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Steve Burd has Safeway flying high.
While its core supermarket business continues to make strides — including nearing completion of the lifestyle conversions — the Pleasanton, Calif.-based company has begun marketing O Organics and Eating Right, the two health-oriented product lines it developed over the past couple of years, to other retailers in the U.S. and abroad.
That move comes on the heels of its development of the Blackhawk gift card business, which has also been marketed to operators around the worldand which provides ancillary sales and profits.
The next ancillary business Safeway plans to market involves health care, which is one of Burd’s primary concerns. Having tested an approach to health care at Safeway’s own stores and proved, to his satisfaction, that the programs work, Burd, the chairman, president and chief executive officer, has Safeway poised to become a consultant to other companies on how to implement similar initiatives to lower health care costs.
Safeway is also on track to complete the conversion of stores to the lifestyle format over the next 18 months — a four-year process that has revived the chain’s financial fortunes.
Safeway said it plans to convert about 250 of its 1,761 locations to the lifestyle format in the current fiscal year, about the same as last year.
Safeway is beginning to turn its attention to what to do with its smallest stores, and it came up with a solution called The Market, a mini-lifestyle store that combines an edited grocery assortment with a mix of prepared foods and smaller service counters. The first unit of The Market opened in a 10,000-square-foot Vons in Long Beach, Calif., in May, and the company expects at least two more similar stores to open in other areas of the country before the end of the year.
“Burd has really reasserted Safeway’s excellence,” Gary Giblen, executive vice president at Goldsmith & Harris, New York, told SN.
“He went through a tough spell a few years ago with some of the acquisitions the company made, but he’s regained his stature as the best CEO in food retailing,” Giblen said.
“He really is the most strategic, most innovative thinker outside the box, and in many ways he’s really invented the strategy by which the supermarket industry has survived, in terms of re-engineering costs by paring expenses in hundreds of small ways and then reinvesting those savings in low price or service — and he’s continuing to refine that process, even as other chains adopt similar strategies.”
Giblen also credits Burd for developing other businesses that complement the supermarkets and add revenue, including the Blackhawk gift card business; Citrine, the restaurant that serves as a test kitchen for some prepared meals at the stores; and O Organics and Eating Right, two healthoriented product lines that Safeway is now selling to other retailers.
— ELLIOT ZWIEBACH
