Safeway

This article is about the U.S.-based supermarket corporation. For Safeway, see Safeway (disambiguation).

Safeway, Inc.

Company type	Public (NYSE: SWY)
Industry	Retail (Grocery)
Founded	American Falls, Idaho (1915)
Headquarters	Pleasanton, California
Key people	Steven Burd, CEO & Chairman
Products	bakery, dairy, delicatessen, dry cleaning, frozen foods, fuel, grocery, lottery, pharmacy, photographic processing, produce, seafood, snack food, liquor, flowers, and Western Union
Revenue	42.3 billion USD (2007)
Net income	888 million USD (2007)
Number of employees	201,000 (2007)
Website	www.safeway.com www.safeway.ca

Safeway Inc. (NYSE: SWY), a Fortune 500 company, is North America's third largest supermarket chain, with, as of December 29, 2007, 1743 stores located throughout the western and central United States and western Canada. It also operates some stores in the Mid-Atlantic region of the Eastern Seaboard. The company is headquartered in Pleasanton, California. Supermarket News ranked Safeway No. 4 in the 2007 "Top 75 North American Food Retailers" based on 2006 fiscal year estimated sales of $40.5 billion. Based on 2005 revenue, Safeway is the tenth-largest retailer in the United States.

History

Seelig and Skaggs Merger

Sam Seelig Company was founded in April 1912 by Sam Seelig who opened a single grocery store in Los Angeles at the corner of Pico and Figueroa streets. The chain had grown to 71 stores by 1922. Sam Seelig left the company in 1924 to enter the real estate business, forming Sam Seelig Realty. As a result of Seelig's departure, the company held a contest in 1925 to develop a new name, the result of which was Safeway. The original slogan was "an admonition and an invitation" to "Drive the Safeway; Buy the Safeway." By 1926 Safeway Stores had 322 stores centered in Southern California.

An older design in Winnipeg, Manitoba

The Safeway chain expanded further in a merger engineered by Charles E. Merrill of Merrill Lynch on July 1, 1926 of Safeway with 673 stores from Skaggs United Stores of Idaho and Skaggs Cash Stores of California. The merger immediately created the largest chain of grocery stores west of the Mississippi. Charles E. Merrill later left Merrill Lynch, for a period of time, to run Safeway in the 1930s. At the time of the merger, the company was headquartered in Reno, Nevada, but in 1929, Safeway relocated its headquarters to a former grocery warehouse in Oakland, California. Safeway headquarters moved into Emil Hegstrom's Mutual Creamery Building on East 14th Street and remained there until the move to Pleasanton.

Skaggs Stores (see Skaggs Companies) had its start in 1915, when Marion Barton Skaggs purchased his father's 576 square foot grocery store in American Falls, Idaho, for $1,089. The chain, which operated as two separate businesses, Skaggs' Cash Stores and Skaggs United Stores, grew quickly, and Skaggs enlisted the help of his five brothers to help grow the network of stores, which reached 191 by 1920. On completion of the Skaggs/Safeway merger, M.B. Skaggs became the Chief Executive of the business. Skaggs retired from the Safeway board of directors in 1941.

While Seelig/Safeway was technically the original company, Safeway has always considered M.B. Skaggs the founder and the American Falls store the original store.

Expansion

Safeway, with financing supplied by Merrill Lynch, then began aggressively acquiring numerous regional grocery store chains in a rollup strategy. Early acquisitions included significant parts of Piggly Wiggly chain as part of the break up of that company by Merrill Lynch and Wall Street. Safeway acquired H.G. Chaffee of Southern California (84 grocery stores); MacMarr (a California chain also assembled by Charles E. Merrill); the Sanitary Grocery Company of Washington, D.C. (including 49 Piggly Wiggly stores), Daniel Reeves of New York (498 grocery stores); National Grocery of New Jersey (84 grocery stores); the Arizona Grocery Company and its subsidiary, Pay'n Takkit Stores; Newway Stores in El Paso, Texas; Sun Grocery in Tulsa, Oklahoma; and Bird Stores of Kansas City (including 224 Piggly Wiggly stores). The company also acquired the 91 west coast Piggly Wiggly Pacific Company stores and the 174 stores of Piggly Wiggly Western States Company. Most acquired chains retained their own names until the mid 1930s.

