UFCW 324 Communications / News
Safeway Cooks Up Ingredients For Profit
June 14, 2006 · Wire Services
Thanks largely to its hundreds of redesigned stores, officials of Safeway Inc. have developed a lifestyle to which they could definitely become accustomed.
Halfway through calendar 2006, the Pleasanton-based grocery giant has continued to remodel existing locations and build new "lifestyle" stores that feature new and expanded product offerings, along with major cosmetic enhancements including subdued lighting, faux wood floors in produce departments and richly colored shelving and display cases.
About 550 of the chain's 1,772 stores now sport the new format and CEO Steve Burd told shareholders last month that most of the remodeling program will be complete by late 2009. He said these stores have sales increases that average 23 percent higher than previously remodeled locations.
The rollout of the lifestyle stores and an accompanying $100 million marketing blitz starting last year that aimed to "rebrand" Safeway have helped the supermarket giant prosper in a tightly competitive industry. Archrival Albertson's Inc. stumbled and was sold in January, with chunks of what used to be the nation's second-largest traditional grocery chain snapped up by groups of investment firms and other retailers
.After the financial and public relations damage inflicted on both companies in the wake of a bitter Southern California strike and lockout that ended more than two years ago, the pair have taken divergent paths. Unlike disassembled Albertson's, Safeway has returned to reliably profitable quarters and has experienced surging sales at its new-format stores.
For the first quarter of fiscal 2006, the company saw total sales and other revenue increase more than 3 percent over the same period a year ago, and identical-store sales rise 1.5 percent.