Supervalu cuts 200 jobs in Minn., 800 nationwide

Eden Prairie-based Supervalu — which operates 1,100 grocery stores nationwide — is cutting about 800 jobs, including about 200 in the Twin Cities.

The company has been struggling in the face of growing competition from Walmart and Target.

Supervalu officials say most of the cuts will be of management and corporate support employees. They include the jobs of about 150 information technology workers whose work will be outsourced to other firms in the United States and overseas.

The majority of affected employees will leave by the end of this month.

Supervalu spokesman Michael Siemienas said the grocer is trimming its workforce to help reduce costs so it can better compete with lower-priced rivals.

"There's competition throughout the entire grocery industry, whether it's the big boxes or other stores that are opening," he said. "And this move is to remove permanent expenses and ensure that we can be more competitive for pricing to our customers."

In Minnesota, Supervalu's holdings include 46 Cub Foods stores. Siemienas said Supervalu has been cutting prices at those stores, as well as at stores it operates in other markets under different names.

"It varies by banner," he said. "We're working with our vendors. The one thing that we're making sure of is that before we lower prices we are making sure we pre-fund it so that these lower prices can be maintained for our customers."

Paying fewer salaries is one way to fund price cuts.

Traditional grocers are facing stiff and growing competition. The huge discount chains Walmart and Target are selling more groceries to draw additional foot traffic to their stores. Grocers also find themselves competing with other low-price retailers like Costco and Trader Joe's.

The trends leave Supervalu in a difficult position.

"They're a middle-of-the-road, plain-vanilla grocer," said David Livingston, a Milwaukee-based grocery industry consultant. "And one of the problems is you get most of your road kill in the middle of the road."

Livingston said Supervalu also is burdened by high amounts of debt and sales declines. In its most recent quarter, the company lost $750 million.

"They are unable to compete on price [with] Walmart," he said. "And they are also unable to compete with the quality service supermarkets like Whole Foods. And then at the same time, they've got an onslaught of new competitors coming in all the time."

Grocery industry consultant John Dean said Supervalu's turnaround has been tough and won't get any easier for the grocer and its 135,000 employees.

"They are cutting costs," he said. "They've sold assets to pay down debt. And at the same time, like-store sales have not turned around. They've continued to erode."

Supervalu has closed dozens of stores and put a heavier emphasis on its discount Save-A-Lot chain. Save-A-Lot stores offer a limited assortment of goods but claim their prices are as much as 40 percent below those of a conventional grocery store.

The job cuts announced Tuesday weren't enough to reassure investors about Supervalu's finances. On a day when the major stock indexes rose, shares of Supervalu fell six cents to $6.87.

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