Supervalu Collaborates for Store Development

MICHAEL GARRY

MINNEAPOLIS — Supervalu here has 2,450 corporate stores across 11 banners, so it would seem that selecting a site for a new store, as well as designing and building the store, would be fairly routine process.

But five Supervalu executives painted a different picture, divulging the complex, collaborative and data-driven activities that underlie the development of each new store in a wide-ranging presentation at the Food Marketing Institute's Energy & Store Development Conference here last week.

Site selection, for example, is a “continuous collaboration between the real estate and retail operations group and others as we try to stay on top of the opportunities,” said Mark Lavin, vice president, real estate and store development for Supervalu.

In choosing the site of a new Cub store, Supervalu looks at changes in communities such as an aging population and new ethnicities, said Keith Wyche, president of Supervalu banner Cub Foods. “We use all the information to find the best location based on gaps in market coverage, and not cannibalize an existing store.”

Wyche is also guided by customer feedback such as letters saying “we need a Cub here,” he said. About 70% of a Cub's customers will be from the immediate neighborhood.

Noting that Cub customers are willing to trade down, “We don't have to build the Taj Mahal when a regular building will do,” he said. Cub stores range from 60,000 to 70,000 square feet.

Supervalu employs an iterative as well as collaborative process in site development, factoring in multiple views as well as the state of the economy and real estate costs. The capital committee “evaluates each perspective, and we make a joint recommendation for a project to move forward,” said Lavin.

Sharon Lessard, vice president, store design services for Supervalu, said her team “works with operations at each banner and merchants back and forth to decide what to put inside the box.” She also works with the real estate team on what the building will look like, and with the merchandising department on “flow and adjacencies.”

Neighborhood data is leveraged to properly merchandise a store, said Rich Juliano, group vice president, merchandising strategic initiatives for Supervalu, who marveled at the amount of data available now compared with 20 or even five years ago. He works with the marketing department to tailor sections and adjacencies “to the neighborhood we're in.” Supervalu's multicultural group also helps make the store relevant to its shopping base.

Supervalu stores follow some standard design practices. For example, the company has developed a “sign plan” that is a guide to signage for permanent merchandising areas and promotional areas. “It seems rudimentary, but we didn't have this level of detail a couple of years ago,” said Lessard. In fact, a few years ago, stores resembled “a race car driver's suit,” said Juliano. “Each department had its own signs. In the new Cubs, we de-cluttered the signage to scream value and help the shopper find her way through an 80,000-square-foot store.”

Lessard's design department is responsible for overseeing “reference plans” that serve as a blueprint for “shapes and sizes of stores across banners,” she said. The plans are evaluated on a quarterly basis. Another example of a collaborative effort, the reference plans also demonstrated the challenges involved in collaboration. “The reference plans took six months to develop and it was not a fun six months,” she noted. “Collaboration is good but getting there is a journey. But if you always think about the business and costs, it gets easier.”

Wyche said the “voice of the customer” may be overlooked in store design. Cub queried a group of eight customers about their likes and dislikes and discovered that the freezer section was located too much near the front. “You have to look at the flow of the store, the ceiling heights, the lighting, and ask, ‘What is the customer's experience like?’” he said.

Cub is currently examining its stores to determine whether they have the best lighting and shelf heights in departments like produce for female shoppers, who make up 80% of the customer base, Wyche noted. Some of Supervalu's Jewel stores reduced the height of gondolas in HBC departments to 66 inches to create more of a “drug store” feeling in the store and appeal to female shoppers, who responded favorably to the move, said Juliano.