ADVERTISEMENT

Jane Casper, right, shops for yogurt at a Cub Foods owned by Supervalu Inc. in Crystal, Minn.

Ariana Lindquist, Bloomberg

Cub suddenly finds it's a big fish in Supervalu's shrinking pond

  • Article by: MIKE HUGHLETT
  • Star Tribune
  • January 11, 2013 - 7:00 AM

The much-anticipated deal that Supervalu Inc. unveiled Thursday may be the best possible -- or least worst -- outcome for Cub Foods and the company generally in the Twin Cities.

More jobs seem likely to be shed at the company's Eden Prairie headquarters, because the new Supervalu will be half the size of the old. But Supervalu should now be more focused on Cub and its remaining regional chains, as well as on its wholesale business, which has a big presence in Hopkins.

"For Supervalu in Minnesota, this is the best thing that could happen," said John Dean, a Twin Cities supermarket industry consultant.

With sales in a tailspin and its stock price plummeting, Supervalu in July put itself up for sale as a whole or in parts. From the get-go, analysts expected the company to be parceled out in pieces, but just how was uncertain.

Supervalu employs 8,700 in Minnesota, and the majority of those workers are at Cub. The deal "will allow Supervalu to focus more on building the Cub brand," said Don Seaquist, head of South St. Paul-based United Food and Commercial Workers (UFCW) Local 1189.

"I think it is a good scenario for our members working at Cub stores in the Twin Cities," he said. "I'm optimistic this will work."

Stillwater-based Cub, formerly one of Supervalu's smaller chains, will now be one of its biggest.

Seaquist said he believes Cerberus Capital Management, which is buying several of Supervalu's biggest chains, has a decent relationship with the UFCW in supermarkets it already owns. Still, had Supervalu been sold wholly to Cerberus, uncertainty would be greater.

"The dog you know is better than the dog you don't know," Seaquist said.

Supervalu also employs 675 people at a Hopkins distribution center, many of them represented by Teamsters Local 120. That facility supplies Cub outlets and independent grocers that Supervalu will continue serving.

Supervalu employs about 1,500 at its Eden Prairie headquarters, said Mike Siemienas, a Supervalu spokesman. The company declined to speculate on future employment levels in Eden Prairie.

But David Livingston, a Wisconsin-based supermarket consultant, said more job cuts there seem likely because corporate staffers will have fewer operations to support. Supervalu, he said, has "laid off a lot of people who are now working for competitors, so don't expect any mercy from them."

Exact numbers on past layoffs aren't available, but hundreds of corporate jobs nationwide have been pared as Supervalu has suffered persistently declining sales and market share.

The company, including Cub Foods, has been battered by lower-priced competition, particularly Wal-Mart and -- in the Twin Cities -- Target. That challenge is only getting stronger. "Cub is going to have problems no matter what," Livingston said.

Mike Hughlett • 612-673-7003

© 2014 Star Tribune