MINNEAPOLIS -- Supervalu is casting about for new forms of business to pursue, but wholesaling, retailing and retail support remain the core of its business and will continue to be so, Jeff Noddle, president and chief executive officer, told SN here in an interview. As he pointed out, wholesaling is a big business worth about $100 billion in this nation, of which Supervalu has a share of about 18%, including volume generated by corporately owned retailing.
ifferently about the future as it relates to wholesale: We have a competency of helping people be in the retail business, and supporting them in the business. That means we provide format support, merchandising, marketing, services, maybe consumer research or site analysis or engineering.
"So we give retailers the resources to be successful. This has been a competency of Supervalu through time."
However, when asked if there are entrepreneurs in sufficient number that are likely to start independent supermarkets that would sustain Supervalu's wholesale business, Noddle acknowledged that the outlook is problematical.
"There's no doubt that we don't have today enough entrepreneurs who are willing to work and invest against the dynamics of the marketplace they see. However, one of the trends in the business that remains today is that in our customer base there are regional operators and they are growing.
"They are the chains of the future. We help develop more, even though it's hard to do so in the financial marketplace. We can help with capital."
Conversely, he acknowledged, these regional chains might become attractive acquisition targets, as has happened in the recent instance of Genuardi's, which was acquired by Safeway. So Supervalu may consider acquiring regional chains in the future, too.
And, he said, some potential supermarket operators might look at the effects of consolidation and at Wal-Mart's growth, and decide to enter another form of business.
"It's clear our customer base is wide, varied, and collectively the independents we supply have like-store sales growth. Many are becoming regional consolidators themselves."
Supervalu's roots are also sunk into retailing because of its corporate stores, Noddle pointed out. Supervalu operates more than 1,100 stores under the Save-A-Lot, Cub Foods, Shop N Save, Shoppers Food Warehouse, Metro, Bigg's Farm Fresh, Scott's Foods and Hornbachers banners.
"The corporate stores give us roots in the ground to anchor our wholesale business, although that's not enough. We still have to make a return on capital on both distribution and retail.
"In the last several months, we did strategic work and took a look at every place we operate corporate stores. We assessed the market, the competitors, our standing, and our own capabilities. We wanted to determine for every market that we're in, whether we will win in the market, and if we stand to get a good return on our investment.
"We found that in the vast majority of our markets, we're either one, two or three in the market. If we're third, we usually have the strongest price position."
But, Noddle said, there were some markets where that position wasn't present, and couldn't be obtained at reasonable cost. So several divestitures occurred, including Laneco stores in Pennsylvania and the Cub stores in central Indiana.
The idea is to redirect resources to markets where Supervalu can bolster an already-strong standing, markets such as the Twin Cities, St. Louis and Washington, D.C., to cite a few.
Some growth will come about because of a speeded rollout of the price-impact Save-A-Lot format.
"Save-A-Lot should be a true national operation, and it may be an opportunity which would include Canada and Mexico.
"There's growth available because in this country alone, 48% of the households are in the $35,000 or below income category. This remains an undeserved part of retailing." Noddle pointed out, though, that Supervalu would build its retail presence with whatever format seems to best fit the market, not with price-impact retailing alone.