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store profile
Strategies for success |
After this company’s merger with Albertsons, its floral
operation innovates while drawing on the best practices of both
companies.
by
Cynthia
L. McGowan
Three years ago this
month, Supervalu, Inc. more than doubled in size when it
merged with Albertsons, Inc. But by developing innovative
strategies, this retail powerhouse is keeping its
focus on customer needs, and an inside look at Supervalu’s
floral operation shows how.
Before the merger, in which Albertsons’ holdings were sold
to a consortium of companies including Supervalu, CVS Corp.
and Cerberus Capital Management, Supervalu reported $19.9
billion in sales in 2005 and had nearly 1,400 stores with 52,000
employees. That compares with $44.6 billion in sales in 2008,
2,421 stores and 180,000 employees.
But the company’s size wasn’t the only change. Before the
merger, nearly half of Supervalu’s sales came from its thriving
wholesale operation. Last year, however, $9.9 billion of the
company’s revenues, or just 22.2 percent, came from supply-chain
services, and Jay Hartley, director of floral, describes
a culture shift that has taken place as Supervalu adjusts to its
increased emphasis on retailing.
“The strength of Supervalu prior to the merger was the
wholesale business,” he remarks. “As it merged with Albertsons,
it transformed almost overnight into a top retailer.”
And it’s a retailer with a diverse customer base, with 13
banners across the nation, from Maine to California. To ensure
that the needs of this large base of customers are met,
Supervalu has drawn on its 139 years of retail and distribution
expertise, its network of 35 distribution centers and the
implementation of best practices culled from both Supervalu and
Albertsons. All programs “are pretty much centered around what’s
right for the customer,” Mr. Hartley affirms.
Two corporate strategies help ensure those needs are met—a
merchandising plan called “superfusion” and a marketing program
called “customer clustering.” In floral, the two strategies are
key to the operation’s ability to serve its thousands of
customers, Mr. Hartley says.
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supervalu |
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HEADQUARTERS
Eden Prairie, Minn.
CEO
Craig
Herkert (appointed in May)
STORES
2,421 stores across the country, under 13 banners: Acme,
Albertsons, Bigg’s, Bristol Farms, Cub Foods, Farm Fresh
Food & Pharmacy, Hornbacher’s, Jewel-Osco, Lucky,
Save-A-Lot, Shaw’s/Star Market, Shop ‘n Save, Shoppers Food
& Pharmacy
SALES
$44.6 billion in fiscal year 2009
YEAR FOUNDED
1870
STORE SIZE
Averages 60,000 square feet
FLORAL DEPARTMENT SIZE
Varies
COMPANY EMPLOYEES
180,000
FLORAL EMPLOYEES
Averages one full-timer and one part-timer per store
FLORAL SERVICES
Full-service floral departments in many stores offering
custom designs, wedding and event services; some stores have
FTD flowers-by-wire service; most offer nationwide delivery
through a partnership with 1-800-Flowers.com
BIGGEST FLORAL HOLIDAY
Mother’s Day
CORPORATE VICE PRESIDENT, PRODUCE AND FLORAL:
Scott Morris
CORPORATE DIRECTOR OF FLORAL
Jay Hartley
WEB SITE
www.supervalu.com
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floral strategies
The superfusion strategy aligns the corporate merchandising plan
across 11 Supervalu banners (excluding Save-A-Lot and Bristol
Farms). To devise and carry out the plan, the company has
created a corporate floral team that is composed of two “pods,”
one to coordinate the fresh-cut program and the other to handle
the potted plant program. In each pod, a business development
manager and a sourcing manager together create floral programs
for their category.
The programs take into account the overall corporate
strategy for floral, Mr. Hartley shares, as well as customer
clustering, a program in which each Supervalu store is
identified by its demographics. “We’ve divided our stores and
customers into three groups: a time-starved group, a premium
customer and a value-oriented customer,” he identifies.
Each floral program is developed based on those clusters.
“For example,” Mr. Hartley offers, “if the fresh team has a
mixed bouquet program that they’re rolling out across the
enterprise, they’re basically going to have three versions. Each
one will align with a particular customer activity,” whether
it’s for value-oriented, premium or time-starved stores.
The clustering applies to the entire retail process. “We’re
aligning our products, our merchandising plan, sourcing, our
advertising and our retails by clustering activity,” Mr. Hartley
says.
Studies by third-party research groups have revealed that
the three cluster categories hold true across the nation, Mr.
Hartley remarks. “We can go out and source products in alignment
with the category business plan for any store in the country,”
he observes. “It aligns pretty well.”
coordinated
departments
As part of the
overarching floral strategy, the floral team developed a plan to
create a cohesive look to the departments. “Packaging, colors,
signage and fixtures—all are coordinated with the look we want
to achieve,” Mr. Hartley says. The goal is for customers to be
drawn in by the total department and not just one display.
