Safeway "new low prices" - 5 Nevada Stores only

Arizona, Hawaii, Nevada, New Mexico, Oklahoma, and Texas. No non-grocery posts.
Post Reply
storewanderer
Valued Contributor
Valued Contributor
Posts: 5761
Joined: February 23rd, 2009, 3:54 pm
Been thanked: 12 times
Contact:
Status: Offline

Safeway "new low prices" - 5 Nevada Stores only

Post by storewanderer »

Looks like Safeway NorCal has finally decided to do something with its too high of pricing strategy in these Nevada Stores. Their ad this week has a double page flyer proclaiming "new low prices." The flyer isn't very exciting but a trip to the location yielded a lot more excitement.

Traffic must have gotten bad enough in the Reno and Sparks Stores that it finally got someone's attention who had the power to do something about this. Maybe if they had done this sort of thing 10 years ago, they wouldn't have had to close 3 of their stores up here. What is funny is they are even doing this in Fallon (only competitor is Wal Mart and I thought this store was doing pretty well), Hawthorne (no competitor unless you count Family Dollar and Dollar General), and Lovelock (no competitor unless you count Family Dollar).

Their little print flyer does not do justice to what they have actually done here. They have roadside banners, parking lot signs, cart return signs, white, red, and yellow balloons on the front walkway, signs all over inside the store, even saw one employee wearing a t-shirt advertising this. They have cut tons and tons of prices literally overnight. I have not seen such a wide scale price drop all at once, by any chain, ever.

Looking around the store, it appears as if they went over to Smiths and just literally copied their prices for most of produce, dairy, and a good amount of name brand grocery in center store. They are actually beating Smiths on some items now. Pricing is still very weak on private label and on non-food and frozen does not seem to have been cut down to Smiths levels but is lower than it was before. Boar's Head products in their deli are now the same price as Smiths and Sprouts (they had been $2/lb higher on everything).

It will be interesting to see how this works out. I believe they will capture more of my business as a result of this change. Hopefully it will work out from a profitability perspective. I worry they may have cut too many prices too quickly and it will be a profitability drain, but evidently drastic measures were needed. Hopefully they can get the volume increases necessary to compensate for this. This kind of reminds me of those "value stores" they were running in Denver back before the Albertsons merger (most of which have since closed) but these price cuts go much deeper on center store.

pseudo3d
Valued Contributor
Valued Contributor
Posts: 2849
Joined: November 12th, 2015, 7:01 pm
Been thanked: 1 time
Status: Offline

Re: Safeway "new low prices" - 5 Nevada Stores only

Post by pseudo3d »

I'm guessing that with Smith's war on common credit cards, Albertsons figured that they can capitalize on that to go for the kill.

storewanderer
Valued Contributor
Valued Contributor
Posts: 5761
Joined: February 23rd, 2009, 3:54 pm
Been thanked: 12 times
Contact:
Status: Offline

Re: Safeway "new low prices" - 5 Nevada Stores only

Post by storewanderer »

pseudo3d wrote: October 10th, 2019, 5:32 am I'm guessing that with Smith's war on common credit cards, Albertsons figured that they can capitalize on that to go for the kill.
Only one of the Safeways is within the trade area of a Smiths. The others are 10+ miles from one.

I think it may be the market in general. There is so much competition here. Safeway must be doing very badly to finally do this. I am not sure if Safeway is really doing that badly here but maybe in comparison to the rest of Northern California, these stores are doing enough less business that someone noticed and questioned why. I suspect if you put these stores into Denver or Phoenix Safeway which have a lot of lower volume stores, they would be "average" type performers.

