Through a special arrangement, what follows are excerpts of a current article from Refrigerated & Frozen Foods Retailer magazine, presented here for discussion.
Who knew?
Safeway, with a seven percent share of the country's retail food market, owns better than half of all supermarket refrigerated soup sales. It's also got the largest made-to-order sandwich business of any food retailer in the U.S. These are just further proof that the Pleasanton, Calif.-based chain is firing on all cylinders - innovating, leveraging meal opportunities and driving profitable sales.
Of course, there are other, larger indicators of how Safeway is differentiating itself:
- After Safeway converts stores to its Lifestyle format, the remodeled units have been turning in double-digit sales gains, and healthy increases in the years after;
- Safeway's O Organic corporate brand - one of the fastest-selling organic food brands in America - is being marketed to retailers in the U.S. and overseas, along with Safeway's other stellar health and wellness brand, Eating Right;
- Safeway is successfully executing store-specific planograms tailored to the local demographic;
- Over a 15-year period ending last Dec. 10, Safeway outperformed 97 percent of the S&P 500 stocks.
Yes, Safeway is really kicking butt. What's behind all this is not Lifestyle stores, O Organics, planograms or refrigerated soup. It's big-picture focus on the consumer, pure and simple. Safeway is methodically building relationships with its shoppers via sophisticated analytical tools and well-oiled store-level execution.
In Cannondale Associates' Power Ranking Survey for 2007, both manufacturers and retailers awarded Safeway drastically higher scores in nearly every category versus 2006: "Clearest company strategy," up 7.5 points; "Best job of branding stores," up 4.3 points; "Best retailers with which to do business," up 4.5 points; "Best category management/buying teams," up five points; "Most innovative consumer marketing/merchandising," up 6.9 points; "Best practice category management," up 7.2 points.
A group of frozen and dairy food manufacturers agreed that Safeway is very different from what it was only a few years ago, and is among the most receptive of any retailer in terms of trying new products and exploring new ideas for partnerships.
One broker notes that Safeway is more willing than most to give smaller vendors time to present their case for why their products might be a good fit for the chain's shoppers. Buyers also work with vendors to get products only in appropriate stores rather than forcing chain-wide distribution, the broker adds, noting that the company is fair about introductory fees in such circumstances.
While never the low-price leader, Safeway is focused on providing a superior shopping experience via more in-store labor and better décor - especially in the Lifestyle stores.
"They do a mix of EDLP and hi-lo, with a nice shelf tag flagging the price reduction," says one frozen food vendor. "They do quite a few multiples, but not many BOGOs anymore. All in all, it works very well for them."
Discussion Question: What has been the underlying driver behind Safeway's many recent successes? Which program has been most impressive in its recent run?