New Supervalu Store Brand to Save Money, Up Sales
Supervalu, Inc., is introducing a new nationwide store brand that will consolidate and replace existing store brands at its various chains across the country.
The Eden Prairie-based grocer said that the move to the new brand-called Essential Everyday-will help it save on packaging costs and enable it to take a national approach to advertising and promotions.
On Tuesday, Supervalu President and CEO Craig Herkert told investors that the new store brand is expected to increase store-brand sales by 1 percent over each of the next three years.
Company spokesman Mike Siemienas said Wednesday that the packaging-related cost savings could help lower prices, adding: “We'll be looking to pass the savings on to the customers.”
He said that Supervalu now sells products under the brand names of several of its supermarket chains-including Cub Foods, Jewel, Albertsons, and Acme. In February, Supervalu also debuted a new private-brand beer.
The roll out of the new food product brand will occur in phases over the current fiscal year ending in February 2011 and the following fiscal year, with the first phase scheduled for completion in late June. Breakfast items-including cereal, granola, and oatmeal-along with pasta and pasta sauces will be among the first items sold under the new label.
Siemienas said that Supervalu performed “significant testing” on the new packaging, and it was well received by consumers.
Product pricing is based on geography, he said, and that will continue to be the case after the new private-label packaging is introduced.
In addition to announcing plans to introduce the new store brand, Supervalu also said Tuesday that it plans to expand its Save-A-Lot chain with the introduction of 160 new stores in fiscal 2012. The chain now has 1,179 stores, but Supervalu aims to have a 2,400-store network by 2015. Save-A-Lot stores are primarily located in the Midwest, east of the Mississippi River, along the eastern seaboard from Maine to Florida, and in Texas. Approximately 70 percent of the stores are operated by licensees, and the remaining 30 percent are corporate-owned.
Supervalu operates a network of about 4,280 stores. It is Minnesota's fourth-largest public company based on revenue, which totaled $40.6 billion during the fiscal year that ended in February 2010. Revenue for the fiscal year that ended in February 2011 totaled $37.5 billion.
Supervalu has struggled in recent years amid tightened consumer spending, and its same-store sales have declined for the past three fiscal years. In January, on news of a weak third quarter, the company's stock closed down 11.6 percent at $7.59-the lowest level since 1984. On Wednesday, Supervalu stock closed down about 3 percent at $10.45.
Earlier this year, the company announced plans to close 20 unprofitable stores within the fiscal year that ended in February in order to “eliminate negative operating costs for a healthier start to the new year.” The company also offered some corporate and office employees a chance to take unpaid time off, with managers' approval, through the end of the previous fiscal year.