Albertsons/Safeway and a lack of "entry level" products

[Super S]

Albertsons and Safeway are not entry level grocers.

They're definitely not entry-level on the level of, say, Aldi, but I think that's the impression caused by the traditionally higher prices of the chains. But Safeway was once a modest chain found in even smaller towns of Texas, and Jewel pioneered one of the first "true" generic lines. If they got their everyday prices under control, then it would be a different story.

Safeway and Albertsons both were at one point modest chains. But there was a time when both chains (pre-merger) took a little more pride in their stores. Safeway was commonly found in many small towns on the west coast, and in some cases, was/is the only major chain present in some of the smaller towns. Safeway also has a history of locating stores closer to downtown areas, and although prices tend to be high, they do serve a purpose. Albertsons up until about the early 90s had really good service areas, well-staffed stores, and did very thorough remodels every time. Albertsons tended to build stores closer to neighborhoods. There was a time when both chains could justify slightly higher prices by offering better service and cleaner stores, and paid close attention to service departments as well as meat and produce. However, in one small town near me, Clatskanie, Oregon, there is a marina Safeway as the only grocer with NO service departments. I think they even bring in meat from other stores. That store exists to supply staple items, but for bigger trips many people drive to nearby Longview or Astoria/Warrenton where there are not only full-service Safeway stores, but also Fred Meyer, and Walmart and WinCo in Longview.

[pseudo3d]

Albertsons and Safeway are not entry level grocers.

They're definitely not entry-level on the level of, say, Aldi, but I think that's the impression caused by the traditionally higher prices of the chains. But Safeway was once a modest chain found in even smaller towns of Texas, and Jewel pioneered one of the first "true" generic lines. If they got their everyday prices under control, then it would be a different story.

Safeway and Albertsons both were at one point modest chains. But there was a time when both chains (pre-merger) took a little more pride in their stores. Safeway was commonly found in many small towns on the west coast, and in some cases, was/is the only major chain present in some of the smaller towns. Safeway also has a history of locating stores closer to downtown areas, and although prices tend to be high, they do serve a purpose. Albertsons up until about the early 90s had really good service areas, well-staffed stores, and did very thorough remodels every time. Albertsons tended to build stores closer to neighborhoods. There was a time when both chains could justify slightly higher prices by offering better service and cleaner stores, and paid close attention to service departments as well as meat and produce. However, in one small town near me, Clatskanie, Oregon, there is a marina Safeway as the only grocer with NO service departments. I think they even bring in meat from other stores. That store exists to supply staple items, but for bigger trips many people drive to nearby Longview or Astoria/Warrenton where there are not only full-service Safeway stores, but also Fred Meyer, and Walmart and WinCo in Longview.

Most chains that offer a common price point do have a range of stores from excellent to crappy. Publix has some fantastic stores, but also some inferior ones. Kroger has stores so different that you'd hardly believe they're the same chain. H-E-B has small stores that lack service departments and some stores that are the closest Texas equivalent to Wegmans. And of course, all of these stores often have a completely different market mix. Albertsons and Safeway belatedly realized one size does not fit all, and has to offer a merchandise mix to reflect that (and they really haven't grasped that completely).

When I lived in Houston, one of the Krogers I visited was in an upscale enclave on the other end of Katy Freeway (Kroger can be found in upscale neighborhoods in the Houston division), and I hardly saw any "owl products" while the Krogers back home (even the nicer Bryan store) push it much more.

[storewanderer]

Safeway spent a ton of money on that "lifestyle" store program which was designed to make the entire chain consistent and upscale. By the time it was all said and done , even the majority of closed Genuardis and Dominicks were remodeled into being lifestyle stores, the company did actually follow through and get I think 85-90% of the stores remodeled. A few toward the end were done really cheaply but those were not the majority. Sure, you still find a few non-lifestyle stores creeping around for one reason or another but there are really very few.

Safeway long decided they were not interested in the lower class and even lower middle class customer. Even though those lower class and lower middle class customers tend to buy a lot from grocery stores since they tend to cook more of their own food as opposed to going to restaurants. Safeway was after a non-price sensitive middle class and upper middle class customer. Problem is that is the same customer who also spends a lot of money in restaurants and the first customer to go line up shopping at the new Whole Foods or Sprouts that opens nearby. Over the years they closed stores in those types or areas or let stores in those types of areas run on fumes and basically killed the stores.

Albertsons always veered more toward a middle class and upper middle class customer as well based on how they located their stores and even the items carried.

