RANCHO PALOS VERDE, Calif. — Out of the chaos and changes that Supervalu has experienced the past few years will come a better, stronger company, Janel Haugarth, the company’s executive vice president and president of its independent business and supply chain services, said here last week.
Speaking to the 2013 Executive Leadership Forum of the Network of Executive Women, Haugarth outlined the issues Supervalu faced after acquiring the Albertsons retail banners in 2006 and talked about the programs under way to reverse the wholesaler’s fortunes.
Having been with Supervalu for 30 years, Haugarth said she is in a position to understand why things happened the way they did and to help new senior management stay focused.
“When a new team comes in, it wants to change the world and make everything perfect, and it believes the people who came before were not as smart as they are,” she said. “That often puts me in a defensive position, but I can’t take these things personally, because as soon as you get defensive, you’re no longer part of the conversation — you’re on the other side of the table.”
New leaders tend to suggest too many projects all at once, she said.
“All are generally good ideas, but there are too many initiatives. In the food business most of the programs dealing with research and development will fail, so you have to move forward more slowly.”
Since all projects must be approved by the chief information officer, Haugarth said she worked with Supervalu’s CIO to urge executives to prioritize programs rather than start a lot of projects that won’t get finished.
“The senior team met with the CIO and laid out all the projects so everyone could see what was going on. Then they determined which had the best prospects of succeeding, and though we ended up with five No. 1 priorities, we cut back on about 25.”
Looking back, Haugarth offered her take on why Supervalu suffered after the 2006 acquisition of the Albertsons banners. It set a retail strategy based on “premium, fresh and healthy,” she recalled.
“But when the economic downturn started in 2008 and shoppers switched to value, Supervalu continued to pour millions of dollars into a format that was not working, then it had to do an about-face that created pressure on sales and merchandising at a time when a lot of new price competition was coming in.
“In a healthy economy, you can take a loss of sales, but in a leveraged company that was investing in ‘premium, fresh and healthy,’ the retail chains didn’t have the fortitude to take that competitive pressure.”
Read more: Supervalu Slows Sales Erosion in Q1
Centralization was another issue, she said. “The company took power away from the banners because it believed more centralized programs could work. But we moved ahead without having systems in place, so the merchants were missing out on a lot of data,” she explained.
“The lesson to learn there is, make sure data is available for decision-makers, because when you centralize, it makes it impossible to determine if you are making any progress on fixing challenges without information.”
Changes at the Top
When Jeff Noddle retired as Supervalu’s chief executive officer in 2009 as planned, the company’s board of directors hired Craig Herkert from outside the company as the new CEO — a move that prompted those within the company who had vied for the position of CEO to leave, Haugarth said.
“By 2012 we were trying to figure out how to stay afloat to get the business situated correctly. When the board decided to replace [Herkert], it installed the chairman of the board, who had no food industry experience — and he had to work with the existing senior management team.”
Once Supervalu announced last year it was exploring strategic alternatives, “that created a lot of insecurity among employees, especially among younger executives, who chose to leave despite our reassurances.
“At the time we were trying to make sure we kept our suppliers together, and we hosted conference calls with the CPG companies to make sure we didn’t lose any credit.”
Having overseen Supervalu’s independent retail business for years, Haugarth said it fell to her to keep the wholesaler’s customers from leaving during the period of uncertainty.
“There were fears Supervalu might go out of business the way Fleming had, and some of our customers had experienced that with Fleming. I had many conversations with them, and I assured them that would not happen here, and if it did, I would tell them in advance, and I asked them to trust me.”
She said she herself was unsure how things would turn out, “but telling people ‘I don’t know’ doesn’t work. So I didn’t lie to anyone, but I had to show a positive attitude.
“The toughest period was late in 2012, when I didn’t know how things would turn out. But if leadership doesn’t show confidence in a company’s outlook, then no one will stick with you.
“Looking back, it would have been difficult if I had to go back and say we did our best but we failed. But trust is a key component to be effective in a world of chaos and change — and if you are not being authentic, others will sniff it out.”
The situation resolved itself in January, when the board announced it would sell all of the Albertsons banners and appoint Sam Duncan as the new CEO, Haugarth said.
“In this chaotic situation where no one knew all the answers, we had to let our people know it was OK to be concerned and uncertain, and we urged them not to jump ship or overreact.”
However, when the Albertsons banners were sold, “we had to do a massive cost reduction, and I was given the job of overseeing that with the ironic title of vice president, business optimization, because I was the only one who knew what everyone did and who was capable of taking out overhead without hurting the business.”
Haugarth said she remained a part of the company’s senior management team “because I brought skills no one else had, and they valued someone who understands why things are as they are. I also had built firm relationships with our independent customers, and when some threatened to leave Supervalu, it was my equity that convinced them to stay.”
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