As you think about how you are going to report lackluster results for the third quarter, I would like to have you consider the following issues that need to be addressed to move Supervalu to an elite company with tremendous growth potential:
* Budget Season - Since this is your first budget season with Supervalu I am sure you are witnessing first hand the "sandbagging' and conservative approach to the budget process. Why?, because you reward your executives for budget achievment instead of actual sales and profit growth. Make it simple, if your executives grow their area then reward them...no growth no reward. I believe your shareholders would benefit from this approach also.
* Retail Operations - Visit your retail stores unannounced on a Friday evening or Saturday afternoon. You'll see what your customers are seeing; numerous out of stocks, poor service (long lines at the checkout) high prices, and poor conditions. You are only fooling yourself by announcing your upcoming visit to one of your retail banners. Until you start to hold your executives accountable for these issues they will never be solved and your customers will continue to be disappointed.
*Wholesale- Your executives in this area have been aware for 3 years that Target was leaving. What is their strategy to grow the business? They don't have one, except to cut costs. If you rewarded for growth instead of budget achievment they would find a way to grow the business. If they can't, then you should sell Wholesale while there is still some value. Quite frankly, retail is your core business now, Focus on that. You should have learned that 5 years ago when Wal Mart sold Mclane. Wholesale is not a core business and it is not growing...sell it!
*Save A Lot- Bring back Bill Moran. The current leadership has failed and now selling national brands as a way to grow sales. Bad Idea, and makes SAL vulnerable to price competition. Your plan to double SAL in 5 years will not happen if you conintue to go down this path.
*NEW Retail Stores - Whoever was in charge of developing and approving the new retail stores should be held accountable for their lackluster results. Get Retail knowlegeable executives to run this area.
*Information Technology - You need real time visibilty to information and one common platform. You saw how this worked at Wal Mart, so make this happen ASAP so your managers can make timely financial decisions. This is critical to Supervalu growth.
*Overhead - move forward and consolidate Merchandising and eliminate the redundancy between the Corp Office, the Retail Bannners and Wholesale Regions. Don't add Merchandising headcount to wholesale...what is your return going to be...more negative sales growth? You are at a distinct competitive disadvantage with the bloated Merchandising headcount.
*Review Accounting- it is overstaffed and most of this should be outsourced.
*HR - another area that is bloated and redundancy is very prevalent across the Banners, regions, SAL and Corp office.
Craig, You have a tough job, I understand that. Surround yourself with new people from the outside. The current executives are not making it happen. They are spending too much time making excuses during the budget process.
I would like to encourage other viewpoints that would assist Craig in making Supervalu an elite business.
SVU has a vision problem. They are too much me too. Copy Copy Copy. What does Albertsons stand for? What is unique about it? We sure know what Costco, Trader Joes stands for SVU is a blah company. They need to find their nich otherwise there is no need for a 3rd place grocery chain.
In layman's terms, and excuse the "political incorrectness" To many CHIEFS and not enough Indians.......... Let's get back to selling groceries, and not concerning ourselves with CSI scores. Self checks need to GO!
nice job on your letter--no doubt a fair bit of time and effort went in to crafting it, but I think the guy knows how to run a business as he would of never attained such a position without the background and skills in the first place. He wants the company to excell because that translates into stock appreciation and that is where most of his huge pay potential exsists. CEO's get rich off their shares and options-not their salaries!!!