SUPERVALU and the customer loyalty challenge
SUPERVALU reported struggling numbers for the 1Q of its fiscal year, with net earnings well below expectations. Shares have since plummeted to 20-year lows for the company.
In a company statement, SUPERVALU highlights a number of cost and debt control initiatives to realign its supermarket businesses, particularly the reduction of capital expenditures and a suspension of the share dividend, so that it can compete against other companies that are selling its products at lower prices.
Interestingly, there is minimal mention of improving profits from a pure revenue perspective. If SUPERVALU is looking at industry examples to improve its revenues, it most likely will be taking a very close look at Kroger, as its first quarter earnings were achieved primarily by leveraging its customer loyalty programs.
Between leveraging its data to provide relevant offerings to its customers and allowing patrons to kickback their loyalty rewards into discounts at the gas station, Krogerâ€™s customer focus has allowed the company to gain a competitive edge.
How should SUPERVALU tackle its financial challenges? What would be the best course of action to secure its return to favorable growth?