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Rethinking The Future of SuperValu and Centra

Centra is investing €25 million in an expansion programme that will see 18 new stores open this year, while SuperValu will invest more than €35 million in approximately 50 stores, in addition to the €23 million deployed last year to revamp and refresh
42 outlets.

Maev Martin talks to Centra and SuperValu managing director IAN ALLEN about the future direction of both brands, taking a leadership position on sustainable retailing, and reimagining the grocery retail experience

The Centra expansion programme, which will create over 430 new jobs in local communities during 2022, is in addition to the 11 new Centra stores opened in 2021 and the €17 million deployed last year to revamp and refresh 64 existing stores. Centra reported strong sales of €1.98 billion and 2.5% annual growth for 2021. This robust performance was driven by growth in Centra’s convenience offering, including its award-winning own-brand ranges, as well as Frank and Honest coffee. Moo’d Ice Cream, Centra’s Irish ice cream concept, recorded sales of €10 million last year, up by over 52% on 2020. The Inspired By Centra range saw strong growth, with a 40% increase in sales, while the Freshly Prepared range of meals also experienced a 40% jump in sales.

“This robust sales performance underscores our position as Ireland’s leading convenience retailer,” says Ian Allen. “A recently published economic impact report by leading economist Jim Power revealed that the financial contribution of Centra stores is valued at an estimated €646.7 million.” SuperValu, which will create at least 150 jobs this year and will add to its existing network of 223 stores, has increased its pre-Covid-19 sales in Dublin, driven by investment in it store network and the success of its convenience offering, including its Freshly Prepared By and assembled meals. The retail brand achieved sales of €3.237 billion in 2021 as it increased weekly customers to 2.7 million during the year. SuperValu also invested significantly in its Real Rewards loyalty offering last year, growing its total membership base to 1.2 million, and it plans to introduce over 1,000 new own brand products to its existing range of 5,000 products.

Online and Omnichannel
SuperValu’s online shopping service gained an additional 130,000 new customers during 2021, while online demand for Centra services grew significantly at the height of the pandemic. “Online shopping and the digitisation of the retail experience have accelerated rapidly over the past couple of years,” says Allen. “Online retail is here to stay and there is now also a rich diversity of online consumer experiences — from delivered food, to in-app purchases, contactless payments and click and collect.

Aggregators and delivered food have also seen significant growth, a trend that is expected to continue into the future. Similarly, ‘frictionless’ retail such as contactless, paying by phone, shopping through SuperScan, or click and collect, has also increased, as shoppers are looking to self-serve and have a seamless experience. We trialled fully frictionless a number of years ago and we continue to explore more frictionless solutions. It is an area in which we aim to lead and continue to invest in during 2022. We also continue to explore partnership opportunities with door-to-door delivery companies.”

Retail 2.0
Covid-19 has also accelerated the rise in omni-channel for all retail brands, including SuperValu and Centra. “Brands recognise that if the digitisation of the retail experience is done in isolation, it limits opportunities for differentiation and offers less than today’s consumers expect,” says Allen. “However, if it is embraced as an integral part of retail, technology can enhance the relationship with the consumer, and make shopping an easier and more personalised experience, either in-store or online. Trends such as cooking from scratch, as well as enjoying high-quality, pre-prepared food at home, have been amplified by the pandemic, but are also likely to stay, in addition to an increasingly sophisticated take-away market.

“In the future, the traditional grocery store or supermarket will be reimagined as a destination — it will be a place of food inspiration and advice, as well as a social hub. What is now the traditional grocery store or supermarket, will become the place where people go not just to buy products, but also for great food and dining experiences.

“Prior to the pandemic, our stores were already developing into these multi-purpose destinations where people go for food demonstrations, nutritional advice, and personal service from artisan butchers, bakers and greengrocers. Post-Covid, we have exciting plans to transform and grow SuperValu, both as a brand and as a shopping destination. Our ambition is to transform the food experience for shoppers with meals prepared in- store by chefs, to deliver reimagined butcher, fish and deli counters to meet every taste and preference, and to create a destination place to shop that delivers a modern and contemporary experience, redefining what shoppers expect from a supermarket in a unique and differentiated way.”

Allen describes SuperValu’s store in Knocklyon in south Dublin, which opened last autumn, as “a leading exemplar of the future of retail that revolutionises the customer journey, resulting in a transformed food experience, as well as easier and simpler shopping, enabling more sustainable choices”. Knocklyon is one of 44 SuperValu stores in Dublin, nine of which have benefitted from a €10 million investment. The investment in Knocklyon has resulted in a store that, among other things, now operates on 100% green electricity and runs on LED lighting made from recycled CDs, which uses 60% less energy than your standard system.

Taking The Lead On Sustainability
When it comes to introducing measures that make the Musgrave operation kinder to the planet, Allen believes that the organisation’s “spirit of enterprise, integrity and innovation” positions them to lead the way in adopting industry-leading sustainability initiatives. Guided by the UN Sustainable Development Goals, Musgrave’s sustainability strategy tackles key areas, from carbon reduction to the sourcing of produce, from plastic packaging to supporting local communities. “With 11 leading food and beverage brands and a network of over 1,000 retail partners, we have a significant opportunity to drive our sustainability agenda and inspire others to make changes in a collective effort to benefit people, protect the planet, and create prosperity,” says Allen.

Musgrave have been reporting on the carbon impacts of the business for well over a decade and sustainability is now embedded in every part of the operation. The company can also lay claim to a number of sustainability firsts in the grocery retail sector, including Centra becoming the first convenience retailer in Ireland to launch a 100% compostable and reusable bag, and the first retailer recognised as an SDG champion by the Government in 2020.

