Safeway’s MOR Differentiation Strategy

Apr 07, 2004
George Anderson

By George Anderson

Greg TenEyck, director of public affairs for Safeway’s eastern division, told the Baltimore Sun, “Everybody has gotten into the grocery business, and our competition has broadened. So we need to differentiate ourselves.”

On one end, Safeway finds it’s up against Wal-Mart and its low prices. That’s a fight Safeway knows it can’t win.

On the other end, Safeway sees consumers shopping at high-end businesses such as Wegman’s, Whole Foods, etc., with specialty foods, organics and higher levels of customer service than it offers.

So, what is the company’s differentiation strategy?

Safeway’s way is to split the difference and “strengthen its standing among grocers that fall between discount stores and high-end supermarkets.”

The company’s latest attempt to capture the middle of the road in its mid-Atlantic market territory is a new 57,860-square-foot prototype store in Hanover, Maryland.

The concept has been brought to the East Coast from California and it includes better lighting, expanded produce sections and the use of natural wood flooring in the produce and natural foods’ sections.

Moderator’s Comment: What are your thoughts on the
need for Safeway to develop a clear strategy for differentiating itself from
the competitors? Is the plan being followed in Maryland going to be successful?

It has been said of one particular trade publication that
if you want to see what was cutting edge in retailing five years back, you should
check out its next issue.

Safeway appears to have a similar problem. The chain isn’t
introducing anything new here. It appears to simply be involved in playing a
game of catch up.

The grocer says the prototype store has been tested with
great success out on the west coast. The company plans to remodel two other
stores back east in addition to the Hanover location. George
Anderson – Moderator

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