The promotion for Sunflower Market went as follows:
"At Sunflower Market, we will offer customers the convenience of a full shopping experience, with access to natural and organic products in all categories,” said John Hooley, president of corporate retail for SUPERVALU. “We’ve developed a unique merchandising approach that will highlight our perishables, which include an extensive produce offering, natural, case-ready meats and fresh bakery and deli items. Simply put, our goal is to provide customers with great tasting, wholesome foods at affordable prices."

Supervalu is now closing the banner.

A foray into the pricey world of organic food has ended badly for Supervalu Inc. The chain, the first of which opened in Indianapolis, IN (US) in January 2006, billed itself as a cheaper alternative to places like Whole Foods, which has seen some consumer pushback for its high prices.

When it looked like the deal between Wild Oats and Whole Foods would collapse, a lot of folks on the Wild Oats side were secretly hoping that Supervalu would ride to the rescue. With small format stores and a heavy emphasis on organic, it seemed like a possible match. In one fell swoop, Supervalu could have picked up a broad store base and the intellectual capital to run this type of operation.

Of course, it didn’t happen, and one reason it didn’t happen is because Supervalu was focused on providing low-priced organics. Among other things, retailers of all types tell us they find shrink on organic product to be significantly higher than conventional, so it is not clear that “bargain basement” organics makes sense.

Supervalu didn’t close Sunflower because it was making too much money, so there may be a lesson for the industry here. Let us think about the characteristics of this concept:

• Small footprint
• A focus on organic and natural
• Affordable organics for the average shopper

There is only one prominent chain that talks that way: Tesco’s Fresh & Easy concept. When Tesco described its concept, most people in the trade assumed it would be somewhat upscale, certainly higher education-biased — Why? Because organic and green are issues that in America, we associate with more educated and more affluent people. Yet Tesco said, no, that the unique edge of its concept would be to make these types of items available not only to the middle class but to the inner-city poor living in food deserts where no supermarket exists.

Supervalu is a very sophisticated organization, with lots of diverse experience in the American market. If Supervalu saw any likelihood of getting these Sunflower stores up to US$200,000 a week, they would jump on it. That they are closing, instead, is not good news for Tesco.