Herkert Cites ‘Difficult Year’

JON SPRINGER

MINNEAPOLIS — Craig Herkert reviewed his first — and he would hope his worst — fiscal year at the head of Supervalu in a presentation at the retailer's annual meeting here last week.

“I wish I could say I was pleased with the results and that we've made tremendous progress, but fiscal 2010 was a difficult year for Supervalu,” Herkert said. “The economic environment continues to be challenging for all of our customers. Our business is in transition, and sales [results] are not what we wanted to see. I can speak for our entire executive team that we are not satisfied with where we are.”

Herkert, the former Wal-Mart Stores executive who took over as Supervalu's chairman a year ago, said however that initiatives formed during his first year would help make future meetings brighter. Executing them successfully required changing the perspective of the company, which he considered to be one of the highlights of the year.

“Over the past year, I've challenged the company to change the way we look at ourselves,” Herkert said. “This shift is a fundamental part of creating a sales- and customer-oriented mentality that permeates everything we do.”

Supervalu is accomplishing this change by “erasing the lines” between its retail and wholesale operations and by considering all of its customers — corporate-owned chains, independent retailers and small chains alike — as it does business. This new perspective provided the framework for accomplishments in 2010 and will guide priorities in fiscal 2011, Herkert said.

Herkert reviewed accomplishments in 2010, including establishing new practices in marketing and merchandising, and reviews of its store categories and assets.

In 2011, Herkert said Supervalu would launch a new fresh produce initiative highlighting local products with new labels and signs detailing the source of the product. “This program brings another level of hyper-local marketing into our stores, where the shopper knows that we support the local economy by purchasing locally. It sends a positive message about our stores,” he said. The program, dubbed “Win With Produce,” will be rolled out to many banners this summer.

Herkert also said Supervalu would “invigorate” its core customers' shopping experience through the SHE (Simplify Her Experience) program, which will make stores more “shoppable” through lower shelving, relevant product adjacencies, simpler signage and assortment, and SKU rationalization.

He said Supervalu would aim to improve its brand strength through efforts to grow private-label penetration by 2% this year and through new investment in its banner brands and advertising.

Jeff Noddle, Herkert's predecessor as CEO and outgoing executive chairman, chaired the annual meeting, his last official duties with Supervalu before retiring. “I'll be cheering from the sidelines,” he said.

Shareholders voted to approve a slate of 10 board members; to ratify the appointment of KPMG as auditor; and in favor of a proposal allowing them to vote at every third Supervalu annual meeting on the compensation policies and procedures, beginning in 2011.