Supervalu Inc has suggested that it will focus on delivering a “fair everyday price” rather than relying on promotions to drive sales as positive consumer sentiment returns to the US.
The retailer yesterday (20 April) posted a 14.9% drop in fourth-quarter sales, a decline the group admitted was continuing in the current quarter.
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“We’re looking at the first part this year at a similar run-rate to where we ended last year,” Supervalu CEO Craig Herkert acknowledged on a conference call with analysts.
However, he insisted that the group anticipated an “improvement” as the year progresses and Supervalu predicted that for fiscal 2010/11 it would see sales fall by just 2%.
According to Herkert, Supervalu’s sales will benefit from the company’s newly-appointed senior leadership team and the strategies that they have begun to implement, including repositioning the group’s pricing strategy.
Herkert said that Supervalu, which runs banners including Albertsons and Save-a-Lot, has already noted early signs that consumer sentiment in the US is improving.
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By GlobalData“We’ve seen a significant shift, a very positive significant shift in consumer behaviour, to where she feels like she can buy those items everyday in our store and not simply wait for them to be on sale,” he revealed.
Supervalu management said that it will now look less at driving sales through promotional activity and instead focus its efforts on its overall “value” offering and delivering a “fair everyday price”.
“There is a value proposition our customers are looking for that includes local relevance and service… To be a leader in fresh foods it’s not just about price. Price is a component,” Herkert suggested. “We are focusing on the entire value proposition in our traditional retail stores.”
While Supervalu has begun to adjust its in-store pricing to reflect a “fair everyday price”, the company has also focused on driving health and wellness innovation and – “most importantly” – private brands, Herkert revealed.
Although Supervalu suggested that consumer sentiment is returning, Herkert also predicted that consumers would continue to buy own-brand products over branded alternatives as the economy recovers.
“I think it’s a new normal. I think consumers changed their habits and many consumers have learned that they liked private brands. And we want to be a great place for them to come and buy our private brand.”
