Genuardi’s Undergoes Bumpy Transition

Jul 16, 2002

The Philadelphia Inquirer reports that complaints abound among Genuardi’s shoppers about changes – real and perceived – in the products offered and service provided since Safeway acquired the family-owned chain last year. Concerns range from the introduction of Safeway store brands to a lower level of customer service.

Safeway officials say that they understand some customers have been unhappy recently with changes in store layouts and in the replacement of many Genuardi’s store brands with its own brands. They also say they believe Genuardi’s food quality and in-store service are as good as ever.

Mona Doyle, president of Consumer Network Inc., a Philadelphia market-research firm, said that supermarket shoppers viewed Genuardi’s as a different store since the Safeway takeover. “Contrary to what you may be hearing, we didn’t see consumers angry enough to not shop there [at Genuardi’s] anymore,” she says adding that Safeway is “still evaluating the concept” of Zagara’s, the four-store gourmet and specialty-foods chain that came with its Genuardi’s purchase, as a separate operation, according to Vice President Brian Dowling, Safeway’s chief spokesman at its headquarters in Pleasanton, Calif. According to Ms. Doyle, Zagara’s shoppers “were decidedly more disgruntled” than the Genuardi’s customer.

Genuardi’s market share went down in the 12 months that ended March 31, according to an annual survey of supermarkets by Food Trade News. Based on revenues and number of stores, the survey found that Genuardi’s – after a decade of strong growth – had 12.55 percent share of the market, down from 12.75 percent in the previous 12-month period, despite having four more stores than it did the year before.

Moderator Comment: Should Safeway reevaluate what it is doing with Genuardi’s?

We found the comment attributed in the Inquirer
to Melissa Plaisance, senior vice president for finance and investor relations,
Safeway, quite telling. “We have been recognized throughout the industry for
having made tremendous progress in that [customer-service] area the last six
to seven years. We liked the customer service at Genuardi’s. Our intent was
to add computer systems” that ultimately speed up the checkout process.

Safeway’s answer to personal touch issues is to automate
the checkout. Sheesh! [George
Anderson – Moderator

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