SuperValu looks to a future in wholesale
Sept. 8, 2017
by Andy Nelson
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SuperValu is the nation's fifth-largest retailer.
NEW YORK — Eden Prairie, Minnesota-based SuperValu Inc. is the nation’s fifth-largest retailer, but its strategy for the future is based on growing its wholesale business.
That was the message from Mark Gross, SuperValu’s president and CEO, in a presentation Sept. 7 at the Goldman Sachs Annual Global Retailing Conference in New York.
SuperValu strengthened its wholesale business with the April purchase of Commerce, California-based wholesaler Unified Grocers. That, Gross said, should give SuperValu about $11 billion in annual wholesale sales, compared to about $5 billion in retail sales.
|Mark Gross, president and CEO of SuperValu
“(Wholesale) is the growth of our business, and the core strength of our business,” Gross said. “I see significant further opportunities for us to grow that business and for us to be a consolidator. Wholesale, more and more, becomes the dominant part of everything that we do.”
The investment in and increased focus on wholesale has SuperValu optimistic about its financial position, Gross said.
“We’re on track with the guidance that we gave,” he said. “Things are looking very positive in our business.”
Gross also addressed e-commerce and other topics in his presentation.
Home delivery may or not be the future of e-commerce, he said, but at least for the present, click-and-collect is a more profitable business model for SuperValu and other grocers.
SuperValue finalized its acquistion of Unified Grocers in late July.
“There’s nothing incredibly complex about (e-commerce deliveries),” Gross said. “Making money has been the difficult part. And so for the largest part, most retailers have not been particularly interested in driving that e-commerce opportunity.”
Click-and-collect is not only more profitable, Gross said, but it’s a good fit for consumers who want to pick up some items, typically center-store items, quickly — from an instore locker, for example — but then hand-select their fresh perimeter products.
“It’s a whole other leap from ordering a box of laundry detergent on-line to getting something for your family, your fresh food, and going through that selection process,” he explained. “And I think that for more customers, they really still prefer to have fresh product selected by themselves.”
Gross said the retail grocery industry also has not solved the problem of delivering fresh foods to customers when they’re not at home.
On other subjects, Gross said SuperValu is bullish on the growth of fresh-perimeter and ethnic sales at retail.
Click-and-collect has been a profitable business model for SuperValu.
More consumers are buying fewer packaged and more fresh foods, providing an opportunity for brick-and-mortar grocers, he said.
“This is a piece of how I think the retail grocer competes more and more with a pure e-commerce provider,” he said. “More and more people want fresh fruit. And the best place to see that displayed and offered is in a grocery store, not on my computer screen.”
Ethnic food purchases also should continue to increase, Gross said, as consumers’ tastes become more diverse.
“There’s an ever-growing sophistication of the American palate,” he said. “It used to be that maybe Asian food meant Chinese. Now it’s Thai, it’s Vietnamese, it’s Japanese, it’s Filipino, and that’s not just on the East and West coasts. There’s an ever-growing interest in greater flavor profiles across the country.”