Also that Safeway is planning a new store in Reno. If the existing market is struggling, it is questionable how bright of an idea it is to build a new store here. They may be feeling out the market for if they can operate profitably here, with the price structure necessary to compete with other stores. The new store they want to build is directly in the trade area of a Wal Mart Supercenter, Sprouts, WinCo, and Smiths. All very price competitive operations. Raleys and Save Mart, the other two high price operators, are 5 miles away and not really in the same trade area. Customers used to shopping the cheaper stores, would have a tough time stomaching Safeway's CA prices that are 30-40% higher. But now with these price cuts it gets them in line with those places... the new store hasn't started construction yet. I'd like to see how it would work out if they opened a new store with this pricing; I think it would be very successful.

storewanderer
Valued Contributor
Valued Contributor
Posts: 5761
Joined: February 23rd, 2009, 3:54 pm
Been thanked: 12 times
Contact:
Status: Offline

Re: Safeway "new low prices" - 5 Nevada Stores only

Post by storewanderer »

This program seems to have expanded to a few other areas where Safeway NorCal operates.

In Reno, the stores don't seem any busier than before. But the produce is noticeably fresher given they are selling most of it for like 50% below the suggested NorCal Division Retail Price. They are basically just matching Smiths prices.

Hard to trust Safeway will hold prices down given its history on pricing. But we will see. So far they have held to it pretty well.

It appears in Redding area and a few surrounding rural towns up there, they are pricing off of Sav Mor (Holiday).
Not sure who they are pricing off of in Fresno but they are doing in there too.

klkla
Valued Contributor
Valued Contributor
Posts: 1466
Joined: February 24th, 2009, 3:26 pm
Been thanked: 7 times
Status: Offline

Re: Safeway "new low prices" - 5 Nevada Stores only

Post by klkla »

storewanderer wrote: January 4th, 2020, 11:07 amIn Reno, the stores don't seem any busier than before.
That doesn't bode well for them. If they have made a decision to reduce margins it would have been done with an expectation that sales would increase to cover the lost income. If sales haven't increased they're just giving money away.

storewanderer
Valued Contributor
Valued Contributor
Posts: 5761
Joined: February 23rd, 2009, 3:54 pm
Been thanked: 12 times
Contact:
Status: Offline

Re: Safeway "new low prices" - 5 Nevada Stores only

Post by storewanderer »

klkla wrote: January 4th, 2020, 3:30 pm
storewanderer wrote: January 4th, 2020, 11:07 amIn Reno, the stores don't seem any busier than before.
That doesn't bode well for them. If they have made a decision to reduce margins it would have been done with an expectation that sales would increase to cover the lost income. If sales haven't increased they're just giving money away.
That is the risk. I think this is a small enough number of stores within NorCal Division that they are willing to give this a try and see what happens. Remember they want to build a new store in Reno (they paid millions for a lot, overpaid big time in my opinion) in a growing area but the primary competition is WinCo, Wal Mart Supercenter, Sprouts, and Smiths. 3 of those 4 stores literally have more business than they know what to do with (Sprouts being the laggard-but still doing well, just not bursting at the seams like the other 3 are). Safeway has struggled in the Reno market for decades starting in the early 80's when Raleys put most of their smaller old stores around town out of business and after the mid 80's never had more than a few stores open in Reno/Sparks at a time while competitors like Raleys, Albertsons, Scolaris, etc. had 6-15 stores open each at any given time.

I think it takes time for this type of program to work. We will see if they give it time. At minimum it should help their shrink and product freshness. They are also running lower price ads. For instance this week the regular NorCal ad front page is Fuji Apples 1.28/lb, in Reno it is .88/lb.

I am just happy to see they are able to identify some of these lower income type markets cannot command the same type of pricing they are running in the bay area. This is not something the old Safeway pre-merger was ever willing to understand. And it cost them serious share to Kroger in a ton of markets. These NorCal markets they are doing this program in have radically different competition and price structure than the bay area. In the case of Nevada, not on NorCal UFCW Contracts either so wage structure is way different. The rural NorCal Stores in the lower income places like Redding and Fresno would still have higher wages but with the amount of discount competition they were obviously losing share.

bryceleinan
Bronze Member
Bronze Member
Posts: 9
Joined: June 1st, 2018, 11:59 am
Status: Offline

Re: Safeway "new low prices" - 5 Nevada Stores only

Post by bryceleinan »

I was talking to a couple of coworkers who live in Damonte Ranch and near Rio Wrangler... they said with traffic it can take upwards of 20 minutes to get to Walmart or Smith’s, so it makes sense to have a grocery store at Steamboat / Veterans. One of the coworkers used to work for Safeway, and the Smith’s on South Meadows was originally slated to be a Safeway.

