What happened

Shares of diversified supermarket operator SUPERVALU Inc. (NYSE:SVU) took a hit again last month, falling 10% according to data from S&P Global Market Intelligence. There was little news out on the stock during the period, other than an activist investor taking a stake, however, shares dipped in tandem with other grocery stocks as the competitive environment heated up.

As you can see from the chart below, it was a volatile month for SUPERVALU, but the stock still finished with another double-digit loss, after dropping 27% in January.

SVU Chart

SVU data by YCharts

So what

On Feb. 6, activist investor Blackwells Capital, which owns 4.35% of SUPERVALU's stock, said the company should separate the retail and wholesale divisions, and eventually pursue a sale of the healthier wholesale business. SUPERVALU's board, however, rejected those recommendations, saying in a statement that they're "confident that their ongoing efforts to transform the Company are driving growth and enhancing SUPERVALU's unique competitive position," which includes primarily pivoting to a wholesale business through acquisitions. 

The exterior of a Supervalu supermarket.

Image source: SUPERVALU.

SUPERVALU shares actually jumped on the Blackwells initiative, but then gave up those gains as industry stocks fell on the news that Amazon.com planned to offer free two-hour delivery from Whole Foods available across the country to Prime members by the end of the year. Reports also emerged that Amazon would open several more of its cashierless Amazon Go stores, and SUPERVALU shares fell toward the end of the month after Sprouts Farmers Market sold off following its earnings report.

Now what 

Amazon isn't SUPERVALU's only competitor making moves. Walmart is set to open 1,000 more grocery pickup stations this year, Kroger has reportedly held talks about partnering with Boxed or Alibaba, and Costco Wholesale is finally taking steps into e-commerce. Against this backdrop, SUPERVALU looks like it will continue to struggle, even though its pivot to wholesale seems like the best move it can make. While that may be the right strategy for the company, investors clearly aren't convinced.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy.