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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.


 
 

supervalu


 


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
 


 

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.
 

 

keys to success


 
 


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.
 


 

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.

Super Floral Retailing • Copyright 2009
Florists' Review Enterprises, Inc.