The fresh and potted pods work together to achieve that
coordination by choosing packaging for their respective products
in the same color palettes. After a new program is created and
the look of the departments is determined, the word goes to
banner sales managers and lead floral merchants, who make sure
the floral department managers carry out the program at the
store level.
Underscoring the importance of floral to Supervalu, the
floral departments in most stores are in high-traffic areas by
the first door. “We’re trying to set the stage for freshness
across the whole store with the fresh floral display as people
walk in,” Mr. Hartley reveals.
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keys to success |
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MERCHANDISING
Supervalu, Inc.’s fresh and potted teams work together to
provide coordinated offerings, which helps the floral
departments present a cohesive look.
MEETING CUSTOMER NEEDS
Supervalu categorizes its stores into three demographic
“clusters” and targets its floral offerings based on each
group.
PRODUCTS
The floral operation sources its products globally, working
with the farms to find the best products for its customers.
SERVICE
Most stores offer full-service florals, and the company
recently launched online ordering with nationwide delivery
for added customer convenience.
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sourcing
high-quality products
As important as
merchandising is, “Our No. 1 strategy is to make sure we have
the best quality and the best value,” Mr. Hartley describes.
“We’re working hard every day to align ourselves with the top
growers, making sure we have the right varieties and we fit the
right time of year with the right products.”
The company has two field buyers: one, Jorge Alonso,
responsible for the East Coast; and the other, Debbie Jackson,
for the West Coast. The fresh and potted pod leaders determine
what will be on the order guides for the stores, and then the
field buyers source the products throughout the United States,
Colombia, Ecuador, Mexico and Canada, “interacting with the
vendors, going to the farms, looking for new varieties, really
being integrated with the agronomics,” Mr. Hartley says.
Promotional and holiday programs are planned a year ahead
in order to secure the volume of products needed. “We gather the
information from the banners on how much they think they’re
going to sell,” Mr. Hartley shares. That information goes to the
field buyers, and they, in turn, “go to the vendors and prebook
the volume of those key times up to a year in advance, so they
can have the products grown for us.”
The early booking benefits both Supervalu and the growers,
he notes. “We get the variety and quality we want, and the
growers know early on what production needs they will have.”
Products go from the suppliers to distribution
centers—Supervalu generally has one distribution center per
banner—and then on to the stores. The floral managers order
directly from the distribution centers weekly, and deliveries
are made to the stores two to five times a week.
“Fresh categories items—bouquets, arrangements, roses and
consumer bunches—represent the highest percentage of our
business,” Mr. Hartley shares. Showing great potential is the
garden center, he says, remarking, “It’s probably the
fastest-growing piece of our business.”
He attributes that growth to Supervalu’s ability to keep up
with garden-center trends—“We’re doing a good job with having
what the customer wants”—and also to an overall growing interest
in gardening. “It’s something that gives immediate home
improvement,” he observes, “and I think people are looking for
that now versus spending big money on other things around the
house.”
getting customers'
attention
Most floral
sales are impulse, he reveals. “We’re not typically on the
shopping list yet,” Mr. Hartley remarks, “but we’re working on
it.” In addition to eye-catching displays in the stores, the
company gets the word out about floral promotions in weekly
newspaper ads.
A new strategy to capture floral sales involves a
partnership with 1-800-Flowers.com. Customers who visit
Supervalu banners’ Web sites can order flowers online and
receive nationwide delivery.
floral services
Supervalu has
full-service floral departments in most of its stores. Mr.
Hartley says the extent of the services offered depends on the
skill level of the employees in the individual departments. “One
thing we want to make sure of is that where we have the design
talent, we’ll focus on extra service—weddings and funerals and
special events—but [only] where we have the right talent,” he
emphasizes. “The worst thing you can do is a bad job on a
special event and lose a customer for life, so I want to make
sure we do it right.”
To help floral employees attain those skills, Supervalu
offers both online and hands-on training for newcomers to the
departments. Mr. Hartley says Albertsons excelled at training,
and Supervalu plans to draw on that strength and offer more
floral education. As a motivational tool, Supervalu has both
merchandising and sales contests at the corporate and banner
levels.
best practices
Mr. Hartley says the
company has made an effort to use the best of both Albertsons
and Supervalu, citing the sourcing process as an example. “As we
combine the two cultures, there’s a lot of best practices that
come out that we’re trying to spread out across all the
banners,” he describes.
Those best practices, in tandem with the company’s new
initiatives in merchandising and its careful attention to
product selection and service, are keys to the floral
operation’s success, Mr. Hartley confirms, adding, “I’m pretty
sure our quality and value stand out across the banners.”
Reach Editor in Chief Cynthia L. McGowan at
cmcgowan@superfloralretailing.com or (800) 355-8086. |
