How to turn Cerberus’ Supervalu deal into an Acme of an acquisition

Earlier this week Minneapolis-based Supervalu sold five of its leading supermarket banners – Acme Markets in Philadelphia and Mid-Atlantic region, Albertsons, Jewel-Osco in Chicago and Shaw’s/Star Market in Boston and New England to Cerberus Capital Management for about $3.3 billion.

While the deal has been heralded on Wall Street, Cerberus should install local management and taste preferences at its new acquisitions if it is to be successful. Supervalu says its same store sales for the third quarter declined 4.5%, including a 2.8% decline in customer counts and a 1.7% reduction in average basket size.

While some of this can be attributed to the recession, I think a lot of it has to do with Supervalu’s taking away the individual identity of the chains. Living in New Jersey, I am most familiar with Acme. It was one of my favorite stores and I regularly shopped there until my local branch was closed down about 5 years ago. One of the things I liked most about Acme was its private label program. They were famous for their Louella butter. In fact, it was Acme’s original private label. However, the name was discontinued once the chain was acquired by Albertsons, which in turn was acquired by Supervalu.

Acme was also renowned for its instant Acme Classic iced tea. It was made by Brooklyn-based 4C, which makes many of the store-brand iced teas, and at a trade show a 4C official once told me that the Classic was a recipe created specifically for Acme. However, I believe that too has been discontinued, with the Acme label being replaced with Supervalu’s Flavorite. Then Flavorite was replaced with Essential Everyday. Just about the only “original” Acme brand still in existence is “Lancaster Brand” which is used on fresh meats. In fact, Lancaster Brand turkeys are so famous some consumers in cities where Acme pulled out long ago would drive for an hour to the closest Acme store to pick one up for Thanksgiving.

I am sure similar stories can be recounted with Jewel, Star Market and Shaw’s brands.

If Cerberus wants to be successful with these new acquisitions it would be wise to do some research and bring back some of these locally popular brands that still have a following. Play it up in in-store displays and newspaper ads. Restore local management who knows what sells best in their local marketplace.

Then perhaps Acme will win back market share from ShopRite and Giant Food, and not go the way of Genuardi’s and Food Fair.

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