Supervalu Continues Retail Cuts

MINNEAPOLIS In a move that some see as the start of Supervalu's retail transformation, Shaw's Supermarkets is checking out of the Nutmeg State. The company said it would pull all 18 stores out of Connecticut this spring, selling 11 locations to members of Wakefern Food cooperative; another five stores to Stop & Shop; and seeking buyers for its remaining two locations. Terms of the sales, which are

MINNEAPOLIS — In a move that some see as the start of Supervalu's retail transformation, Shaw's Supermarkets is checking out of the Nutmeg State.

The company said it would pull all 18 stores out of Connecticut this spring, selling 11 locations to members of Wakefern Food cooperative; another five stores to Stop & Shop; and seeking buyers for its remaining two locations. Terms of the sales, which are expected to be finalized in late March, were not released.

“While these decisions are always difficult, given the impact on associates and customers, they ultimately allow us to operate more efficiently and effectively within a highly competitive retail environment,” Pete Van Helden, Supervalu's executive vice president of retailer operations, said in a statement.

Shaw's, based in East Bridgewater, Mass., expanded to Connecticut in 1995 and at one time operated as many as 26 stores there. But sources said it suffered from poor brand recognition and some iffy real estate.

“Where the stores were sold in Connecticut, Shaw's never really achieved significant size and scale, and under management prior to Supervalu, really bought some second-rate stores,” Burt P. Flickinger III, managing director of Strategic Resource Group, New York, told SN. Flickinger noted that Shaw's expansion to Connecticut included taking over some locations eschewed by Stop & Shop when it purchased selected Edwards and Grand Union locations.

Supervalu, Flickinger added, was “making a superb strategic decision realizing that Shaw's made store site mistakes under previous management and concentrating on areas where it has significant size and scale.”

Some observers believe Supervalu could make additional divestitures in its retail landscape in the months to come. Shaw's, along with its Philadelphia-based Acme banner, have long been considered potential acquisition targets. A Supervalu spokeswoman declined to comment on market speculation, saying only that the company was focused on operating more than 170 Shaw's stores in New England.

Wakefern, the retailer-owned cooperative in Keasbey, N.J., said it would convert 10 of the stores to its ShopRite banner and one store to its discount PriceRite format to be operated by individual members.

Wakefern is to acquire stores in Canton, Clinton, East Hartford, Enfield, Fairfield, Hamden, Southbury, Stratford, Wallingford, West Hartford and Willimantic, reports said. Those locations stand to benefit from Wakefern bringing a better cost structure, more efficient buying and improved sales volumes, Flickinger said.

“The acquisition of these stores represents an exceptional growth opportunity for Wakefern and its members,” Joseph Colalillo, chairman and chief executive officer of Wakefern, said in a statement.

Stop & Shop, based in Quincy, Mass., said it would acquire Shaw's stores in Darien, East Hampton, New Fairfield, Newington and Vernon. Shaw's said it would seek buyers for locations in Manchester and New Haven.