Burd Pledges Aggressive Remodeling for Dominick’s – On One Condition
Editorial By George Anderson
I have to admit it. I don’t get Steve Burd.
Yesterday, Mr. Burd announced Safeway would “aggressively remodel” its Dominick’s stores in and around Chicago “if” (intended as a big IF) the labor union that represents 7,900 of its workers approves a new labor deal negotiated between the parties.
The stores to be remodeled would be redone in Safeway’s “Lifestyle” new concept format designed to appeal to more upscale consumer tastes.
To date, Safeway has only remodeled one store in the Chicago suburb of Northfield (another is scheduled to open in December). According to the company, the location’s sales jumped and it is now in the top five percent of company stores. Dominick’s operates 99 stores in the Chicagoland area.
Why then, I have to ask, has Mr. Burd held back on remodeled stores that, by his own account, significantly improve sales? Doesn’t he owe it to Safeway’s shareholders and other stakeholders to do everything in his power to generate sales and profits for the company?
Even if he was setting up the company for sale because Safeway decided it couldn’t make it in Chicago, wouldn’t he get more for the company and its shareholders by demonstrating that consumers actually want to shop in the stores?
His admission that he’s waiting on a union deal makes clear that he has neglected the Dominick’s business and the Chicago market. In doing so, he neglected the shareholders and company he is supposed to represent.
Moderator’s Comment: What is your assessment of Safeway’s past Chicago strategy? What do you think about its plans for the future?
Morningstar analyst Mitchell Corwin told the Chicago Sun-Times that Safeway’s plan for Dominick’s represents “a significant change in direction.”
The company now appears as though it is ready to attempt to make a go of its business in Chicago instead of selling it off. –
George Anderson – Moderator