Cost Cutting in the Retail World

A recent article in the Wall Street Journal (At Supervalu, Cost Cuts are in the Bag) fascinated me both as a business person as well as a logistics professional. It described the extensive research, training and implementation of a cost-cutting program by Supervalu Inc. (operator of Albertsons, Acme Markets and Jewel-Osco stores). The targeted cost center? Shopping bags.

According to the article, plastic shopping bags cost approximately $0.02 each; paper about $0.05 each.  Since 2008, Supervalu has initiated a company-wide bag use study; instituted a new training program for baggers; and created a 41-question bagging quiz, all in an effort to reduce or (better yet) eliminate the use of bags. Estimated company savings for 2009: $4-6 million. Estimated company revenue for fiscal 2010: $40.6 billion.

"We're in a very competitive industry. Anything we can do to lower our expenses will help us keep our prices as fair as possible," says Supervalu spokesman Mike Siemienas.

Not long after I read this article, a customer asked me if it’s fair for customers to expect its 3PLs to keep driving down costs. I thought of the $0.02 bags and the time and effort spent on Supervalu’s program, and answered that 3PLs should be just as proactive as their customers. It’s our responsibility as partners to be innovative and leverage resources to reduce costs. Isn’t that what a customer expects from its own team?