Their new sustainability strategy focuses on four key areas – Climate Action, with the ambition to be net zero-carbon; the Circular Economy, which includes plastic packaging and food waste; Sourcing; and Communities. “Our ambition is to be the most trusted and sustainable business in Ireland, making a real difference to people’s lives and ensuring our actions have a positive impact on our planet,” he says. “Our goal is to reduce our carbon emissions to reach net zero carbon by 2040. 91% of our own brand packaging is now recyclable, reusable or compostable, and we are well on the way to achieving our target that 100% of our own brand packaging be recyclable, reusable or compostable by 2025. We have already removed all non-detectable black plastics and replaced them with recyclable alternatives.

"We are also removing expanded polystyrene, plastic straws, stirrers and cutlery from our stores. And we are challenging our suppliers to improve their packaging in line with our 2025 target Musgrave is also committed to preventing food waste wherever possible, and where there is a surplus in its operations, they are ensuring that it is re-distributed to alleviate food poverty through their charity partnerships. “In addition, we aim to extend what we have learned in the operation of our own logistics, warehousing and buildings to make a difference at a community level through all the stores associated with our brands,” he says.

In an effort to raise awareness of the importance of pollinators and support the local biodiversity in communities around Ireland, SuperValu recently collaborated with the All-Ireland Pollinator Plan to launch the Save the Bees campaign. Bees are facing many threats, the main ones being lack of food and safe habitats, which means an uncertain future for bees and other pollinators. This will ultimately impact the food we eat, in particular fruit and vegetables.

In October 2021, SuperValu became the first retailer to bring vertically farmed hydroponic micro greens to market, and they are planning to further develop the range of products being produced in this way in-store in 2022. “Given the environmental benefits of vertical hydroponic farming, we are delighted to be able to offer customers locally grown options, where previously products would have to be transported from countries in warmer climates when they were out of season,” he says.

In addition to the micro greens, the Signature Tastes growing pea shoots are also launching in SuperValu stores. These are also grown using innovative soil-free methods, but they are grown on a bed of compostable paper. The zero waste growing pea shoots are a living product, so customers can cut as much as they want, and the plant

keeps growing. SuperValu’s Signature Tastes micro greens and growing pea shoots are sustainably grown and herbicide- and pesticide-free. “As they have been grown in a soil-free environment, which reduces strain on land-based resources, customers get great-tasting, nutrient-rich greens with fewer negative impacts on the environment,” he says.

The Conscious Consumer
Allen believes that, as we emerge from this pandemic, we will see a “conscious consumer, one who is interested in packaging, sustainable living, less food waste, better food choices, and buying local. In fact, sustainability is less of a trend and more of a core value for many of our younger shoppers”.

He also believes that Musgrave’s retail brands, particularly SuperValu and Centra, have been ahead of the curve when it comes to launching new product ranges and in-store solutions for healthy eating. “We were doing it before these trends became mainstream, and we will continue to adapt and meet every eating occasion, whether that be in- store, at home, or online,” he says.

While Kantar is predicting a general drop off in retail sales following the removal of Covid-19 restrictions and the return of hospitality, Musgrave are confident that the innovations they have introduced, and the continued development of their own brand offering, will help sustain the business going forward.

“Home-dining is now viewed as a new social occasion, so customers want access to restaurant-quality meals, which are not only convenient but also sustainable,” he says. “People have less time, so that convenience and quality is important to customers now and into the future, especially as they return to the office.”

Inflationary Pressures
Of course, grocery shoppers also want value for money, with inflationary pressures being felt across the globe, including in Ireland. NielsenIQ puts food inflation at 3.5% in Q1 of this year and estimates that inflation will potentially add over €360 per annum per household spend on groceries.

“We are keenly aware of both the scale and impact of price inflation right the way through the supply chain, from producers to customers,” he says. “This inflation is primarily driven by commodity price inflation, reduced availability of certain products, and political uncertainty. We are working hard with our suppliers to ensure we continue to deliver the best value and quality Irish products for our customers. Food retail inflation is rising, so consumers may start to see price increases in certain products. Cost pressures, from rising transport costs, higher energy and commodity prices, may start to filter through to consumer prices. We are aware of the pressures our customers and communities face at this time and we will seek to ensure that we deliver the best value, choice and quality.

“Our retail partners are experiencing unprecedented rising energy costs, with energy bills having as much as doubled over the last few months. Government proposals on the living wage, statutory sick pay, and pension auto-enrolment will put additional pressure on the cost of doing business. We are concerned that Government is not taking a joined up approach and is ignoring the cumulative effect that all these additional costs will have on retailers’ ability to run their businesses and employ people locally.”

Supporting Local
SuperValu’s Food Academy programme currently supports 320 Irish food and drink producers 52 weeks of the year. Producers recorded sales of €30 million in 2021, up by 47% on the prior year, and have now sold a combined €200 million worth of produce in SuperValu since 2013. SuperValu recently launched the Taste of Local initiative, which celebrates 33 new Irish food and drink producers who have completed this year’s Food Academy programme and will have their products available in the Taste of Local section in-store.

“We’re immensely proud of the work that the SuperValu Food Academy does in supporting and nurturing local, home-grown Irish food and drink businesses,” he says. “Supporting local Irish communities and businesses is at the heart of everything we do at SuperValu, and Food Academy producers are delivering consistently high quality and great tasting products that are at the cutting edge of innovation. In the last year, Food Academy producers achieved sales of over €30 million and 6% growth, highlighting the continuous support from customers for local and Irish products.”

© 2022 Checkout – your source for the latest Irish retail news. Article by Maev Martin. For more retail news, click here. Click sign up to subscribe to Checkout.

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