Supervalu, rooted in America's heartland, faced a culture shock with its $12.4 billion purchase of Albertsons' prize assets.
The acquisition last year catapulted Supervalu from a traditional Midwest distributor that did 50% of its annual sales in retail markets that weren't so diverse, to a retailer of national scope that generated 80% of its corporate sales in a variety of demographic retail markets.
The Albertsons deal placed Minneapolis-based Supervalu into some of the largest urban areas in the country, with a geographical reach that encompassed both coasts and runs border to border. Seventy-one percent of its stores are in markets with populations exceeding 2 million people.
Many of the acquired Albertsons' markets are ethnically diverse. In Southern California, for example, where Supervalu operates primarily under the Albertsons banner, Hispanics make up 41% of the population, Asians 10% and African Americans 7%. The Census Bureau projects that by 2025, the Caucasian population in the region will decline from 39% to 22%, while Hispanics will increase to 53% and Asians to 13% of the population.
Almost overnight, Supervalu was transformed with 1,124 new retail locations with combined sales of $24.5 billion. The acquisition tripled Supervalu's corporate store count and brought its network of food and drug stores to 2,500.
Since May 2006 when the deal was approved, Supervalu has undergone restructuring to incorporate the huge transaction by combining the best of both companies. Supervalu put an executive team in place — many team leaders came from Albertsons — to manage and execute Supervalu's mission of being a “world-class food and drug retailer and supply chain providing an exceptional in-store experience and diversified product offerings to meet the wide variety of consumer preferences on both a local and a national level,” Jeff Noddle, Supervalu's chairman and chief executive officer, explained to investors in November.
An important component of Supervalu's transformation is creating a corporate culture that embraces diversity as an important driver in fulfilling the needs of its urbanized markets.
For renewing its focus on diversity, which requires the commitment of its CEO to put the right leadership in place to create an environment that embraces diversity as a corporate strength, and for fostering an environment that respects the values, views and contributions of others, SN is honoring Supervalu with its annual Champion of Diversity Award, which was to be presented to Jeff Noddle at the Friends of the Industry Dinner during Food Marketing Institute's Midwinter Executive Conference in Grand Lakes, Fla., last night.
Supervalu was chosen based upon nominations from SN's website, and from discussion and evaluation by SN editors and industry consultants.
Even before the Albertsons sale, both companies were making progress on their approach to diversity.
Noddle told SN that Supervalu began to get serious about it several years ago. Prior to that, he admitted diversity was not as high a corporate priority as it should have been. That was partly because Supervalu operated in Midwest regions that weren't as diverse as other parts of the country.
“If we are going to be a national company, we have to reflect how this country looks,” Noddle said. Therefore, Supervalu is pursuing a number of initiatives to strengthen its position as a company of nearly 200,000 employees that promotes diversity as a strategy to better understand and serve its varied markets and consumers.
Those initiatives include:
— Maintain a diverse board of directors. Noddle noted that Supervalu's 13-member board currently consists of three women, two African Americans and one Asian. In 2005 Noddle received the Bridge Award for inspiring and supporting diversity on Supervalu's board. The award is presented by Chicago United, an advocacy organization that promotes corporate diversity.
— Have a vice president of diversity and inclusion, a new position, to coordinate initiatives and measure results.
— Encourage and support associate affinity groups that represent a spectrum of diversity interests and issues. Both Supervalu and Albertsons had affinity groups. These are now being combined and rationalized under the new Supervalu. There are about 15 Supervalu affinity groups that represent African American, Hispanic, multicultural, gay and women's interests.
— Create a dedicated supplier diversity department with a dedicated staff to further the company's efforts in maintaining a diverse supplier base.
— Form an internal diversity council, comprised of members of Supervalu's senior leadership, as well as representatives from all business units. This initiative is in the process of being created.
“What's important is the commitment that has been made with the company to do better. We are early in this journey and particularly early in the journey of bringing the two organizations together. We are really harvesting the best ideas out of both companies,” Noddle said.
Herb Smith, CEO, HC Smith Diversity Consulting, Shaker Heights, Ohio, called Supervalu's diversity goals a “remarkable business objective.”
“It is a leadership issue,” he said. “Whether a small, midsize or large organization, it begins at the top and cascades through the organization.”
