Is it the store environment, is it product development or is it ancillary activities that lead a supermarket chain toward significant upturns in sales and profitability? In the instance of Safeway, it was all those factors.
That's why SN editors chose Safeway, the chain based in Pleasanton, Calif., as this year's recipient of SN's Retail Excellence Award. We'll take a closer look at Safeway and some of its programs, but first here are some details about the award program.
Kelly Griffith, president of Safeway's Portland, Ore., division, is to accept the SN award on behalf of Safeway in a ceremony set for Oct. 23, during the Food Industry Leadership Center Executive Forum in Portland. Presenting the award on behalf of SN will be David Orgel, editor-in-chief. The forum is sponsored by Portland State University. SN is an event partner. Safeway is the fifth winner of SN's annual award. Prior winners were H.E. Butt Grocery, Kroger, Hannaford Bros. and Hy-Vee. There will be news coverage of the Portland event in an upcoming issue of SN.
Now let's return to some of what's happened in recent time at Safeway that has contributed to the chain's success. The chain's tactics were described in a rare interview with Steve Burd, chairman, president and chief executive of Safeway. The interview was conducted by SN's Elliot Zwiebach. Interview results form the basis of the front-page news feature in this week's SN.
Lifestyle format: Doubtless, the biggest change at Safeway has been the conversion of nearly 1,000 of its stores, or about half of them, to the lifestyle format. The intent of the format is to put Safeway beyond mass marketing and position the store to communicate to shoppers lifestyle solutions, such as those focused on perishables and distinctive product.
Distinctive product: Formats are good, but it's the content of a store that counts. Safeway has developed new products intended to support shoppers' quest for healthier living. Included are O Organics, Eating Right lines, Rancher's Reserve beef, Primo Taglio deli products and Signature soups and sandwiches. Safeway's O Organics line has become the fifth-largest organic brand of any type, as measured by sales, and the brand is proprietary to Safeway. The newer Eating Right line shows promise of being even larger.
Ancillary activity: The program that represents the biggest inductive leap for Safeway is its Blackhawk Network. Blackhawk is a distribution network that allows Safeway to sell the prepaid gift cards of other companies within its own store walls, and at supermarket companies overseas. This is big. Hundreds of stores, sports companies and entertainment venues participate. Blackhawk is expected to contribute $100 million in pretax revenue to Safeway this year. An annual compound growth rate of 80% is anticipated for the next five years.
Another ancillary activity is Safeway's tryout of the restaurant business with this year's opening of Citrine New World Bistro, a freestanding casual restaurant.