Safeway Changes Strategy

Oct 14, 2002
George Anderson

By George Anderson

Like most other grocers, Safeway is feeling pressure from more selective consumer spending and Wal-Mart. The impact on Safeway’s business has been clear as projected earnings have continued to drop.

Safeway’s response has been to focus on lowering prices and stepping up promotional activity. The San Francisco Business Times reports that Safeway is attempting to leverage its Club Card program. Members receive direct mailings for special discounts and they can accumulate mileage on United Airlines’ frequent flyer program. Safeway has also signed on to the Upromise and eScrip educational programs.

Steve Burd, Safeway’s chairman and CEO, said, “We have to change our formula a bit because what’s worked for 10 years doesn’t work as well because the competitive landscape has changed.”

Moderator’s Comment: Will Safeway’s price cutting and
expanded promotional strategy work? What does it need to do to become a more
effective competitor?

Trying to play the price game with Wal-Mart is a losing
proposition. Safeway needs to find a way back and recapture the qualities that
made Randall’s, Dominick’s and Genuardi’s worth buying in the first place. The
goal of streamlined distribution has, unfortunately it seems, resulted in more
stores with less personality. [George
Anderson – Moderator

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