Albertsons was known in the industry to have a strong commitment to diversity. At one time it supported some 35 affinity groups, according to Darnell Allen, a 36-year Albertsons veteran who was appointed Supervalu's new vice president of diversity and inclusion.
Albertsons' internal theme was “one vision, many perspectives.” Over the last few years, Albertsons was recognized by the Washington-based Human Rights Campaign, a civil rights organization for equality among gay, lesbian, bisexual and transgender people, for its non-discrimination policy that includes sexual orientation. In January 2004, Albertsons and Coca-Cola honored Black History Month by donating more than $100,000 to African American organizations in some of the supermarket chain's biggest markets. In 2003, Albertsons partnered with the United Hispanic Foundation and The East LA Classic Theatre in Denver to introduce new literacy and scholarship programs that focus on bilingual education for minority students in the Denver area.
Supervalu is also pursuing such outreach projects through partnerships with educational institutes where it seeks out diverse talent, and participates in diversity-focused career fairs such as the Black and Hispanic MBA fairs, among many ongoing projects.
Allen defines diversity as “any collective mixture of differences and similarities.” While there are many differences among the people that work at Supervalu — nearly half are male and half are female, and about a quarter of the workforce is ethnically diverse — they all work for the same company, Allen explained. Inclusion means how differences and similarities are respected within the company. “It's important to create an equitable, healthy and high-powered organization in which all individuals and their contributions can be valued.”
The affinity groups provide an inclusive platform to achieve awareness of issues, community outreach and mentoring. Each of the home office banners have been asked to form affinity groups. By the end of the year, 20 to 25 groups are expected to be functioning and pursuing projects that touch the community, from raising money for women's shelters to volunteering at hospitals.
“The affinity groups play a mentoring role, and we urge our executives to mentor others as well,” said Dave Pylipow, Supervalu's executive vice president, human resources. “It helps folks learn the unwritten traditions and ways of doing things, and they share those benefits. We work hard to identify talent among women and minorities, and identify what things to do to accelerate their development and move things along quickly. That is our favorite way to bring folks into management internally. We can identify those in hourly or salary positions showing talent and work hard on their development.”
Like Albertsons, Supervalu plans to host an annual affinity forum. “We'll have them come in — two to four from each group — and talk about what their group had accomplished over the last year. That is a way of building camaraderie and networking as well as sharing best practices among affinity groups and getting exposure to the top leadership within the organization,” Allen said.
Equally important to Supervalu's diversity program is its minority supplier program. Noddle explained that a lot of small companies are made up of minority families. Supervalu strives to break down any roadblocks to entry for those small vendors, he said. “We really encourage them and find a way for these people to get their products and services into our company. It's not necessarily in a preferential way, but in an easier way. We make sure there are no roadblocks in letting these products get through,” he said.
Noddle said the company is just at the beginning of its diversity journey. He believes progress is being made on the gender front with two females running retail companies, one heading the supply chain and a female CFO. He believes the company reflects the marketplace where it operates. But progress still needs to be made at the executive leadership level with more minority representation.
“Overall, diversity of our employees does reflect the communities pretty close,” Noddle said. “From a customer standpoint, I hope we appear diverse. Where we have yet to improve is to build diversity more into our everyday thinking within the company in our merchandising and marketing decisions.
“If we get more people in leadership positions who can help us to better understand the more diverse world we live in, it will only help all the subsequent decisions we have to make.”
Joe Palmer, vice president of Hunt-Scanlon Corp., Stamford, Conn., said Supervalu typifies the direction many leading companies are going with diversity. Such companies are “looking at diversity in a different way, and it's not just the right thing to do. It needs to be looked at as making good business sense and is good for business. Fortune has its ‘best companies to work for list’ and those companies have outperformed the S&P 500. Getting representation at the senior level is viewed as a more critical aspect of diversity because everyone wants to be working with a company whose role models allow them to say, ‘I can move up the ranks in this organization.’”
Related Stories: Affinity Outreach
You don't have to be a Six Sigma Black Belt to qualify as a member of a Supervalu affinity group. But it can't hurt, according to Anne Marie Marasco, who holds such a title in the process improvement department at the Acme Markets division, Malvern, Pa.
