business

Keith Wyche need only look at the title of the book he wrote -- "Good Is Not Enough" -- to get a sense of the challenges he faces at Cub Foods.

Wyche became Cub's president in January, taking the reins of a grocer that far outpaces its Twin Cities competitors in terms of market share. In fact, Eden Prairie-based Supervalu, which owns Cub, has few other chains nationally with as much local market muscle.

But like conventional grocery stores across the nation, Cub is under increasing and intense pressure from discount chains, in Cub's case SuperTarget and Wal-Mart. While Supervalu doesn't release sales data for Cub or any of its regional chains, the company broadly speaking has seen steep drops in sales in recent quarters, some of which stems from losing customers to rivals.

"Customers have a lot more choices where they shop," Wyche acknowledged. But "the Cub brand really resonates in this area."

Wyche came to Cub with no grocery industry experience, which is unusual, supermarket analysts say. Before Cub, the Cleveland native spent six years with Pitney Bowes, the Connecticut-based maker and administrator of corporate mailing systems. When he left Pitney, he was working in the firm's Manhattan office as president of its U.S. operations.

Prior to Pitney Bowes, much of Wyche's business experience was in telecommunications and included stints at Convergys Corp., Ameritech and AT&T. Along the way, he's served as a career coach and mentor to aspiring minority executives.

"Growing up as a poor inner-city kid in Cleveland, I always thought that if I had success, I would always reach back," Wyche said.

His career coaching experience helped lead him to write a book, "Good Is Not Enough (And Other Unwritten Rules for Minority Professionals)." It was published last year by Penguin Group.

'Reinventing myself'

Chapter 9 stresses how "being a continuous learner is a must," advice that's particularly apt for Wyche himself at Cub. "I'm reinventing myself as a grocer," he said in a recent interview at Cub's Stillwater headquarters.

"I came in with a complete consumer focus," he said, adding that he has "hundreds of years of grocery experience" on his management team.

Cub does about $3 billion in sales, mostly in Minnesota. There are 48 Cub stores in the Twin Cities, and they captured about 35 percent of the metro area's grocery market in 2009, according to data from IRI InfoScan published by Trade Dimensions, a service of the Nielsen Co. Of Supervalu's myriad chains, only its Jewel banner in the Chicago area -- with a 38 percent share -- owns more of its market.

"Both [Jewel and Cub] have been profitable, high-volume, high-market-share concepts," said John Dean, a Twin Cities supermarket consultant.

But nobody these days is immune to the likes of Wal-Mart and SuperTarget, which generally have lower prices than conventional supermarket chains like Cub.

SuperTarget last year had a 13.9 percent share of the Twin Cities grocery market, according to IRI. That ranked second -- a position long held by Rainbow Foods, which came in third in 2009 with a 12.9 percent share.

Historical market share data aren't available, but Supervalu appears to be losing it across the country at rapid pace. In each of the past three quarters, its same-stores sales -- a key gauge -- have fallen nearly 7 percent.

That's one of the steeper declines in the entire grocery industry, and reflects a loss of customer traffic as well as lower purchases per customer.

"It's not a sustainable trend in food retailing," said David Livingston, a Milwaukee-based supermarket industry analyst. He said that given the depth of the sales dropoff, it would appear to be broadly spread across Supervalu's banners, including Cub.

Still, Wyche said that "Cub is enjoying the same level of shopping experience as we've had in the past couple of years."

A focus on food

The trick for Cub is to differentiate itself from the likes of SuperTarget and Wal-Mart. Those two chains have one-stop shopping as a selling point; you can pick up a hairbrush and a honeydew melon. But in Wyche's view, Cub is the food specialist.

"We want to make sure that when people think of grocery shopping, they think of Cub," he said. That means Cub emphasizes fresher produce, a larger variety of meats and a broader selection of goods storewide, Wyche said.

Earlier this year, Cub reduced prices on about 8,000 items, "an effort to get our everyday shelf prices back in line," Wyche said. "It reinforced the Cub message of great value that maybe had been lost."

Among items on Wyche's agenda: adding more liquor stores to Cub locations. The company has 13 liquor stores in Minnesota, and added them in the past few years to stores in Rosemount, Bloomington and Eagan.

As for bricks and mortar, Cub is in the midst of remodeling its Fridley store. Supermarket analysts aren't looking for much in the way of major build-outs at Cub or any other Supervalu banner -- except Sav-A-Lot, a nationwide deep-discount chain.

Last year, Supervalu announced it would double Sav-A-Lot's 1,200 stores within five years. "They're putting a lot of money into Sav-A-Lot," said Dean, the supermarket analyst. So, traditional chains like Cub "may not have as much to work with in capital spending."

But Wyche didn't seem concerned. "They've given me enough money to make my stores look the way I want them to look."

Mike Hughlett • 612-673-7003