Supervalu bulk and chain food stores are one of the largest firms in the United States of America. It is expected to service more than a million consumers in the US. The corporation is based in Minnesota. It has over 5000 stores made up of local, certified and conventional grocery stores. Supervalu has about 40,000 workers. The organization deals primarily with the delivery of food products to different households in the region.
In the last few years, the business has been competing against low revenue volumes, primarily in the retail sector. This has been the product of increasing rivalry from its main rivals in the food industry. Some key elements have primarily contributed to the many problems experienced in the organization as discussed below;
Sluggish Retail Segment
According to Kinsey (78), the sluggish retail segment has been attributed to price competitions and challenging environment. Another factor that has also contributed to the problem is the competitive store openings. This has caused a decline in the volume of sales which has affected the amount of revenue generated by the company in the last few years. Further, it has weakened the retail segment since a lot of time is taken during the distribution of the various food products to the consumers.
Amazon Company had recently acquired the Whole Foods Market which saw it reduce the various prices of the different food items. This forced other companies to lower the charges on the products (Kinsey 78). Supervalu is, therefore, facing a significant a challenge from Amazon Company which has sent fears among the management team and significant shareholders since there have been speculations of a decrease in the amount of revenue that would be generated.
Supervalu wholesale and retail Grocery Company have several distribution stores across the country. This, therefore, makes control and coordination of activities of the various branches of the organization very difficult. The managers employed to run on behalf of the organization have proved to be very incompetent (Kinsey 78). This has been attributed to the release of the number of profits that were generated in the last financial year. According to the financial report that was given out by the overall finance manager, the company had only produced about $5 billion profit.
The company also experience poor communication among the employees in the central office and the distribution stores. Supervalu Company mainly relies on the vertical form of communication which has prevented a free flow of information between the junior staff members and the top level management (Kinsey 78). With such a poor communication, the company has lost some significant consumers leading losses within the organization.
Management Strategies Used in Supervalu Wholesale and Retail Grocery
The company has been applying certain vital strategies to facilitate the operation and running of various activities within the different distribution stores. Such critical strategies include;
Supervalu uses a tactical pricing strategy that has been applied and used widely in all the retailing centers of the company. The strategy has enabled the firm to gain a competitive advantage over most of its competitors across the country. The organization uses base zone pricing, data from the stores and a competitive pricing model to provide key recommendations that aids in increasing the sales volume and amount of revenue gained. The pricing strategy has enabled Supervalu wholesale and retail grocery to have a better competitive positioning against most of the competitors such as Amazon Company.
Centre Store Strategy
Under the center store strategy, the company has shifted its focus on an efficient merchandising strategy as a means of recovering the volume of sales that have been lost in the past years which was as a result of stiff competition in the market. The center store strategy works by evaluating what key categories are weak within the company, and then a mass merchandise is applied not the various selected types. The retail store is then assisted in developing a customized pricing and merchandising strategy. This is usually done to aid in recapturing of the several categories that have been lost. The potentially weak categories are then defended by the merchandising team.
The business strategy is mainly for the organization to attract and retain consumers by carefully looking at the concerns of the consumers. The target customers are identified, and the product that appeals and suits them are provided for them in the specific geographical regions. Apart from the customers, the firm also gets the management team to understand and thus know the company’s competition. This mainly dwells on what products and how the key competitors promote and market its products in different markets across the country. The management through a business strategy helps the company to position itself concerning its critical competitors. Further, the strategy has been used in Supervalu wholesale and retail to identify the most significant resources needed by the workers to enable to achieve certain objectives set up by the management.
The transformational strategy is used in the company to bring major transformation that changes the way operations are conducted within the organization. It primarily involved planning for the future on a technological basis to adapt to the changing environment. This has helped the company to institute several changes especially during low sales volume which has always been characterized by a decreased profit.
The operational strategy has been used mainly by the middle level of management. It has been used to implement an action that was formulated by the management of Supervalu Company. The senior management is first consulted who help in the identification of various tools, processes, and technology that would be used to put into action the set-out strategy. The company involves all the employees since it involves making high-level decisions that are critical to the success of the organization. Supervalu wholesale and retail grocery can attain the best level of the price of its products. Further, the due firm uses this particular strategy to manage its inventory in most of the distribution stores across the country.
