Key 1
Matt Key
Natalee Grigoletti
Intro to Business
May 5, 2011

Supervalu

• The full name is Supervalu Inc. This company’s main headquarters is located at 11840 Valley View Road in Eden Prairie, Minnisota. • History: The Supervalu company was created in Minneapolis in the 1870’s. In 1871 three men named Hugh Harrison, George Newell, and W. D. Washburn created a company known as Newell and Harrison. In 1874 George Newell bought out the other two men and renamed the company George R. Newell Company. In 1879, Hugh Harrison started his own company call H. G. Harrison Company. In 1926, the two companies merged. The new company was known as Winston & Newell Company. It was the largest grocery distributor to independent grocers in the Midwest. In 1954, it took the name Super Valu Stores. In 1958, the company bought the grocery store chain, Piggly-Wiggly which was based in Wisconsin. In 1971, the company took a different direction when purchasing a retail store chain called ShopKo. In 1980, the company continued to expand by buying out two other grocery store chains called Cub Stores and Atlanta’s Food Giant. Also during that year, Supervalu combined the Cub Stores and ShoKo into one company. In 1991, the company bought out an Indiana grocery store chain called Scott’s. Later that same year, Supervalu sold 54% of Key 2 the ShopKo company to the public. It wasn’t until 1992 that the company changed its name to Supervalu Inc. In that same year, Supervalu bought a food wholesaler called Wetterau. After buying Wetterau, Supervalu Inc. became the countries largest independent food distributor. In 1997, Supervalu sold the remaining 46% of the ShopKo company to the public. In 2001 Supervalu laid off 7% of its employees and closed down some of its distribution centers and stores. In 2006, Supervalu bought the grocery store chain called Albertsons which owned Acme Markets, Bristol Farms, Jewel-Osco, and Shaw’s Supermarket. In 2007, Scott’s was sold to Supervalu’s number one rival, Kroger. In 2010, Supervalu sold Bristol Farms to local management in California. Its original products were grocery foods. The company’s current market product is still grocery foods but it also includes pharmaceutical products, retail products, and even fuel. The mission statement of Supervalu Inc. is “We will provide America’s Neighborhoods with a superior grocery shopping experience enhanced by local expertise, national strength and a passion for our customers.” • Management Analysis: The current CEO and President of Supervalu is a former Wal-Mart executive named Craig Herkert. Wayne Sales is the Chairman and Sherry M. Smith is the CFO. After those three, it goes to the other executives that work in the corporate office building. After the executives, next come the district managers who oversee the Store and Assistant Store Directors who oversee all the other employees in the store. Supervalu’s top subsidiaries include, Albertsons, Shaw’s, Save-a-lots, Jewel-Osco, and Acme. In 2010, the company stopped Key 3 employing both a Store Director for the grocery side and a Store Director for the Pharmacy side per each store. Instead, they are training people to run an entire store. Since the steep competition and the decline in the economy, Supervalu laid off a number of Store Directors in order to save money. All Supervalu employees, including the employees of the subsidiaries, who are not in management, are forced to belong to the union. The Union is known as UFCW. Around here it is known as the local 881. Benefits depend on how long you have worked for Supervalu. All full time employees get insurance, but the part time employees must work for two years before receiving the insurance benefit. For an employee’s first year they get no vacation time, but after their first year worked, they get one weeks vacation and after that, every three years worked they get another weeks vacation per year. Also, all employees get 15% off all store brand foods. Employees used to get 5% off of everying, but to cut back on money, they had to switch it to the 15% off all store brand foods. Currently, the union has no signed contract between the companies, but they still take $7.76 out of everyone’s paycheck. The top five major stockholders are Jeffrey Noddle with 614,828 shares, Craig R. Herkert with 339,466 shares, Janel S. Haugarth with 97,939 shares, Kevin H. Tripp with 80,739 shares, and David L. Boehnen with 41,851 shares. • Marketing Analysis: Supervalu’s main products are retail food which includes nonperishable foods, perishable food, pharmaceutical products, cosmetics, and fuel. During the summer, some of the stores will have a garden center outside to Key 4 sell flowers, soil, and other gardening materials. Supervalu only operates in the United States. It has around 4,280 stores in 40 different states. About a year ago, to increase sale, the company made a 20% decrease from all of its prices, not including liquor. Another strategy the company uses is a weekly sale of a certain item for a very low price and this sale is called the weekly extreme value. Recently the company had a special for a few months which involved getting free cookware. For every $10 a customer spent, they would receive a little sticker that would go into a booklet to be saved. The customer would save up these little stickers and redeem them for a free pot or pan. The pots and pans were worth a different amount of stickers. On some Sundays, the company would have a double sticker day. Also, in the summer of 2010, the company had a special where for every $300 a customer spent, not including tobacco or liquor; they would get a 10% off coupon on their receipt for a future purchase. They did not have to buy $300 in groceries all at once, the computer would keep track how much the customer was spending through their preferred card. One of Supervalu’s subsidiaries, Jewel-Osco, is giving free store tours to people who are living with Diabetes to show them what kind of foods that they should buy to stay safe and to help them pick out the kind of food they like that they can eat while still remaining safe while eating them. The companies target market is the general public. Everyone needs to go grocery shopping and everyone needs food. • Financial Analysis: The gross profit of the company has had a significant decrease over the past three years. The gross profit has dropped almost $2 billion Key 5 from February 2008 to February 2011. Also, the net income after taxes for February 2011 was $-1.51 billion. All the company’s current assets and decreased a lot over the past three years. Cash from 2008 was $243 million and in 2011 it was $172 million. The company’s total assets decreased so much because of all the stores and distribution centers that were sold off in order to save money. Also, inventory of the company took a steep dive downwards. In many of the stores, the top shelves were removed in order to decrease inventory expenses which affected the total assets of the company. The company is however making up for the loss in assets because the total liability of the company has decreased significantly as well. Due to the rough economy and the steep competition, the company really needs to find a way to increase sales revenue because that has decreased by almost $8 billion since 2008. The financial trends of the company are just all over the place due to the poor economy. The financial outlook of Supervalu Inc. is sketchy and at this time it is not looking so good. The company is going to take an even harder hit when Wal-Mart and Target open up little shopping markets in the bigger cities like Chicago. Jewel-Osco is going to be greatly affected (which affects Supervalu) by the new Wal-Mart and Target stores. Supervalu Inc. needs to come up with a plan soon or they are going to face a rough road ahead.