Safeway to Spend $100 Million in Re-branding Effort
By George Anderson
Safeway, the nation’s third largest grocery store chain, is launching a $100 million marketing campaign with the slogan “Ingredients for Life” to reposition itself as a more
upscale market with product selection and services that address the lifestyle demands of modern consumers.
The campaign, billed as the largest in the company’s history, will kickoff on April 18 and include television, radio, print, outdoor and other communications to highlight store
remodels and other upgrades associated with the chain’s “lifestyle” format.
Safeway will focus the campaign on markets in the Western U.S., Canada and in metro D.C. Banners covered under the marketing effort include Safeway, Vons and Pavilions. Dominick’s,
Genuardi’s and Randalls are not part of the campaign.
Moderator’s Comment: What are your thoughts on Safeway’s repositioning plan? Has it made the required changes in its stores in terms of products and
services to match the messages in its new marketing campaign? –
George Anderson – Moderator
It’s getting to be do or die for Safeway, as they are on a fast track to becoming another Winn-Dixie or A&P. By the looks and sales levels of their stores, they already are. Since they have such a poor track record over the past quarter of a century of successfully implementing any new programs, naturally I am skeptical. Seems like most of these sluggish large chains have the same old story, using buzz words like “lifestyle” that are more designed to impress Wall Street rather than customers. If their success is anything like what they have experienced with Genuardi’s, Randalls, and Dominick’s, I think we all know what to expect. I think Safeway is better off saving the $100 million and just handing the check book back to the division presidents. Most of them have much more grocery experience than the accountants who are making the decisions at the corporate headquarters.
Safeway will be successful only if they take back control of the merchandise selection. The “Category Partner” scheme has come full circle and robbed the stores of differentiation. It is a blinding flash of the obvious that a dominant vendor may not have the best interests of the chain at heart.
SCOP is a smokescreen and has been run by deep pocketed manufacturers who are maybe saving money and labor for Safeway, but taking them down an insidious path.
Safeway would be better off taking the Millions and investing in real category management, and adequate buying staff. Product selection and display should be self hosted and managed by people who really care about Safeway.
BobX,
You are totally correct. Until Safeway realizes that their purchasing and marketing should be done at their division offices and not at Pleasantville (joke), they will not have a clue as how to attract customers. They need a regionalized purchasing department for each of their divisions.
I was at that new Dominick’s Lifestyle store last week looking at magazines and they had at least five or six local San Francisco Bay Area magazines on the shelf and not one copy of Chicago magazine. Is that an error or is the entire country California?
Safeway has to do something to ensure its future survival. They concluded that a low price strategy is untenable, which leaves Safeway with a strategy of differentiating the shopping experience – their stores. They’ve decided to use classical brand management as a go-to-market approach where Safeway is the brand and offering “lifestyle” solutions to their shoppers in pursuit of a desire to have their shoppers connect emotionally with the Safeway stores and brand. Sound approach.
Safeway is taking a branding page from the P&G, Coca Cola management book, but there is a lot more hard work behind the scenes that will determine success of execution. They should be commended for trying something new; however, odds are against them being able to pull this off. This is a new way of looking at the business and is long-term. It’s a new way of treating the consumer and their own associates, and is an organizing principle that goes against what Safeway has done in the past. This is not just a “campaign,” and if Safeway is treating it as such, it will fail miserably, not only on Main Street, but also on Wall Street.
IMHO, Safeway is making a mistake, not in direction, but in timing and intensity.
The new Lifestyle stores are indeed an improvement, but not exactly a sea change. What they have done so far is necessary, but probably not sufficient.
I suspect they are trumpeting their new position before they have perfected a sustainable model of improvement. They need to develop something exciting enough to draw customers back from other channels as well as other supermarkets. So far, I don’t think they have done so.
It reminds me of when Stop & Shop bought Grand Union – they re-bannered stores before they remodeled them – and when consumers went in, they were still in a Grand Union by a new name. So they left and many never returned.
