Safeway was an easy target. It acquired businesses (Randalls, Dominick's, Genuardi's) and drew immediate criticism for changing the very aspects of those stores that made them desirable for purchase in the first place.
By 2002, it became clear to Safeway management that its plan for the acquired businesses, along with the stores it started out with, was simply not working.
"We needed some fundamental changes," said Steven Burd, chairman and CEO of Safeway. "We [needed to] differentiate our offering from other conventional supermarkets."
Safeway's answer to setting itself apart came in the form of its "Lifestyle" format. Starting in 2003, Safeway began a six-year program to remodel all of its stores to the tune of $1.6 billion a year.
Importantly, Safeway chose not to play up all the changes it was making to consumers. Instead, the company waited until the Lifestyle reformatting program was well underway and consumers had voted with their dollars as to whether they liked the changes.
Safeway had chosen to put the steak before the sizzle or to try, as BusinessWeek described it, "authentic marketing."
For those not familiar with the term, the magazine defined authentic marketing as, "Deliver what you promise."
"We were very careful not to talk about quality until we had stepped up quality," said Burd.
Once Safeway decided it had a story to tell, the company launched a $100 million plus ad campaign to drive consumers into its new and significantly improved stores.
Discussion Questions: What is Safeway's Lifestyle format and advertising campaign's role in contributing to the chain's turnaround? What other factors have enabled Safeway to improve its business results?