On November 8th, The Food Industry Center hosted Mike Erlandson and Katie McComb from SUPERVALU Inc, for the season's first "Food Industry Leader in the Classroom" event. Erlandson, the Vice President of Government Affairs at SUPERVALU and McComb, a Category Merchandiser, were invited to speak on their work with the company and in the industry before a group of students, faculty, and public participants. SUPERVALU is one of the country's largest retail grocers with estimated sales of $41 billion and operating over 2200 stores.
Their conversation focused on variety of industry topics that included the future of the neighborhood grocery store, the challenges that come with competing against big market retailers like Target and Walmart, and strategies for merchandising products. A 2006 study suggested that prices are 17%-23% lower at Walmart for national brand products and 8%-14% lower for private label brands than competing and comparison stores (Volpe and Lavoie 2006). SUPERVALU is focusing on supplying high quality produce and meats to get people in the door along with taking a holistic approach to looking at the customer. A recent Wall Street Journal article cited a SUPERVALU consumer survey that revealed 92% of customers said fresh produce was the top priority in choosing a grocery store. Due to popularity and higher margins for fresh foods, traditional grocery store formats are moving produce sections to the front of the store, and packaged food companies are fighting to get their products up front with the produce. Another method of distinction for traditional grocery stores is offering different products at different stores based on the neighborhood instead of a one size fits all model.
SUPERVALU has also embraced technology with a new iPhone/Android app where customers can make grocery lists and see the weekly ads for their Cub grocery stores. Erlandson said that grocery stores operate on 1%-2% margins so it is especially important for stores to keep themselves on the frontier of new technology and ideas. One of those ideas is being implemented by Ahold USA in some of their Stop & Shop stores, allowing customers to scan barcodes to look for coupons as they shop. The application connects with the customers loyalty card and provides recommendations and information on discounts. It has the potential to cutback on labor costs in supermarkets as well, which is 12%-15% of a grocery store's expenses (Wall Street Journal). These mobile technologies are especially important as a recent study from the Pew Internet and American Life project revealed that 42% of people with cellphones, or 35% of adults in the United States use a smartphone (Pew Internet).