The number of stores peaked at 3,527 in 1931, when the numerous smaller grocery stores began being replaced with larger supermarket stores.

Hegstrom's, a chain of Oakland, California stores controlled by Mutual Creamery owner Emil Hegstrom, was acquired by Safeway in the mid-1950s. The company's New York operations were sold in 1961 to Finast.

International Growth

International expansion was an early part of Safeway's growth. The company expanded into Canada in 1929 through the acquisition of nine stores (which became Canada Safeway); into the United Kingdom in 1962 with the acquisition of the 11-store John Gardner Limited (which became Safeway plc); into Australia in 1963 with the acquisition of three Pratt Supermarkets (which became Safeway Australia); and into Germany in 1964 with the acquisition of two Big Bār Basar (Big Bear Bazaar) stores. The company also had operations in Saudi Arabia and Kuwait in a licensing and management agreement with the Tamimi Group during the 1980s. In 1980, Safeway acquired the 31-store Jack the Slasher chain in Queensland, Australia, and in 1981 acquired 49% of Mexican retailer Casa Ley.

1940s-1970s

A Marina Safeway in Hamilton, Montana built in the 1960s

In 1947 the company's sales exceeded $1 billion for the first time. By 1951 total sales had reached nearly $1.5 billion. In 1952 the company adopted the S logo, which it still uses.

In 1959, Safeway opened its first store in the new state of Alaska, being the first major food retailer to enter the market. In 1963 Safeway again opened stores in Hawaii, having exited this market in 1934.

In 1969 Safeway entered the Toronto market in Canada and the Houston market in Texas.

1980s: Takeover and sell-offs

An older store design from the 1970s and 1980s is seen in this San Jose, California Safeway.

Following a hostile takeover bid from corporate raiders Herbert and Robert Haft, the chain was acquired by Kohlberg Kravis Roberts (KKR) acting as a white knight in 1986. With the assistance of KKR, the company was taken private, and assumed tremendous debt. To pay off this debt, the company sold the West Germany and UK divisions (Safeway plc, which was absorbed by Morrisons in 2004), Dallas, Salt Lake City, El Paso, Oklahoma stores, and the Liquor Barn divisions in 1987, and the Kansas City, Little Rock, and Houston divisions in 1988. The Salt Lake division was sold to Detroit based Borman's, Inc., which renamed its stores in Utah, Idaho, Nevada, and Wyoming after its Michigan chain Farmer Jack. The Houston division was bought by a management-led group and became AppleTree Markets. A similar buyout of the Oklahoma division became Homeland Stores. Safeway's national presence was reduced to Northern California and several western states, plus the Washington, D.C. area. Safeway Australia was sold to the Australian-based Woolworths Limited in 1985. Altogether, nearly half the 2,200 stores in the chain were sold.

In Southern California, Safeway sold most of its stores to Vons in exchange for a 30% interest in the company. Safeway pulled out of established markets like Los Angeles and San Diego, and diminishing operations in Fresno, Modesto, Stockton, and Sacramento. Save Mart Supermarkets purchased the few remaining Fresno stores in 1996.

In late 1987 Safeway acquired the Woodward's Food Floors, which operated in the western Canadian provinces of British Columbia and Alberta.

The company was taken public again in 1990.

1990s and beyond

Randall's Food Markets headquarters in Westchase, Houston

In the late 1990s, Safeway began to again aggressively acquire regional chains, including Randall's Food Markets in Texas, Carrs in Alaska, and Dominick's in Illinois. In 1997, it exercised its option to acquire control of Vons in Southern California. (The buyout of Randall's marked Safeway's presence to return to Texas ten years after the original stores in Houston were sold to AppleTree.)

In 2001, Safeway acquired the family-owned Genuardi's chain, with locations in Pennsylvania, New Jersey, and Delaware. Safeway also created subsidiary "Blackhawk Network", a prepaid and payments network, a card-based financial solutions company, and a provider of third-party prepaid cards.

In October 2003, a strike was called by members of the United Food and Commercial Workers at Vons stores in Southern California. The strike (and concurrent lockout at Albertsons and Ralphs) lasted until the end of February 2004.

In November 2006, speculation rolled around as the Chicago Sun-Times reported that Sears Holdings Corporation may buy Safeway.

Store formats and concepts

Safeway had pharmacy operations, formed in 1962 under the Super S brand, which were sold in 1971.

In 1964 Safeway opened a trial two level "International Store" at 12th and F Street in Washington, D.C., with a conventional Safeway downstairs and a gourmet store on the upper floor. The Safeway International Store range included wild boar steaks, snow hare, suckling pig, and reindeer steaks.

The company also made a number of attempts to repurpose older, smaller store sites, opening Food Barn, a discount grocery outlet, and Liquor Barn, a discount liquor outlet, in the 1970s. Safeway also trialled Town House in Washington, D.C., small stores targeting apartment dwellers, and a gourmet store concept, Bon Appetit in San Francisco.

In 1969 Safeway formed a joint venture with Holly Farms Poultry Industries (now part of Tyson Foods) to open "Holly Farms Fried Chicken Take Home" in an effort to diversify into fast food restaurants and compete with KFC. The first store opened in Colonial Heights, Virginia in August 1969.

Corporate governance

Safeway headquarters in Pleasanton, California

Current members of the board of directors of the company are: Steven Burd, Janet Grove, Mohan Gyani, Paul Hazen, Robert MacDonnell, Douglas Mackenzie, Rebecca Stirn, William Tauscher, and Raymond Viault.

Locations

An early 21st century Safeway store in Sunnyvale, California.

Safeway has a total of 1,521 stores in the United States and 222 stores in Canada, over 80% of which are located in Western states and provinces. The greatest concentration of Safeway branches is in California with 521 stores (including the 295 branded as Vons), followed by Washington State with 168 stores and Colorado with 122. In Canada, the greatest number of Safeway locations is in Alberta with 88 stores and British Columbia with 78 stores.

Brands

Current brands

A Safeway.com delivery truck, used for deliveries to people who buy their groceries online.

Today, Safeway Select is the company's signature private label that offers an upscale range of products, a sub-label Primo Taglio is used for more upscale deli products and Lucerne remains as the main dairy line. In 2006, Safeway introduced a new line, with organically grown and processed line of products named O Organics. In late 2007, the Safeway Select: Signature line was renamed Signature Cafe.

Some of the brands in use today are:

• Basic Red — Mostly paper products, but includes large tubs of ice cream.
• Bright Green — Environmentally friendly cleaning products.
• Butcher's Cut, The — Secondary meat brand used for pre-packaged cold cut and raw meats.
• Captains Choice — Seafood brand.
• Country Hearth - A Lucerne manufactured line of bread similar to Orowheat
• Dairy Glen — A second dairy brand. It is also used for the two gallon tubs of ice cream.
• Deli Counter, The — A secondary deli brand used mainly for cold cuts.
• Diablo Creek — Wine
• Eating Right — Brand used for healthier eating using labels such as low fat, low sodium, etc.
• Firefly Ridge — Wine
• Gourmet Meat Shoppe — Frozen meat products.
• Jerseymaid — A carryover dairy brand from Safeway's acquisition of Vons, still used due to its reputation.
• Lucerne — The main dairy brand, used for ice cream, cheese, yogurt, and milk.
• Manor House — Another frozen meat line used for turkeys during the holidays.
• Mom to Mom — A full line of baby products.
• O Organics — Line of organic products.
• Oven Joy — Bread brand that is neither Safeway, O Organics, Eating Right nor Safeway Select.
• Primo Taglio — The upscale deli cold cut brand.
• Priority — Pet care brand.
• Produce Stand, The — Pre-packaged produce such as baby carrots, salads, and raisins.
• Ranchers Reserve — The upscale meat brand.
• Refreshe — Bottled Water Brand.
• Remarkable — Used for the Texas based stores.
• Safeway — This includes non-branded items like Go2 Cola, that have unique names, and are not a whole brand to themselves. It is also used on items that just have descriptive titles instead of names.
• Safeway Select — These are mostly the upscale items.
• Signature Cafe — Deli Line of soups, side dishes and pre-made salads.
• waterFront Bistro — Frozen seafood products.

