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Cub Food Stores

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Cub Food Stores – Unit 4 Exercise
Team B
The name CUB stands for "Consumers United for Buying" and was founded by Minnesota-based Hooley’s Supermarkets in 1968 and then purchased by SuperValu in 1980. Cub’s was one of the first total discount food stores in the United States. “CUB shoppers enjoy low prices on a variety of top-quality name-brand products and the freshest produce, meats, seafood and baked goods available. For total convenience, most CUB stores are open 24 hours a day and offer more than 35,000 items, full-service pharmacies and in-store banking.” (Supervalu.com, 2012)
Cub’s is one of the many superstores in the United States that has directly affected the way consumers shop for groceries and household goods. Low prices, smart marketing, and sheer size encourage shoppers to spend far more money than they do in the average supermarket. (Peter & Olson, 2010)
1. List at least five marketing tactics Cub Foods employs in its stores to increase the probability of purchases.
Cub stores stock double the selection of conventional stores, mixing staples with luxury, ethnic, and hard-to-find foods. The arrangement of the products within the store allows for consumers to give into impulse buying before they choose their essential items and reach their budget limit. The entry alley, also known as the power alley is lined two stories high and features discounted specials. The store’s ceiling joists and girders are exposed, giving the subliminal feeling of all the spaciousness up above. Paul Suneson, director of marketing research for Cub’s parent company, SuperValu, says the design of the inside of the building “suggests there’s massive buying going on that translates in a shopper’s mind that there’s tremendous savings going on as well.” Wider-than-usual shopping carts, which are intended to suggest expansive buying, fit well into their wide aisles, which channel shoppers toward high-profit impulse foods. (Peter & Olson, 2010)
2. What accounts for Cub’s success in generating such large sales per customer and per store.
Cub’s distributes maps to guide shoppers through their large stores. But without a map or a specific destination, a shopper is subliminally led around by the arrangement of the aisles. The “power alley” spills into the produce department. From there the aisles lead to highly profitable perimeter departments including meat, fish, bakery, and frozen foods. Cub’s vast selection, tables of samples, and discounts as high as 30 percent overwhelms shoppers and they fall prey to a shopping frenzy brought on by low prices and clever marketing. That’s the reaction Cub’s super warehouse stores strive for—and often get. (Peter & Olson, 2010)

3. Given Cub’s lower prices, quality merchandise, excellent location, and superior assortment, offer reasons why many consumers in its trading areas refuse to shop there.
Big discount stores like Cub Food Stores attract negative opinions from local consumers including the fact that many smaller stores are forced out of business as a result of Cub Foods being located in the same community. Smaller stores cannot compete with the large selection and low prices offered in Cub’s stores. (Peter & Olson, 2010) Also, some consumers feel that Cub Food stores do not treat their employees well. Recently, the workers who clean Cub Foods Stores have staged a year-long effort to get better working conditions and better pay. The negative press surrounding this issue is bound to make consumers shop elsewhere so as not to support poor working conditions. (YouTube.com, 2011)
What some consumers view as low prices at Cub’s, others do not. "I can't do my food stamps here cause it won't last me all month," said Laticia Lewis of St. Paul. "I got to go to Aldi's and Rainbow. Here, the meat and stuff is kind of high." Price is a real problem for Supervalu, parent company of Cub Food Stores. "In far too many cases, we've priced our everyday retails out of line with the market," said CEO Craig Herkert. "Therefore, customers select against us." (Minnesota Public Radio News, 2011)
Conclusion
Cub Food Stores is in the midst of a major effort to reduce prices on key items without denting its profit margins. Supervalu Chief Executive Craig Herkert says the campaign is working. Herkert recently told analysts there has been an "improvement in price which is increasingly noticeable to our consumers and sustainable for our business." (Star Tribune, 2012)
According to Herkert, the company remains on plan with its ‘8 Plays to Win strategy’ (see Graphic 1 on page 3). Even with the ongoing difficult economic environment and pressured consumer, they continued to make progress against their plan, allowing them to invest in price to deliver everyday value and hyper local choices that meet the needs of their customers in the diverse neighborhoods they serve. (Weinstein, 2012)

Graphic 1

References
Hughlett, Mike. “Loss widens at Supervalu”. (January, 2012). Star Tribune. Retrieved on March 24, 2012 from http://www.startribune.com/business/137088098.html

“Low Wages Spark Grocery Store Hunger Strike”. May, 2011. YouTube.com. Retrieved on March 24, 2012 from http://www.youtube.com/watch?v=nJhzr2CuZYg

Moylan, Martin. “Supervalu's recent performance not so super” (January, 2011). Minnesota Public Radio Retrieved on March 24, 2012 from http://minnesota.publicradio.org/display/web/2011/01/24/supervalu-performance/

Weinstein, Justin. “3 Things That Could Prop Up Supervalu Stock”. March, 2012. Seeking Alpha.com. Retrieved on March 24, 2012 from http://seekingalpha.com/article/414241-3-things-that-could-prop-up-supervalu-stock

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