Analysis and Evaluation of Supervalu Company
The following ratios are used to analyze the financial capability of the firm;
The liquidity ratio has been used to determine the ability of the firm to meet the financial liabilities as and when they fall due. The ratios that have been used to indicate whether the company is capable of paying debts have been calculated as below;
Quick ratio=cash + short-term investments +current receivables/current liabilities.
Total cash=$5.8 billion
Short-term investment=$3 billion
Current receivables=$2 billion
Current liabilities=$8 billion
Working Capital Ratio
It helps show the liquidity of the firm to the creditors.
Working capital ratio=current assets/current liabilities
Current assets=$10 billion
Current liabilities=$ 8 billion
The solvency ratio is usually used in measuring the company’s ability to sustain the various operations continuously for a more extended period. It compares the debt levels with the assets, equity and earnings of the company.
Key solvency ratios that have been used in the determination of financial capability include;
The equity ratio measures the number of assets usually financed by owners of Supervalu wholesale and retail grocery. The total assets are compared with the total equity in the company.
Equity ratio=total equity/Total Assets
The debt ratio measures the company’s total liabilities about the total number of assets.
Debt ratio=total liabilities/total assets
Total assets=$24 billion
Total liabilities=$18 billion
The ratio is used to compare the income statement accounts indicating the capacity of the firm to obtain profits from its daily operations. It involves calculating ratios such as profit margin, return on assets and return on equity.
It is used in the calculation of net income earned by the company against the volume of sales made in a particular financial year.
Profit margin=net income/net sales
Net income=$ 65 billion
Net sales=$58 billion
Return On Assets
Return on assets=Net income/Average total assets
Net income=$65 billion
Average assets=$12 billion
Return on Equity
Return on equity=Net income/Shareholders’ Equity
Net income=$65 billion
Shareholders’ equity=$70 billion
Factors for The Success of Supervalu Company
The organization uses some marketing methods to ensure it makes sales that generate profits to meet its critical objective which is to make profits. The method includes;
The digital marketing involves marketing of products digitally through the emails, websites and social media platforms. Supervalu wholesale and retail Grocery Company use the digital marketing to promote to market its products (Grewal 30). The organization mainly uses email marketing, mobile marketing, and social media. This has enabled the company to reach a wider market across the country hence a massive volume of sales has been made.
It involves making an immediate sale to a customer through personal contact. Supervalu Company has employed several individuals whose work is to make sales personally to various consumers.
It focuses on the loyalty of the customers and long-term relationship to retain consumers to a particular business enterprise. The company uses this type of marketing to help in retaining the existing customers (Grewal 30). It has therefore created a platform that looks at the concerns of the customers. The organization offers an immediate feedback to the varying complaints and concerns raised by the consumers.
The company employs the four factors that are essential in the production of foodstuff. The factors include capital, land, entrepreneurship, and labor. However, the company has been experiencing a shortage of labor considering the many numbers of distribution stores. This has been improved in the last few years by use of robots to aid in the operations and running of the various business units (Grewal 30). Supervalu Company uses several types of equipment that aid in the production process. The machines and equipment have contributed to the large volume of food items and other products that are offered to the customers resulting in a huge amount of profits generated.
Supervalu Company usually hires a competent manager who is capable of running and managing the operations and activities of the organization. It tests the managerial competency by checking whether the individual who aspires to be the head of the firm is capable of meeting various complex demands by using the right skills and attitudes. Managerial competency is assessed by analyzing motives, self-image, transferable skills, know-how and the values that a manager would bring to the company (Grewal 30). Through management, the company has been able to run continuously by meeting the various needs and concerns of the customers.
Emerging Benefits of Managerial Competency
The organization has been able to identify the various strengths and weaknesses of most of its employees. It has therefore devised a way of motivating the workers on their strengths through awards and promotions. On the other hand, the employees are advised according to improve on their weaknesses. Also, the managerial competency has helped the company to supercharge its key training programs by acknowledging the specific areas that need improvement during the training sessions organized by the firm. Further, Supervalu Company has been able to track competencies of its strategies by comparing the competency scores from the lowest to the highest score (Grewal 30). This helps in the determination of the competency that brings the highest profits into the organization. Later, the firm would then look for individuals who already possess the competency abilities and then hires them to help in the control and coordination of the major activities of Supervalu wholesale and retail grocery Company.