Same product (and selection), different wrapper. I would love to see some of their divisions go back to their glory days, but until some people at Safeway see that their customers across the country are not homogeneous and expect different things in different areas, we will continue to see lackluster performance with their stock.
The Safeway plan is bold and visionary. They will definitely, however, be breaking new ground by branding their shopping experience. This is something that generally has only been done successfully by a small number of independents and an even smaller number of unique regional chains like Hy-Vee and Ukrops.
In our experience, they have done a great deal to put themselves in a great position to successfully brand their shopping experience (which, as you recall, from the Coca-Cola Retailing Research Council study, “The World According to Shoppers,” is one of the keys to winning new business).
Some of the things they’ve done include:
>An intense focus on customer service through mystery shoppers and building the results into management incentives.
>A unique, sustainable basis for branding their produce around sweetness.
>Turning their deli into a real competitor for carry-out food, e.g., Friday Night Pizza.
>Offering an exceptional artisan bread program, i.e., a specific yet surprising attribute (also called out in “The World According to Shoppers” study).
In our opinion, they’re as ready as anyone could be to begin to try to brand their shopping experience. Now, we have to wait and see if this proves to be meaningfully relevant to enough shoppers.
Perhaps I’m jaded by too many years of this. I’ve rarely, if ever, seen people or companies really change much. Remember “the new Nixon,” also out of California? Safeway has long had too many accountants and not enough real merchants. This’ll require a melding of merchandising and operations, complete with in-store execution, for the long haul. I just don’t expect it to happen.
You have all brought up a topic very important to me…..Safeway and their new Lifestyle format. I have been to the new Dominick’s Lifestyle format here in Chicago a few times already. IT’S ABOUT TIME…….they realize how to design the interior of a grocery store to reflect the prices in their stores.
The lifestyle format is much more contemporary and pleasing to the eyes than the former decor with the green, beige and branded wallcovering. Does anyone know when they came out with the last decor? They finally realized that lighting is a key to making the products look pleasing, fresh and filled with quality.
When Safeway took over Dominick’s, they put exposed fluorescent strips, the kind my retail company puts in the toilet rooms, in the entire general sales area! What the heck were they thinking? It was a disgrace to our Dominick’s stores to have been downgraded to a 1960’s Kmart lighting spec.
Dominick’s also had many stores pre the Safeway buyout in 1998 that used HID (Metal Halide) High Bay fixtures that made the entire store seem like it was washed in Sunlight, but the first thing Safeway did was rip these out….and put up dingy, dime store-looking strip lights. Dominick’s was also putting skylights in their stores to make use of natural lighting….Safeway eliminated this.
As we see over and over here in Chicago, our Dominick’s went from an upscale store to a plain boring beige box. You don’t know how excited I am to see this lifestyle concept come here. The store is well stocked, colorful….no more of that ugly Dominick’s branded wallcovering…instead they used bright paint colors. The signage is all lower cased fonts which is a trend in today’s graphic design. The exposed strip lighting is enclosed in a nice silver lighting fixture….no more dime store-looking fixtures. In produce, there must be over 300 recessed adjustable downlights that wash the produce in very nice light. This store in Northfield has a drop ceiling and they painted it a beige color which does look very nice. Dominick’s has about 50 exposed ceiling stores….so I am anxious to see how they handle that. Anyone have any insight on Safeway’s store design and how they will re-brand themselves?
Re-branding is all well and good, but only if you fix the product first. Let’s face it, Safeway’s image is poor because its stores haven’t been anywhere close to state of the industry. They neither offer the lowest prices, nor the best experience, so they’re stuck in Searsland — the muddy middle. Having decided that they can’t compete on the low-end with Wal-Mart, they have to try to carve out a piece of the value-added pie, not an easy task. People expect more choice, more service, more style, more experience, more of everything from full service supermarkets. Specialty shops like Whole Foods, Stew Leonard’s and Trader Joe’s have raised the bar for everyone in food retailing.
