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Supervalu to continue price investments

Supervalu plans to continue making price investments in its Save-A-Lot stores to get closer to Aldi pricing, Bruce H. Besanko, EVP and CFO, told investors Wednesday.

“We are typically [priced] well below Walmart, and we are close in terms of Aldi,” he said at the Oppenheimer Consumer Conference in Boston.

“We’ve invested in price to be more competitive with Aldi and to distance ourselves ever further from Walmart, [including] two tranches of price investments over the course of fiscal 2014 that we felt were successful and that generated the kinds of returns we wanted, and we’re going to make additional price investments this year if necessary.” Besanko said

Minneapolis-baed Supervalu is also testing various approaches to price investments at its corporate supermarkets, he noted.

“The management team is prudent, and when they have an hypothesis, they typically test it, and when the test is favorable, they’ll roll it out. But if it doesn’t work on the rollout, then they’ll draw it back. And I think there is going to be more price investment over time.”

In terms of remodeling corporate stores, Supervalu’s efforts have sometimes been confounded by competition, he said, adding he wasn’t prepared to give too many specifics.

“Obviously you need a little bit of time to see how things are working, but not every [remodel] has been a home-run so far because of confounding variables in a couple of cases that weren’t in the pro forma, as when a competitor comes in and disrupts the pro forma.

“Generally the management team is pleased with the remodels, but I don’t think we’ve had enough time and runway yet on these remodels, [though] at some point I think we need to be a little more transparent. So over time we’ll begin to share a little more when we feel like we’ve got enough results to really be indicative of the return.”

Remodels include resetting stores “to be sure we have the proper amount of merchandise in a particular area,” with pet and baby foods being expanded “because we were under-serving our customers,” he said. The wholesaler is also “cleaning up” fresh areas at some corporate stores, merchandising produce “more robustly” and adding sushi and fresh-cut items, Besanko noted.

Source: supermarketnews.com

Publication date: 6/30/2014


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