1. VICTORYSUPERMARKETS

2. AGENDA
KEY ISSUES
STRATEGIC
OPPORTUNITY
COMPETITOR ANALYSIS
FINANCIALS
RECOMMENDATION

3. Key Issues
Changing supermarket landscape
Preference for home meal replacements
Increased margins carried by food court

4. Problem Identification
Challenges
Strategic
objectives
Recommendation
Project
kick-off
Dependence
on
distributor
1.5 bln.
Annual sales
?
1996
Short-term
financing
Minimize
dependency
on Fleet
Partnership
with
Supervalu
1999

5. STRATEGIC OPPORTUNITIES
EXPAND
• Conventional
Stores
1.Option
NOT TO EXPAND
2.Option
• Market
Square
concept

6. COMPETITOR ANALYSIS
SALES
REVENUES,
bln.
$6
$2
SHAW’S
PRICE
CHOPPERS
$0.3
VICTORY
18%
30%
40%
MARKET SHARE

7. NET SALES
16
- Marlboro break
even at 9mln.
Sales
- Kingston break
even at 10 mln.
sales
14
12
10
Marlboro,mln.
Kingston,mln.
8
6
4
2
0
1996
1997
1998
1999
2000
2001

8. NET INCOME BEFORE DEPRECIATION
2000
1500
1000
Marlboro,thousands
Kingston,thousands
500
0
1996
-500
1997
1998
1999
2000
2001

9. TOTAL COSTS
Market Square
- Increased
overhead, payroll
costs
Conventional
Stores
- Training costs
14 mln.
22 mln.

10. Conventional vs. Market Square stores
Marlboro
• NPV:
$240.000
• PP: 4.14
Kingston
• NPV:
$995.000
• PP: 4.11
Twin city
• NPV:
$167.000
• PP: 5

11. Assumptions:
- Marlboro is representative
for Conventional stores
- Kingston is representative
for Market Square
Capital by Supervalu: $100mln.
NPV in millions
INVESTMENT APPRAISAL
$ 2.5
$ !.7
0
Conventional
Stores
Market Square
stores

12. MARKET PENETRATION
Bipolar customers
Not price sensitive
customers
Quality customers
Sanitation sensitive
customers

13. RECOMMENDATION
Challenges
Strategic
objectives
Recommendation
Project
kick-off
Dependence
on
distributor
1.5 bln.
Annual sales
MARKET
NPV: $2.5 mln.
SQUARE
PP: 4.11
1996
Short-term
financing
Minimize
dependency
on Fleet
Partnership
with
Supervalu
1999

14. THANKYOU
FOR YOUR ATTENTION