SUPERVALU In The Green: Can Omnichannel Drive It Further?

SUPERVALU INC (NYSE:SVU) , like other big-box retailers, has been proactively responding to consumers’ increasing preference for online shopping. Owing to technological advancements, customers’ shopping habits have evolved rapidly, leading to a large number of customers opting for digital shopping.

In keeping with such consumer needs, SUPERVALU is striving to upgrade website and mobile applications to make shopping easier. Recently, the company launched refreshed e-commerce sites under a multi-year contract with Instacart. Apart from this, the company has also been undertaking initiatives to expand wholesale business and augment organic food products portfolio.

On the back of such efforts, the company’s shares have depicted a turnaround from a declining trend. Its shares have surged 32.2% in the past month compared with the industry’s rally of 3.1%.

Let’s take a look into SUPERVALU’s omnichannel development initiatives and other factors that have been driving the company’s performance.

E-commerce Expansion With Instacart & Other Growth Efforts

SUPERVALU and Instacart had first teamed up in September 2015, for providing same-day grocery delivery services. Given consumers’ favorable response and rising demand for e-commerce, SUPERVALU decided to opt for Instacart’s services to enhance its omnichannel operations. Thus, the company launched e-commerce websites, powered by Instacart to augment services in four of its retail units. These units include Cub, Shop 'n Save, Farm Fresh Food and Pharmacy as well as Shoppers Food and Pharmacy.

Notably, the new websites offer solutions that allow shoppers to place orders online and collect the same from stores without having to leave their vehicles. Further, the websites will allow customers to club store coupons and loyalty rewards with online orders. The company also stated that customers in St. Louis, Minnesota, Virginia Beach and Washington, D.C. can now place orders at brand specific websites of Instacart and get the items delivered to their doorstep within an hour.

Clearly, SUPERVALU strives to adapt itself to reap from growing e-commerce opportunities and provide unique options to shoppers. Management believes that the newly-launched website offering fits well with consumer’s busy lifestyle.

Further, consumers are benefitting from purchasing fresh products from the company’s retail stores with the option of same-day delivery. Such developments also strengthen SUPERVALU’s position in the grocery segment against the e-commerce king Amazon.com (NASDAQ:AMZN) and other large retailers such as Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) . We also expect that company’s e-commerce growth efforts to help revive the performance of retail-banners that have been sluggish in the past.

In addition to expanding omnichannel capabilities, this Zacks Rank #3 (Hold) company has been dedicatedly widening wholesale business scope through acquisitions. Recently, the company concluded the buyout of Florida-based Associated Grocers, prior to which it acquired Unified Grocers in June. Additionally, the company has been evaluating prospects in the organic food products arena and has partnered with wholesale merchants to explore opportunities in this category.

We expect such efforts to drive SUPERVALU’s performance in the forthcoming periods and help it maintain its position in the green territory.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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