Dive Brief:
- Supervalu is combining the operations and merchandising staffs of Shoppers Food & Pharmacy and Farm Fresh in an effort to improve the struggling stores, according to Supermarket News.
- The new partnership also will operate 22 newly acquired Food Lion stores now known as Shop n’ Save East.
- As part of the change, 21 of 44 merchandising and operations positions at Farm Fresh were eliminated, with those responsibilities taken over by Shoppers. Supervalu plans to hire additional merchandisers to support the combined operations.
Dive Insight:
The change by Supervalu is the first major announcement since January when it hired Anne Dament as senior vice president of retail, marketing and merchandising. She is not wasting any time improving the company's grocery store operations in dire need of help.
Shoppers operates 52 stores in Baltimore and Washington,D.C., while Farm Fresh has 40 locations in and around Virginia Beach, Va., that have been impacted by deflation and competition. In its most recent earnings report, SuperValu posted a 5.7% decrease in retail sales.
The company sold its chain Save-A-Lot to an affiliate of Onex Corp. for $1.365 billion in December. While some have questioned why the company doesn’t sell off its remaining underperforming brands, SuperValu is confident it can still make them work. The company’s Save-A-Lot divestment, along with some key management changes, have allowed it to re-focus its efforts on wholesaling. In recent months the company has picked up some lucrative new contracts.
Some analysts have speculated its lucrative wholesale business makes SuperValu a prime acquisition target. If that were to happen, the acquiring firm would likely jettison the retail operations to help fund the deal. It's uncertain who would be interested in buying those chains, especially if the operations are in need of a costly investment to help turn them around. But in the East Coast where Lidl and Wegmans are expanding or entering the region, and Amazon and meal-kit delivery services are growing in popularity, for the right buyer these stores could be a good way for them to expand their reach.