As if Supervalu isn’t having enough trouble with its traditional supermarkets, results at the company’s star performer, discount grocer Save-A-Lot, are sagging as well. According to a recent Supermarket News story, licensees say higher costs and a lack of leadership at Supervalu are to blame.
The latest blow for Save-A-Lot and its licensees is the departure of COO Tom Lenkevich, a former licensee who many store operators thought of as their last ally at corporate headquarters. Lenkevich is resigning later this summer to pursue other opportunities.
Earlier this month Supervalu reported that Save-A-Lot’s sales for the most recent quarter were flat compared to the same quarter one year ago, despite the addition of 53 more stores since that time. The company said declining identical store sales and higher costs related to Save-A-Lot’s growth strategy resulted in lower profitability.
Save-A-Lot’s largest licensee, who has 220 stores, agrees that higher costs are to blame, adding that as a result, prices are too high as well.
The Supermarket News story included the following quote from the licensee.
“Supervalu as a whole has bounced around in their priorities. When Herkert first came to Supervalu he said they were going to concentrate on price and expanding the store base. They spent the money expanding the store base without addressing price, not only at Save-A-Lot, but at the chains: Acme, Shaw’s and Jewel. And that affects Save-A-Lot because as those chains falter, Supervalu was more dependent on money coming in from Save-A-Lot. It’s gotten where the cart is before the horse.”