She has been a member of the Diversity Advisory Council, a multicultural group of 20 people under the Acme division, since the council's inception in 2002.
The DAC group is all about improvement. “It's a collaboration of personal and professional outreach, and how we can make our company better,” Marasco explained.
A primary function of the group is mentoring, and that includes funding scholarships for minority associates; recruitment efforts at Rutgers University; workshops and seminars to educate management and improve the overall business; and supporting community charities such as an annual drive for the American Diabetes Association.
In recognition of Martin Luther King Day, the group held a luncheon, sponsored by Glory Foods, a minority vendor that makes Southern-style products. Executives and category managers were invited to taste the products. “If you weren't African American, you could say this is product I could buy in the store,” commented Marasco.
The biggest benefit for Marasco is mentoring. “I've gotten back from them as much as I've given,” she said. Without mentoring, many people's paths may never have crossed. It elevates associates' morale and increases retention, she added. “It's invaluable to retain talent both diverse and non-diverse. We are an active group and have passion for what we do.”
Liz Garrett, another former Albertsons' employee and now Supervalu's vice president of human resources, Retail West, also has a passion for affinity groups.
Known as “Mother MESA” (mentoring, encouraging, supporting, achieving), Garrett was a founding member of Albertsons' first women's affinity group in 2001.
The group was formed to increase the number of women in management positions at Albertsons. “We didn't see the number of women in management positions that represented the number of women in the total workforce,” she said.
Kevin Tripp, Supervalu's president of Retail Midwest, was a big supporter of the group. Success for Tripp was whether the group could provide a network that would give women an opportunity to move up the ranks in their careers, Garrett said.
When the 70-member group celebrated its sixth year last year, two-thirds of the original women had been promoted to higher-level jobs or taken on new opportunities, Garrett said.
The original MESA group was broken up with the Albertsons sale. The Southern California MESA chapter now consists of about 50 members, and it plans to grow by forming other chapters throughout Albertsons' 287 stores in the region.
Besides providing a formal networking and resource support group for women, who are Albertsons' core target audience, the group has been known to give back valuable feedback and insight in focus group sessions for the company. “We provide a reality check back to the business,” Garrett said, especially when it is launching new concepts or formats.
Supervalu's Affinity Groups
These groups are instrumental in mentoring and community outreach. Supervalu expects to nearly double the number of these groups by year's end.
|Black Leadership Network
African American Leadership Committee
|Hispanic Mentoring Group
|Affinity Leaders of the Big Sky
Diversity Advisory Council
Diverse Career Path Network
|Mentor Encouragement, Support, Achieve
Albertsons Women's Initiative Network
People Opening Windows Enabling Results
Mike Byron, Supervalu's corporate director of supplier diversity, knows his barbecue sauces — he has seen his share of them come across his desk — and he knows the buyer's time is limited.
Named last year to manage Supervalu's supplier diversity department, Byron, a long-time Albertsons executive, is in charge of helping minority owners who want to break into big- time distribution with their products.
Byron has plenty of empathy for the small entrepreneurs since his family once ran several barbecue restaurants in Florida.
“We are about being relevant to our customers and support anyone that wants to do business if they have the capacity and scale to do it,” he said.
The request-for-proposal process is stringent in order to make the best use of buyers or category managers' time. With 200 to 300 suppliers asking for reviews almost daily, Byron says he looks at what is really different about a product, and how the supplier plans to market it. “It's not just bringing it in and putting it on the shelf.”
Byron said he is responsible for attracting vendors, evaluating the products, implementing minority vendor products into distribution, especially into categories that are underrepresented, and monitoring the results.
“We want to implement supplier diversity because it is good for business. It provides us a competitive advantage and creates relevance for us in those areas we operate.”
Supervalu measures its supplier diversity results by spend. Byron said the industry best in class is 5% of total spend. Supervalu's goal is to have 5%-10% of its total spend be on goods produced by minority-owned companies.
Byron will add a manager of professional services (IT, HR, legal services, etc.), a new position.
“In trying to reach a certain spend with minority-owned companies, certainly you have to sell a lot of barbecue sauce to do that. But if you hire a construction company to build four or five stores, that represents millions of dollars, and the same thing with any professional services,” Byron pointed out.