Viewpoints

Supervalu Needs Workers’ Support to Succeed

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Supervalu gave Wall Street some positive news last week when the company reported fourth-quarter results and a better-than-expected outlook for the year.

After the stock had plunged about 35% in 2012 to reach new all-time lows, the diversified, Minneapolis-based wholesaler and retailer regained some ground when it said net income (excluding a goodwill write-down) was only down about 15% compared with last year’s fourth quarter, and identical-store sales were projected to be negative only 1% or 2% for the current year.

“The latest results offer validation that the business is not fundamentally broken,” said Ajay Jain, an analyst with Cantor Fitzgerald, as reported by SN’s Elliot Zwiebach.

Supervalu has been working to improve its price perception, which some analysts believe will help stanch market-share erosion.

So, with Wall Street starting to feel better about the company, and with customers coming around, that leaves one major constituency that needs to get behind Supervalu’s efforts at recovery — its employees. Online posts from workers and reports from close observers of the situation indicate frustration among employees about the company’s leadership and strategic direction. Supervalu has struggled to transform itself from a focus on wholesaling to operating a diverse portfolio of retail banners, while under the gloomy shadow of a weak economy. Strategies have shifted under three different CEOs in the last six years, from Jeff Noddle’s strong focus on wholesaling to Larry Johnston’s Six Sigma “black belts” to Craig Herkert’s focus on detail.

Compounding Supervalu’s challenges is the elimination of 800 positions announced earlier this year. While the staff reductions might be in the best interests of the company, in the near term they only seem to deepen anxiety among workers. Supervalu says the cuts will “strengthen and accelerate Supervalu’s business turnaround,” but what employees hear is, “OMG! They fired Harriet in accounting! She was so nice!”

“If you lose the faith of your people, a favorable earnings report or a favorable comment from an analyst can only mask that for so long,” said one observer.

Supermarket retailing, it is often said, is a “penny profit” industry. But it’s also a people industry, and the two concepts work together.

If Supervalu’s people are on board, then the pennies will start rolling in faster, and once the pennies are rolling in, it will become much easier to keep the people on board.

Discuss this Blog Entry 2

Anonymous (not verified)
on Apr 16, 2012

NO kidding, When Albertson's bought American stores it was a total employee shock. Two totally different ways of doing the job were combined with very poor results. American stores had spend years trying to show some strong support for its employees, while Albertson's was all about management being the end all of employee's. Both sides were hurt. American stores was bending over back wards for the customers, while the Albertson's was what it always was shop here or not this is the Albertson's way. Then Supervalu comes in and for years lets the Albertson's way continue to chase away the American stores customers. Employees spent a lot of time pointing out the differences to customers which did not help matters. Now they have cut customer count down to the what I guess you would consider the customers that want to shop there. From the employees point of veiw it has been almost 10 years of something new every year as management has went from selling groceries to being the highly educated computer age monsters that run the stores now. The everyday customer has moved on and employees must act like robots to take care of the customers left.

Anonymous (not verified)
on Apr 17, 2012

The news today is good as a shift in Presidents shows progress in over coming some of past bad habits in management.....hurry CEO finelly working on the right area.

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David Orgel

David Orgel is executive director, content & user engagement, of Supermarket News (SN) and its website, SupermarketNews.com. Orgel delivers his opinions on industry trends through a bi-weekly...

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Carol Angrisani is an associate editor at Supermarket News. Along with covering the packaged goods beat, she also manages SN’s annual private-label and ethnic marketing supplements. Carol...
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