The other factors that have contributed to the success of the organization include;
The company offers fresh experiences to its customers. The quality, ease of working and strong offering are the key factors that have made retailers everywhere across the country to seek the products from Supervalu company.
Supervalu Company has some dedicated operations and sales staff who provide support to the customers. They offer guidance to the consumers by the provision of strategic planning and expert knowledge which helps in meeting the specific needs in different distribution stores across the country.
Massive Network On a National Scale
Supervalu usually gathers together its employees, customers, and vendors during every summer for National Sales Expo. Such a platform allows the retailers to have direct access to new items including finding solutions to merchandising problems (Grewal 30). Additionally, the retailers have access to products and promotions that are not available in the country. Through such platforms, the company meets new customers who would be willing to purchase items from them.
Factors for The Failure of Supervalu Company
Sluggish Retail Segment
The sluggish retail segment has been attributed to price competitions and challenging environment. Another factor that has also contributed to the problem is the competitive store openings (Grewal 30). This has caused a decline in the volume of sales which has affected the amount of revenue generated by the company in the last few years. Further, it has weakened the retail segment since a lot of time is taken during the distribution of the various food products to the consumers.
The company also experience poor communication among the employees in the central office and the distribution stores. Supervalu Company mainly relies on the vertical form of communication which has prevented a free flow of information between the junior staff members and the top level management. With such a poor communication, the company has lost some major consumers leading losses within the organization.
According to Grewal (30), Supervalu wholesale and retail grocery company has several distribution stores across the country. This, therefore, makes control and coordination of activities of the various branches of the organization very difficult. The managers employed to run on behalf of the organization have proved to be very incompetent. This has been attributed to the release of the number of profits that were generated in the last financial year. According to the financial report that was given out by the overall finance manager, the company had only generated about $5 billion profit.
Based on the analysis and evaluation of the company, the following are the recommendations that should be adopted to tackle the various problems that are present;
Supervalu Company should move outdoors to help do away with the sluggish retail segment. The outdoors allows many of the customers to check out several products of the organization (Duncan 13). This can be made easier through an additional employment of salespersons who would be tasked with moving and making sales of the goods outside the distribution centers. Another way to lower the sluggish retail segment that should be utilized by the company is a proper designation of the stores for sales through the use of creative displays and lighting techniques that attract customers. The stores should also have several videos play to entertain the consumers. This would allow for quicker movement of products in the distribution stores. Further, the company should create an open communication environment. The open communication can be attained by allowing all the employees to share any particular interesting idea, provide feedback and even give criticisms against any specific issues that they may feel unsatisfied with (Duncan 13). With an open communication in the organization, trust is built among the employees who will eventually result in the success of any company.
The company should also employ different channels that help in the transmission of various messages. The different channels that can be used include memos, emails, faxes, meetings and face to face conversations. The company should also choose a competitive advantage to enable them to survive the competition that is posed by the key competitors such as Amazon Company. The basic area that the organization needs to focus on gain a competitive edge would be on quality and prices (Stahlkopf 7). Supervalu, therefore, should produce high-quality products that bring value to its customers. It should also charge low prices for the food items as compared to other retailing firms that offer the same products.
In summary, Supervalu Company has some issues that affect its performance in the provision of various food items. Such problems include a sluggish retail segment, poor management and an ineffective communication between the top level management and the junior members of the company. However, some factors have contributed to the success of the firm which includes managerial competency, right marketing strategies, and fresh differences. The company should provide an open communication environment to enhance effective communication. It should also move outdoors to reduce sluggish retail segment existing in the distribution stores.
Duncan, Tom, and Sandra E. Moriarty. “A communication-based marketing model for managing relationships.” The Journal of marketing (1998): 1-13.
Grewal, Dhruv, et al. “Retail success and key drivers.” Retailing in the 21st Century (2010): 15-30.
Kinsey, Jean. The concentration of ownership in food retailing: a review of the evidence about consumer impact. Retail Food Industry Center, University of Minnesota, 1998.
Stahlkopf, Karl E. “Keeping up: technological challenges in power delivery.” IEEE Power Engineering Review 19.7 (1999): 4-7.