SuperValu SWOT and PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Acquisitions and mergers: Supervalu has been expanding through recent acquisitions like Unified, a retailer-owned cooperative focused on wholesale grocery and specialty distribution located on the West Coast of the United States in June 2017 and AG Florida, retailer-owned cooperative that distributes full lines of grocery and general merchandise to independent retailers, located primarily in South Florida, the Caribbean, Central and South America and Asia in December of the same fiscal. Thus, such acquisitions provide space for strategic expansion and Supervalu should invest more in these strategies. Integrating the synergies of these acquisitions which includes expanding the market, optimizing the distribution network will provide leverage to the company. Thus, it should pursue external expansion.
The recent acquisition of Supervalu by UNFI for a whopping $2.9 billion has been a great strategic move and that has earned combined revenue of $24.5 in 2018. This acquisition has increased Supervalu’s customer base and their combined products are 110,000 in 40,000 locations. This deal was made keeping in mind the synergies of the two companies and to fix Supervalu’s issues. The merger also helped the combined entity manage risks better, balance speed and bring in equilibrium in the ecosystem.

2. Optimizing asset base: The Company has been trying to improve asset base and reduce debt. It has eliminated undue expenditure in certain segments of operations which are no longer necessary. It has made agreements to sell majority of the loss making franchises. The three banners are Shop n Save East, Shop n Save St. Louis, and Farm Fresh which were closed. They were making losses over years and thus, their operational costs, increased the expenses. Closing these, has helped them in improving the operational efficiency and profitability.

3. Improvised version of Private Labels: The business can be grown by building fresh offerings of products, improving the private labels by adding depth to them and improving their marketing. There is demand for more organic products and company can invest in this section. Targeting more organic products as the company is losing customers because of the market shift towards organic sector. There has been estimated increase in demand of organic food and market is expected to grow from CAGR 14.8 percent from 2018-2022.

Threat

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Political

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Economic

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Social

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Technological

1. Electronic payment system: Supervalu has invested in making the whole payment system automated and seamless in its effort to improve operational performance. The customers have the facility to locate the nearest store through online channel and also the company showcases their achievements and their activities through the website. They have a strong logistic network running on warehouse technology equipped with radio frequency equipment, mechanized facilities and warehouses for dry groceries.

2. Labor management and scheduling system: The company has insurance and self-insurance programs where the employees are incentivized and given employee benefits like paid leaves. The key for the company is hiring and retaining their customers and this requires a proper scheduling system to ensure the functioning of the stores based on employee availability.

3. Embracing digitization and automation: Many grocery chains including Supervalu are embracing cutting edge technology like advanced analytics, artificial intelligence, robotics, and the Internet of Things (IoT). Advanced analytics helps grocers to opt for better assortments, pricing and promotions. Currently, many retailers are offering hyper localized assortments. They have different price zones with respect to the locality. They are handpicking products that play a key role in the assortment and running space-sensitivity analysis to identify the best store-specific planogram. They’re defining price zones using micro market segmentation and comparing prices automatically with key national competitors. Retailers are piloting no-checkout models: examples include Amazon Go, Ahold Delhaize’s “tap to go,” and China’s BingoBox, a chain of unstaffed convenience stores. Same day delivery, self-help with zero staff models like in China’s Bingo Box is modernizing the whole shopping experience. Robots are now efficiently performing over half of in-store tasks says a McKinsey study. Supervalu can adopt these automation measures to improve their service.

Legal

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Environmental

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