MINNEAPOLIS -- Supervalu here expects a companywide rollout of its new retail pricing program to begin in late summer, after the completion of a one-year test in the Denver market. "Nothing is more critical to our customers than pricing. Thus, we are taking extreme care in the design, training and implementation efforts in support of this goal," stated Mike Wright, chairman, president and chief executive officer, in the wholesaler's annual report.
Supervalu's new pricing program, called Activity Based Sell, "determines the sell price of a product by using its net product price plus fees to recover our cost to serve the retailer and to earn an adequate profit margin," Wright explained. "As in any test our customers provided us with valuable feedback, and we are now in the last stages of refinement, with an eye toward a companywide rollout beginning in late summer." The rollout will begin in the company's Midwest region.
The ABS pricing test began at five Denver stores in June 1995 and was eventually expanded to the entire division, according to Wright. "I believe it is fair to describe the test results as extremely successful," Wright said in the report. He noted that ABS has resulted in fewer but fuller truckloads, enabling Supervalu to eliminate four tractors and eight trailers plus make significant reductions in Denver's transportation costs. Other highlights of the annual report included the following: · Supervalu plans to start shipping products early this summer from its first regional distribution center, in Anniston, Ala. Construction is slated to begin soon on a second regional facility in the Midwest, which will begin operations in the fall of 1997. · The company's East Coast regional facility will combine the use of existing warehouses in Pennsylvania and Maryland, while its Pacific Northwest facility also will use existing facilities.
· Supervalu expects to expand its category management program to several regions in the current fiscal year, after a test in the Denver market. The company's commitment to category management involves a training program for about 900 merchandising employees. · Though it continues to close underperforming corporate stores, Supervalu plans to add nearly 1.4 million square feet of retail space this year. The purpose of operating regional distribution centers is to improve logistics by optimizing product flow, reduce inventory levels, eliminate redundancy and add efficiency, Wright said in the report. The company's first regional facility, due to become fully operational shortly, will consolidate slow-moving groceries and all general merchandise and health and beauty care products from five Southeastern distribution centers. A second regional center -- and the largest of Supervalu's regional facilities -- will become operational in two phases, the report said, with general merchandise and health and beauty care in calendar 1997 and slow-moving groceries roughly a year later. That regional facility will be built in Oglesby, Ill., west of Chicago, and will serve 12 distribution centers and three Midwest marketing regions.