drive organic sales as a percent of the total store, and we're working to close this gap,” said Gross.

“Part of this opportunity also relates to private label organic products, where we continue to add additional SKUs to our Wild Harvest line. In this fiscal year, we plan to add more than 80 new Wild Harvest items, adding to a brand that currently has approximately 600 SKUs.”

Like many retailers, particularly Smart and Final, SuperValu has noted that retail is becoming more of an omnichannel business and that it has to be ready to serve consumers across several shopping experiences.

“This may be in a store, it maybe online with your order delivered to your home or it may be a combination, such as click-and-collect where part of the order is done online, and part likely perishable items, selected by the customer in the store,” added Gross.