SPEED TO MARKET

ROSEANNE HARPER

Supervalu has already bought corn for the whole summer and enough strawberries to send off this year's season with a bang. Indeed, as early as last month, officials were huddling with key vendors to map out how much product they'll need for summer promotions, so growers can plant to meet the demand.

Supervalu, one of the nation's largest wholesalers, and one of its biggest retailers, is like many other companies these days -- it's cultivated a relationship with a handful of select growers that assures stores an adequate supply of such volume movers as corn and strawberries and Michigan apples when they need them, no matter what.

"There's a need to do business a different way. You're not out there chasing a price anymore," said Tom Page, East Coast procurement manager for the Minneapolis-based wholesaler/retailer. "Instead, you're chasing product, securing the right amount, and the right quality. You have to be out in front, way out in front sometimes."

That's just one of the changes wrought by the consolidation explosion in the retail world over the last few years.

"If any of the big retailers -- Kroger, Wal-Mart or Supervalu, for that matter -- is out there looking for an item for an ad, it could dry up the market."

In fact, one week last summer, Supervalu's corporate stores had to delay an iceberg lettuce promo that was set to run because they couldn't get an adequate amount. One of the other big chains had commandeered the iceberg lettuce supply for that week.

That increasingly common occurrence makes forward planning all the more critical. And keeping lines of communication open with conference calls, e-mail and digital imaging has figured big, too, in a 20% sales increase for the East Coast buying office, which will move 17 million boxes this year.

"We've had double-digit growth two years in a row and I know most of that is the result of working so closely with the growers," Page told SN from his office in Lakeland, Fla., one of three buying offices that Supervalu's wholesale arm operates. The other two are located in Fresno, Calif., and in Minneapolis.

Page pointed out that changes in the way produce makes its way to the supermarket are huge and have speeded up in just the last couple of years. For example, he said, it wasn't long ago that buyers bought everything on a day-to-day basis.

"We'd be waiting to see what the price was going to do, and hopefully when we decided to make our buy, the product would be there at the price we wanted to pay. But we've gotten past that, especially with major commodities, and for the big holidays like Memorial Day and Fourth of July," Page said, adding that for some crops it's just plain necessity to buy them before they're in the ground.

"We pull over 2,000 loads, about 1.3 million cases, of corn in the summer at this office. You don't just go find that on a corner somewhere," he said.

While it still buys the majority of its produce items pretty close to the time they're needed, Supervalu has shifted its buying strategy to match store growth: It now contracts months in advance for the major commodities such as corn, cabbage, Michigan apples, strawberries, onions and cantaloupe, Page said.

The new system is good for everybody concerned, from farmer to consumer, he pointed out.

"Five years ago, we'd buy our corn two weeks or a week before. The farmer was taking all the risk and we didn't know if we'd get enough product. Now we commit. It's verbal, but it's a contract."

But it's not just committing to a particular item; the wholesaler or retail buyer must support the grower in the weeks before and the weeks after as well, Page said. That's where the partnership comes in and, done right, it closes some of the gap between retailer and grower. The idea is to get everybody along the way in a selling mode.

"If a grower is going to stick his neck out for a price, he wants to know that the retailer is doing the same thing -- that the retailer will pass the savings on to the consumer and, as a result, drive more business. Which, in the end, means more sales for the grower," Page said.

What Supervalu is doing on the partnership front is a good example of what's going on at a lot of companies across the country. Things have changed and are changing at a faster pace.

"Five years ago, you wouldn't sit down with a grower and work with him on what to plant for you. We've been doing that now for about three years. Before that, we'd say just give us a price and don't worry about what we're selling it for."

But now, Supervalu -- as other companies, big and some medium-sized grocery chains included, are doing -- is sitting down with the grower and talking about what they're doing at retail, Page said.

"We might tell [the grower] that if we had another 50 cents a case off, we could lower the retail and do this or that with it, and move this much more of the product. We're having that kind of conversation now."

Supervalu is constantly working with commodity commissions and grower/

shippers, too, to see how they can contribute to the retailer's effort to drive sales at store level, he added.

In addition to participation in 5 A Day promotions and activities, some commissions and larger growers are supplying point-of-sale materials and full-color display bins or other special packaging for particular promotions as part of their after-sale support strategies.

Page emphasized that Supervalu's buying offices make a point of keeping in close touch with the retail end -- both their own corporate stores and other retailers they supply. Those include some Super Target stores and some IGA stores across the country.

"We are on conference calls or talking to retailers in one way or another approximately 10 to 14 hours a week. Five years ago that would have been less than one hour," Page said.

"One of our big customers is Target. This office conference-calls them once a week. We talk about what we see in the field, about their ads that are coming up. Do we need to elevate the item to a feature? If we see that it's really nice, we'd like to do that, for example. We try to get the retailer linked to us."

Page said his buying office didn't in the past have those ties with the retailer itself.

"It was the warehouse we used to talk to, and it was the warehouse that the retailer talked to. But we want them to have an association with us, the source. It's our feet that are here in the fields. This way, they don't have to wait till the product shows up in the warehouse."

Retailers also have access to the buying office through a regular, national dial-in conference call that Supervalu initiates every other week.

"Our entire company can join in, including any of the 31 division offices, and our retailers can dial in to listen and to ask questions," Page said.

Digital imaging, in particular, gets very high marks from Page for improving communications and efficiency at Supervalu.

"That's one of the biggest changes [that has affected our business]. We used to go into a shed or be at a harvest and say, 'This looks like really nice stuff. You need to up your orders.'

"Now we take a picture. We have four inspectors from this office in the field with laptops and digitals. The inspection process is about the same as it was a few years ago, but the communication level has risen tremendously. Just today, I've probably received and sent out 200 inspection pictures taken in the field and in the sheds."

The increased involvement with retailers, as well as the growing sales volume, has spurred Supervalu to beef up the staff at the East Coast buying office. At the same time, the office has cut its vendor list by half from two years ago, and Page explained why.

"We're aligning ourselves more with a few people who know what we want and are able to deliver it. For instance, for our corn supply, we work with the four largest vendors down here."

In turn, small farmers are consolidating, creating shipping groups so they can comply with the food-safety and quality guidelines that the Supervalus, Wal-Marts and Krogers of the world are demanding.

"For example, we demand that all our vendors have a food-safety management plan. We keep those on file so if there's a problem, we know what they'll be doing in response," Page said.