As far as Safeway’s success goes, I was shocked when Carson City closed - the place was always busy when I was in there. It is an odd lot - and my understanding is that the re-lease of the property failed when they couldn’t put a gas station in. Kietzke was no surprise - Walmart and Albertsons/Save Mart ate its lunch.

storewanderer
Valued Contributor
Valued Contributor
Posts: 5761
Joined: February 23rd, 2009, 3:54 pm
Been thanked: 12 times
Contact:
Status: Offline

Re: Safeway "new low prices" - 5 Nevada Stores only

Post by storewanderer »

bryceleinan wrote: September 18th, 2020, 9:58 pm I was talking to a couple of coworkers who live in Damonte Ranch and near Rio Wrangler... they said with traffic it can take upwards of 20 minutes to get to Walmart or Smith’s, so it makes sense to have a grocery store at Steamboat / Veterans. One of the coworkers used to work for Safeway, and the Smith’s on South Meadows was originally slated to be a Safeway.

As far as Safeway’s success goes, I was shocked when Carson City closed - the place was always busy when I was in there. It is an odd lot - and my understanding is that the re-lease of the property failed when they couldn’t put a gas station in. Kietzke was no surprise - Walmart and Albertsons/Save Mart ate its lunch.
Yes, traffic is very bad and there was supposed to be a grocery store where Safeway is going when the shopping center was built but it never materialized. If someone else builds a grocery store on the opposite side of the road, we will see what happens. I think Damonte Ranch area is shopping primarily either at Wal Mart or Raleys (Mt. Rose); a few at Smiths. That Raleys... does extremely well. I cannot even believe how well it does, it seems like its business has doubled or maybe even tripled in the past five years, but it is sure a nice store and they keep the meat and produce departments stocked very well in there.

Also in the mid 90's there was a proposal to put an Albertsons on the NE corner of Virginia St. and Geiger Grade- that never materialized and it is probably a good thing as I don't think it would have made it back then. Also when the Summit was built initially Wild Oats was slated to go in there. Again that never materialized. However with additional housing and the many apartments now around the S. Virginia/Geiger Grade/Mt. Rose Highway area I am wondering if that trade area could soon support a store.

Smiths got ownership of the South Meadows lot in 2004 from "Serene Plaza LLC" - whatever that is, and built the store there shortly thereafter. There were always rumors back then Safeway was going to put a store out in South Reno but it became pretty clear at that point Reno was way over-stored as a whole. Also the space where Sprouts is, initially, was proposed as a Smart & Final. I always wondered if another conventional would take that spot to try to go against Smiths. Sprouts is kind of a lame duck, definitely does not provide the competition a full conventional would.

Carson City Safeway was a money losing store in its last few years (just like the Kietzke Safeway in Reno, but Carson had better foot traffic due to the Wells Fargo inside). Rarely more than one checkout open at any given time no matter how long the line got, and tons of expired product on the shelves. Very small size transactions. https://s196.photobucket.com/user/Store ... t=3&page=1 However Safeway did make an effort to work something out with the landlord to keep the Carson City location open and renovate it but couldn't come to terms with the landlord on the lease, and ended up closing it when the lease ended. Kietzke they were losing enough money they walked from before their lease even ended, which was really too bad, because the store selection in central SW Reno is lousy (two Save Marts and the Food Source...). I think the landlord down in Carson already had CAL Ranch lined up for the building at the point of negotiations with Safeway as CAL Ranch reoccupied the building quickly. Wal Mart really ate everyone's lunch there in Carson City. Smiths came out on top which back before Wal Mart opened and the Scolaris and Safeway were still there I never would have predicted (I would have predicted the Smiths would be gone, because it was the worst run and in the worst condition store of the three back then).

Post Reply