Lifestyle branding

Safeway "Lifestyle" look Produce Department.

On April 18, 2005, Safeway began a $100 million brand re-positioning campaign labeled "Ingredients for life." This was done in an attempt to differentiate itself from its competitors, and to increase brand involvement. Steve Burd described it as "branding the shopping experience".

The launch included a redesigned logo, a new slogan "Ingredients for life" alongside a four-panel life icon to be used throughout stores and advertising, and a web application called "FoodFlex" to improve consumer nutrition. Many locations are being converted to the "Lifestyle" format. The new look was designed by Michigan-based PPC Design. In addition to the "inviting decor with warm ambiance and subdued lighting", the move required heavy redesign of store layout, new employee uniforms, sushi and olive bars, and the addition of in-store Starbucks kiosks (with cupholders on grocery carts). The change also involved differentiating the company from competitors with promotions based on the company’s extensive loyalty card database. At the end of 2004 there were 142 "Lifestyle" format stores in the United States and Canada, with plans to open or remodel another 300 stores with this type of theme the following year. "Lifestyle format" stores have seen significantly higher average weekly sales than their other stores. By the end of 2006, shares were up proving that this rebranding campaign had a major impact on sale figures.

Safeway fuel

Safeway has fuel stations at some stores that allow you to use a phone number or club card discount. In July 2008 Safeway changed the fuel station discount, re-branding it the "Power Pump Rewards." The Power Pump Rewards program offers 10 cents off every gallon when you spend $100 in the store (after club/coupon savings). No matter what the Safeway customer will save 3 cents a gallon with the use of a club card or phone number. –Purchases of products such as alcohol, tobacco, pharmaceuticals and lottery tickets do not count towards the program. Major metropolitan areas, such as the San Francisco Bay Area, have as few as three fuel centers. The Power Pump Rewards allows customers to spend $100 to receive the 10-center discount is being discontinued on September 12, 2009. Safeway is committed to lower prices within stores and give 3-cents off each time you fill up at the pump with your Loyalty card.

Safeway ATM Network

The Safeway ATM Network is operated in Colorado, Oregon, Wyoming and Washington. There are typically two machines located near the front of each store. Cirrus, Plus, Star, and NYCE are on the network. The network was started in late 1998 in Denver and was expanded to Wyoming, Washington, and Oregon.

Banners

In addition to the Safeway name, the company also operates stores under the following banners:

• Carrs (Carr-Gottstein Foods), Alaska supermarket chain
• Casa Ley, food stores in western Mexico, competes primarily with Wal-Mart
• Dominick's (Dominick's Finer Foods), Chicagoland supermarket chain
• Genuardi's (Genuardi's Family Markets), Delaware Valley supermarket chain
• Pak 'n' Save (warehouse store chain in California)
• Randall's Food Markets, southeast and central Texas supermarket chain
  • Tom Thumb Food & Pharmacy, North Texas supermarket chain
• Vons (The Vons Companies, Inc.), Southern California/Nevada supermarket chain
  • Pavilions, upscale division of Vons

Logos

The Ribbon Leaf logo

Safeway Medallion logo, 1980

• The S Medallion (1946–December 1981) — The red "S" part was slightly thinned in late 1957, and would remain in this fashion through 1981.
• The Ribbon Leaf (January 1982–2005) — Safeway used this logo from January 1982 to April 17, 2005. The red stylized "S" was still located in the center.
• The Yin-Yang - Life logo (January 2005 to the present) — The stylized "S" is still located in the center, but is now white.

