Supervalu Inc has suggested it is unfazed by competition from discounter Aldi in the US but will start growing its Save-a-Lot banner further in order to compete more effectively.
The CEO of the US retail group, Sam Duncan, today (30 April) said that Aldi was “very smart” and stayed true to their form as a discount retailer. He added: “We got away from it and they jumped ahead of us but now we’ve got to figure out how to start growing the company again. There’s plenty of room out there for us to grow the organisation.
“When you look at the map there is plenty of room now in the western part of the country for a lot of people, not just ourselves and Aldi.”
Last week the struggling US retailer booked an increase in net losses for 2012 as charges relating to its turnaround plan hit the bottom line. Save-a-lot same-store sales were down 3.3%.
Despite the fall in sales for the hard discount banner, Duncan told the Barclays Retail and Consumer Discretionary Conference there is a “terrific opportunity” for growth.
“We were trying to run the business like a regular supermarket operator instead of being a hard discount retailer, so we just got away from that,” he told analysts. “We are just going to get back to the basics in the organisation.
“I feel very good about the Save-a-Lot banner. It is a terrific opportunity for our company. If you look at a map of the US, it’s quite obvious there is a terrific opportunity for growth for that banner west of the Mississippi and we are going to focus on that.”
Duncan said new initiatitives include price changes and the introduction of meat-cutting equipment to replace pre-packaged meats.
“That’s going to help us tremendously. In the future I don’t care how we grow Save-a-Lot, either through licensees or corporate stores. I will take either gladly.”
In May 2011, Supervalu revealed details of a business transformation plan, set in place to help reverse three successive years of negative identical store sales and re-position the company for growth. Elements included improving price competitiveness, offering store managers more discretion over locally-sourced ranges and promotions and, more broadly, a decentralisation of its retail banners. Despite the plan, earlier this year Supervalu sold five of its chains to a consortium led by private-equity firm Cerberus Capital Management
Duncan emphasised to conference attendees today his confidence in why a decentralised banner works.
“It’s very obvious why a decentralised banner in our opinion works better and LLC proved that. The banners make all the decision on everything. Albertsons LLC proved that. I’m not going to go out and try and reinvent the wheel … all I want to do is duplicate what LLC came and did but they are going to be in control of everything.
“Some people have this misconception you lose buying power. We still have this incredible buying machine called our wholesale side and our banners pull from our wholesale distribution centres and what we’re seeing now is a significantly better working relationship between the retail banners and DCs. A decentralised banner works better no matter what.”