Supervalu’s new president and CEO, Sam Duncan, spent his career in retailing, but lately I keep associating him with automotives. That’s because he’s the new head mechanic charged with fixing the Minneapolis-based distributor, and he just found some scary things under the hood.
Alarmingly, many of the problems he cited focus on perishables, an opportunity-filled growth area for so many companies. Duncan recently told an investor forum that he was shocked by the state of the company’s perishables business in corporate stores and among wholesale customers. So before tackling the bigger opportunities, he needs to address this.
Among the surprises for Duncan were the “poor conditions of the perishable departments” and the fact that some wholesale customers weren’t buyingand produce from Supervalu because of concerns about quality and variety.
Duncan identified solutions to these problems, and two in particular are worth mentioning.
The first is the need to improve buying specs to boost quality so that wholesale customers will want to buy more perishable items from Supervalu.
The second is taking advantage of pooled buying power by having the wholesale, retail and Save-A-Lot parts of the organization work together more.
He gave an example that underscores it doesn’t take rocket science to attack the perishables problems. Duncan said he quickly noticed that retail banners were operating with three different brands of bananas, which he called “not very smart.”
As he explained, “It’s very hard to maintain a three-banana program because all of the different brands are different on the ripening process.”
Duncan’s solution was to “go to a one-banana program, and we’ll have a second as an option.”
His team moved quickly to solidify the details with a result “that’s going to save us millions of dollars a year.”
If Duncan can produce a string of these seemingly simple fixes with big payoffs, the company has a good shot at putting itself into a position to jumpstart perishables growth, which should fuel overall growth.
There are no guarantees, of course, given longtime challenges around growing sales and reducing costs. But the distributor is fortunate to have a leader who’s spent a career checking under hoods, including at Albertsons and Kroger Co., and who seems to be addressing the current challenges with urgency.