Supervalu Dramatically Reduces SKUs

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April 27, 2010

To lower its inventory costs and free up shelf space for its less expensive and higher-margin store brands, Supervalu reduced SKUs by 20 percent across 10 major food categories, according to a Wall Street Journal report.

"The stuff we took out still positions us to be a leader in assortment and variety," Craig Herkert, CEO of Supervalu, told analysts during a fourth-quarter earnings call. "We were simply so over-assorted before."

Because the company’s product assortment was too large, often store level associates did not have ample room to place full cases of products on shelves, resulting in filled-to-the –brim storage rooms, Heckert said.

The company also exited 26 general merchandise categories such as fragrances and automotive accessories, said Herkert whose Supervalu holding company operates grocery chains such as Albertson’s, Jewel-Osco, ACME Markets and Shaw's.

Supervalu reported profit of $97 million for the quarter ended Feb. 27, compared with a loss of $201 million in the same prior-year quarter. Meanwhile same-store sales declined 6.8 percent and overall retail sales dropped 15 percent, some of which is attributed to store closures.

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