Slogans

• Since We're Neighbors, Let's Be Friends (1972–1979) — Probably the first Safeway advertising campaign to make use of a singalong jingle. This slogan was used by the U.S. stores until July 16, 1979, when the "Everything" slogan was adopted. (lyrics acceptable)
• Today at Safeway (used by the Canadian stores during the same period as the American jingle listed above)
• Everything You Want from a Store and a Little Bit More (1979–December 1981) — This campaign, launched on July 16, 1979, was adopted, perhaps, to reflect the image of Safeway stores as "one stop shopping centers." This campaign was used through December 1981, although it was in use in the UK into the 1990s.
• Today's Safeway: Where You Get a Little Bit More (January 1982–1983) — The first Safeway ad campaign to make use of the company's new "ribbon leaf" logo.
• America's Favorite Food Store (1983–1986)
• I Work an Honest Day and I Want an Honest Deal (1985–1987) — "America's favorite food store" tagline used with this campaign through 1986 until the buyout and divestitures, which reduced the storecount and made the "America's favorite" line inaccurate. Also featured a song.
• Nobody Does It Better (1988– late 1990s) — This campaign is unique for being adapted from a pop song. In this case, the song was originally a hit for Carly Simon in 1977. Simon originally sang it as the theme song to 1977's James Bond movie, The Spy Who Loved Me.
• We Bring It All Together (late 1980s–early 1990s) Main slogan for Safeway locations in Canada.
• Giving Our Best (2001–2005)
• Vons is Value (mid-to-late 1990s) — Used only for Vons stores in Southern California. This was the first Vons ad campaign since Safeway took over ownership of the chain.
• Delivering Our Best (late 1990s–2005) Used only for Vons stores in Southern California, as a regional variant of the Safeway slogan.
• Today's Better Way (1990s) Main slogan for Safeway locations in Canada before Giving Our Best was used in the early 2000s.
• Ingredients for life (2005–present)

SCOP: Safeway Category Optimization Process

Safeway recently transitioned from regional control of their product assortments to national category management, known as the Safeway Category Optimization Process or SCOP. With all dry grocery corporate buying done from Safeway's Pleasanton offices, it is said it will increase representation of manufacturers by experienced sales professionals with extensive product and category knowledge. Corporate produce buying offices are located in Phoenix Arizona. This will mean consistency across the Safeway chain, meaning one could go into a store in Winnipeg or San Francisco and find the same products at the same price as all negotiation is now done at the corporate level.

Safeway Music

Safeway Music is provided by InStore Broadcasting Network, giving store personnel a variety of songs to play for shoppers. The satellite network also beams commercials and advertisements for Safeway products and brands that play intermittently with the music.

In Canada (and various other divisions in the past up until 2004), the "Bread song": Fats Domino's "I'm Walkin'" plays at 5 PM local time to remind the bakery staff to remove the fresh bread from the ovens and bring it to the floor for the Fresh French Bread at 5 campaign.

Healthy Measures Employee Insurance Plan

Safeway has designed an innovative, market-based employee health insurance plan that has kept per capita health-care costs flat between 2005-2009 (that includes both the employee and the employer portion), while most American companies' costs have increased 38% over the same four years.

The Safeway Healthy Measures plan capitalizes on two key insights. The first is that 70% of all health-care costs are the direct result of behavior. The second insight is that 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity). Furthermore, 80% of cardiovascular disease and diabetes is preventable, 60% of cancers are preventable, and more than 90% of obesity is preventable. Safeway's insurance program focuses on tobacco usage, healthy weight, blood pressure and cholesterol levels, utilizing a provision in the 1996 Health Insurance Portability and Accountability Act that permits employers to differentiate premiums based on behaviors.

Safeway's Healthy Measures program is completely voluntary and currently covers 74% of the insured nonunion work force. Employees are tested for the four measures cited above and receive premium discounts off a "base level" premium for each test they pass. Data is collected by outside parties and not shared with company management. If they pass all four tests, annual premiums are reduced $780 for individuals and $1,560 for families. Should they fail any or all tests, they can be tested again in 12 months. If they pass or have made appropriate progress on something like obesity, the company provides a refund equal to the premium differences established at the beginning of the plan year.

External links

• Safeway website
• Safeway Canada website