Re-branding Safeway is a long-term effort and results won’t come overnight. It starts with real change in the store, not just a fresh coat of paint. Then they need to build momentum with programs designed to generate trial. (People will have to experience that things have changed to believe it.) And then, just as this latest effort becomes old news, they’ll have to be ready with the next round of product improvements to keep from backsliding.
Because of shareholder demand for short-term ROI, few public companies have the patience for this kind of effort… Time will tell.
If “Ingredients For Life” means foodstuffs, Safeway already offers those. If it means more than that in Safeway’s program, I shall wait with an ecstasy of anticipation.
As for positioning itself as going upscale, it’s already halfway there for that’s the way it prices. Unless there’s something dramatically new to be offered under its $100 million marketing program, I shall sit on the sidelines and watch the passing parade proceed.
What exactly am I missing here? I’m reading such things as “uniquely superior quality of the perishables” (uniquely superior – what is that?), a “new store concept” and “superior service” to its customers. How do these things, in the words of Mr. Burd, “redefine the grocery shopping experience?”
According to the company, “the strategy encompasses offering the highest quality produce, meat, bakery and deli products, proprietary brands, prepared meals and superior customer service to differentiate the Safeway shopping experience and attract consumers who are weary of shopping in multiple locations.”
Have things become so bad in this business, or have our expectations as consumers dropped so far, that what should be the norm (i.e. highest quality/superior products, superior customer service, etc…) now are said to “redefine the grocery shopping experience.” Forgive me, but I don’t see anything new or unusual here.
They are spending a lot of money. One can only hope they succeed.
Safeway is making an effort to re-invent itself, as consumers
have defined their need for a supermarket, specialty food store, and ‘outside the home’ kitchen. I do believe Wild Oats is testing, or has, a lifestyle format.
The question is, “Has the culture at Safeway adjusted to bring exceptional service, engagement, and satisfaction to shoppers?”
Safeway did take a lot of labor and service out of its stores
when it bought Dominick’s and Randalls. Hopefully, the advertising campaign will connect, not disconnect, in the consumers’ minds with the shopper service, convenience, and quality carry-out meals and programs.
Kudos to Safeway for putting a stake in the ground defining their brand equity; too few supermarket retailers are providing a sense of clarity to their consumers or their employees. Of course, it’s only a first step and, like most supermarket retailers, Safeway has a long way to go to match their store experience to their brand. If I’m told that a store offers the “ingredients of life,” I would expect not just products but solutions; not just access but convenience; and not just sameness year-round but continual refreshment and change to match my changing lifestyle. To bring that to life requires wholesale changes to the way Safeway develops, implements and manages their store experience. Congratulations to Safeway for starting the process of change.
This is a very bold move and the right move if they can stick with it. I am not sure that they have the people to do this. Traditional retailers are buyers and know store operations. This needs real branding people, and it needs a top down commitment to let the branding people run with it. Using people who have been within the Safeway “family” for 20 years will not bring fresh thinking or the results Safeway wants.
Most of the comments that I read were pessimistic of Safeway and its plans.
As I like to say. either this will work, or the new “Lifestyle” will be the best looking stores Wal-Mart has ever put out of business.
At the end of the day, it is the consumer who votes with their dollars. It is obvious from Whole Foods to .99 stores that there is a range of retail platforms to work from.
Wal-Mart, for the first time in its history, is having to spend time, energy and “money” outside of the retail area, defending its business.
I am confident about one thing: there is a place and time for step change shift in retailing. Not everyone is excited about the prospect of shopping in a Wal-Mart. The merchandising in Wal-Mart has taken on the “carnie” lifestyle as your senses are assaulted from aisle to aisle, department to department.
Yes, we all want to have more in our pockets, but shopping is experience.
I want to save, but not have my senses assaulted from every possible venue in the store. You will not see me in a Wal-Mart any time soon. So, as un-consumer as that might sound, or at the risk of not joining the masses, you will find me at Trader Joe’s, Safeway, or HEB, or some other establishment that wants to treat me and my family to a quality sane shopping environment versus the $3.00 I will save on [laundry detergent], while we are trampled by the rest of America at Wal-Mart.