Supervalu Revamps Private Label Program

May 4, 2011

During a meeting with investors, Supervalu outlined its “strategic transformation initiative” to deliver profitable growth and improve competitive performance in the future, including private label program enhancement and accelerating Save-A-Lot unit growth.

Craig Herkert

The plan includes unifying all of Supervalu’s national-brand equivalents under a new single national private label called Essential Everyday, which it will roll out in phases. This initiative will reduce the company’s costs significantly through packaging and the ability to take a more national approach to advertising and promotions, the company said in a statement.

Supervalu also plans to expand its Shoppers Value entry-price-point private label and will be launching or relaunching 80 new items in the coming months. Executives also announced the addition of the Save-A-Lot Today, a new “opening-price-point” private label brand for its hard discount format, which will mostly feature products priced under $1.

The broader strategic plan, which is intended to “reverse sales declines at its traditional retail banners and get them back on the path to growth,” includes:

Developing and maintaining a portfolio of compelling private brand products that differentiate our retail outlets from our competition and provide more competitive value for customers;
Sharpening the traditional retail banners' value proposition through a fair everyday pricing plus promotion strategy;
Enhancing fresh offerings, which includes providing customers with more locally grown produce, introducing a new "Just Baked" program to ensure the availability of fresh-baked breads and rolls throughout the day, and improving deli department offerings with new products like grilled chicken;
Better matching store assortment and format to the needs of each neighborhood; and
Providing a more hassle-free experience both in-store and online.

"We are focused on acting as one company, working toward a common goal of delivering increased value to all of our customers and meeting their needs neighborhood by neighborhood," said CEO and president Craig Herkert. In private label sales alone, Herkert said Supervalu expects to deliver a 100 basis point annual improvement per year over the next three years.

Supervalu also said it plans to continue aggressively expanding Save-A-Lot, its hard-discount format, adding 160 new stores in fiscal 2012 with the ultimate goal of having 2,400 stores by 2015. Thirty percent of Save-A-Lot stores are company owned while 70 percent are licensee operated. “This multiple-ownership model supports the company's aggressive growth strategy, while helping it conserve capital,” executives said.

Other components of the plan include growing its wholesale distribution business through the addition of new value-added services to support its independent retailers while better leveraging the scale of the entire store network, and seeking new affiliations and expand its geographic reach into previously underserved markets.

SBD Views: While most of the announcements related to store brands deal with future plans yet to be executed and implemented, it's clear that store brands will be playing an expanded role in Supervalu's future. We'll be watching the execution and realization of these strategic plans with great interest. -- John Failla for Store Brands Decisions

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Keywords: private label portfolio management, private label brand unification

Comments (4) - Post a Comment

Makes sense - other retailers have had success carrying one brand across multiple banners. Better economies of scale and efficiencies which hopefully get passed on to the consumer. Don't care much for the name however. "Essentials Everyday" sounds like a value brand, not an NBE brand. Good luck convincing the customer otherwise.

J C at 1:46pm EDT - May 4, 2011

I tend to agree with J C regarding the name. Even if the packaging design follows others in the category, having a variety of products labeled Essential Everyday in your cupboard does present to me the image of a mother who is trying to do something special for her family,An Article in Supermarket News indicated that the launch would start in the "cereal and pasta aisles" and that the company "did “extensive testing” on the packaging and Essential Everyday name and found the products beat existing store brands in quality perception and overall appeal".Initial categories are interesting, as there are a number of quality suppliers, including Gilster and Ralcorp, so pricing should be competitive. They have not set their target very high, if they are only trying to beat their existing offerings, but maybe I am misreading what they have to say. They are on the right track and have a lot of work ahead of them. I wish them well.

John Stanhaus at 5:44pm EDT - May 4, 2011

The name, while testing well, can indeed be confusing.What happens to the Richfood label?Also Great A

Andy at 3:04pm EDT - May 9, 2011

The introduction of the name comes on the heals of Foodlion's "My Essentials," and looks to emulate the "Essential" line from Waitrose in the UK. Not very original, and unfortunately, I don't think this iteration resonates very well. We'll see how well they suport it.

Tim at 10:11am EDT - May 10, 2011

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