MINNEAPOLIS -- Supervalu here will focus this year's corporate retail store expansion program on its Cub Foods and Save-A-Lot formats, according to Michael Wright, chairman, president and chief executive officer.
add 20 new corporate Save-A-Lot limited-assortment stores and about 85 licensed units. An additional 30 Texas T stores acquired in May are being converted to the Save-A-Lot banner.
"Texas T is a very nice addition to the Save-A-Lot concept," Wright said.
About 35 new stores, a square footage increase of 9%, will be added to the corporate retail program in 1994, the same square-footage growth rate as last year, Wright told investors. Supervalu will spend $133 million on the expansion and an additional $150 million is budgeted to support the growth of independent customers.
At fiscal year-end in February, Supervalu operated 258 corporate stores, with annual sales of $3.7 billion. This included 54 Cub Foods stores and 75 Save-A-Lot units, which the company said makes Supervalu the 14th largest food retailer in the United States.
On the wholesale side of Supervalu's business, Wright said he expects forward-buying income, which has been on a slow rate of decline since the late 1980s, to continue to decline gradually. "But we don't expect it to disappear all together," he said.
To improve the Wetterau operations acquired in late 1992, Supervalu created retail development offices in each of the Wetterau divisions to support independent customers. Previously, retail development was handled centrally out of Wetterau's headquarters in Hazelwood, Mo., Wright said.
"We didn't think that got them close enough to the retailers or the business," he said. "We're already seeing the pent-up demand for development."
Supervalu also is moving to improve its New England wholesale distribution operations following the acquisition of Wetterau and Sweet Life Foods, Suffield, Conn., Wright said.
A Northboro, Mass., distribution center, which was added in the Sweet Life acquisition, closed recently and its volume was moved to a Wetterau warehouse in Andover, Mass. The added volume should build distribution synergies and improve the Andover facility's operations, Wright said.
"New England, which was a problem area for Wetterau, is now adding significant potential for Supervalu as we go forward," he said.
Another trend in the industry is that the structure of discounts offered by manufacturers is changing for the benefit of the largest buyers, such as Supervalu.
"What's happening is that those with the buying clout can work special deals and special advantages through use of their buying clout," Wright said. "More and more people are getting sophisticated, especially the big buyers."
At the company's annual meeting, which came a week after the presentation here, Wright cited the example of discounts offered on the purchase of tuna fish. By buying in larger quantities, an order of 500,000 cases for example, Supervalu received an additional discount of 7 cents per can. This lowered procurement costs by $1.7 million on this one item.
The extra 7-cent discount is available to anyone, Wright said. "However, few can sell 24 million cans of tuna," he said.
In an attempt to build its international business, Wright said Supervalu hired a former executive of Hong Kong-based Dairy Farm to lead its international expansion. Supervalu is exploring several interesting international opportunities, but Wright said he had "nothing to announce" yet.
