SUPERVALU SETS AMBITIOUS STORE-EXPANSION GOAL

MARTIN SCHNEIDER

Supervalu, Minneapolis, reaffirmed its commitment to retail operations, saying it has set a goal of commanding a fleet of 2,500 corporate and licensed stores in the next few years, which would more than double the distributor's store base.

Jeff Noddle, president and chief executive officer, told attendees at the Credit Suisse First Boston Food and Drug Retail Conference earlier this month that the company plans to add 100 stores per year to achieve this goal. Most of the stores, Noddle said, will operate under the company's Save-A-Lot price-impact banner.

"We will have a total of 14 distribution centers by year's end, which we believe can easily handle a network of 2,500 stores," Noddle said. "Also, the price-impact format is one that can be rolled out easily and also keeps operating costs low."

Noddle said that the price-impact store is an attractive format for investment because he sees little competition in key markets.

"There are a lot of other operators in that niche, but they are rather small," Noddle said, noting that Supervalu will open its 1,000th Save-A-Lot sometime within the next 30 days. "So, this gives us a great opportunity to be the best large-scale operator in the hard-discount format."

Noddle also said that prices at "extreme value" price-impact formats are 10% to 15% lower than supercenter prices, giving Supervalu a strong weapon against supercenter expansion in key markets across the country.

He said Supervalu is committed to retail, noting that by the end of 2002, the company's sales will be evenly split between its retail operations and distribution. In 1996, distribution accounted for 70% of Supervalu's business.