So these factors are why I'm not really sure that a "value" brand belongs in Safeway/Albertsons. They do not want to dilute their image with a bad quality private label. Their image is already very diluted and they need to do things to strengthen it. Selling crappy low end private label items even at great prices won't fit the bill if the customer gets home and finds the milk tastes terrible, the napkins fall apart upon touch, etc. I think the better strategy is to have the basic Signature/Lucerne as the private label option, make sure the quality is better than name brand, and price the items competitively in all divisions. When you are a dollar more on most private label dairy items than Raleys in NorCal you really have a problem. A BIG problem. Raleys is a quality operator with nice stores and good service levels; you will be confident in the quality of what you buy from them and operations are pretty consistent from location to location. They provide a MUCH better in-store experience than Safeway NorCal provides with good staffing and very clean stores, and at this point also provide lower prices (thanks to Albertsons pricing attitude at NorCal Safeway).

You're right about the Owl/PSST items not being so present at some Kroger owned stores. I don't know if the QFC division carries that brand at all. Maybe on a few paper products. I have noticed typically when Kroger starts to reduce merchandise mix at stores due to limited size, the private label items seem to be the first to get cut out. At least that is what I have noticed at Ralphs, Smiths, and QFC: smaller size stores do not have nearly the assortment of Kroger brand items as larger size stores. I think they are careful to not be "missing" name brands. Likely learning from Safeway's mistakes of a decade+ ago who did the opposite... cut name brands to push private label.

[lake]

This is coming from a NorCal division perspective but, I think the most interesting thing I find about Safeway is that I don't even know if they're aware of who exactly they're targeting these days. Their prices have skyrocketed recently yet they continue to have giant in store banners advertising "Just Better" prices. If they are going for the upper market, than these higher prices are fine, and they likely maintain the real estate to succeed with this. However, if you're going for the upper market, you have to back that up with the quality people expect from the upper market stores such as Nugget. They simply haven't, in fact I'd say their quality has gone down recently. They have based their brand completely around these fake promises such as "Fresher, Juicier, Better" on the side of their trucks or "Threes a Crowd" in their stores. People have noticed these fake promises and it's starting to show in the noticeable decrease in their store's volumes. They aren't struggling, but I have noticed that the Safeway stores I frequent have gone down in volume while the Raley's/Bel Air and even SaveMart stores I frequent have gone up in volume. All three of these stores are going for the same customer as Safeway traditionally but all have a different way of doing it. Raley's new slogan "Making Great Food Affordable" is actually a pretty good way to go about this as they aren't saying that their prices are "WOW" but instead are saying that their food is a good value for it's typically higher quality. This is very true as of recent as Raley's prices have become very reasonable when compared to Safeway despite Raley's having a much better reputation in terms of quality. SaveMart on the other hand follows a very Publix like campaign where they try to lure people in with tons of promotions that involve buying certain items to get rewards along with tons of BOGOs. Safeway on the other hand just says "We have low prices" which draws people into the stores, but fails to provide them with the lower prices promised.

[pseudo3d]

Safeway long decided they were not interested in the lower class and even lower middle class customer. Even though those lower class and lower middle class customers tend to buy a lot from grocery stores since they tend to cook more of their own food as opposed to going to restaurants. Safeway was after a non-price sensitive middle class and upper middle class customer. Problem is that is the same customer who also spends a lot of money in restaurants and the first customer to go line up shopping at the new Whole Foods or Sprouts that opens nearby. Over the years they closed stores in those types or areas or let stores in those types of areas run on fumes and basically killed the stores.

Albertsons always veered more toward a middle class and upper middle class customer as well based on how they located their stores and even the items carried.

So these factors are why I'm not really sure that a "value" brand belongs in Safeway/Albertsons. They do not want to dilute their image with a bad quality private label. Their image is already very diluted and they need to do things to strengthen it. Selling crappy low end private label items even at great prices won't fit the bill if the customer gets home and finds the milk tastes terrible, the napkins fall apart upon touch, etc. I think the better strategy is to have the basic Signature/Lucerne as the private label option, make sure the quality is better than name brand, and price the items competitively in all divisions. When you are a dollar more on most private label dairy items than Raleys in NorCal you really have a problem. A BIG problem. Raleys is a quality operator with nice stores and good service levels; you will be confident in the quality of what you buy from them and operations are pretty consistent from location to location. They provide a MUCH better in-store experience than Safeway NorCal provides with good staffing and very clean stores, and at this point also provide lower prices (thanks to Albertsons pricing attitude at NorCal Safeway).

You're right about the Owl/PSST items not being so present at some Kroger owned stores. I don't know if the QFC division carries that brand at all. Maybe on a few paper products. I have noticed typically when Kroger starts to reduce merchandise mix at stores due to limited size, the private label items seem to be the first to get cut out. At least that is what I have noticed at Ralphs, Smiths, and QFC: smaller size stores do not have nearly the assortment of Kroger brand items as larger size stores. I think they are careful to not be "missing" name brands. Likely learning from Safeway's mistakes of a decade+ ago who did the opposite... cut name brands to push private label.

Yeah, Safeway did largely move upscale, as just looking at some of their old stores that were let go with the divisions in the 1980s it seems incredible regarding the cities and stores they stuck around with (can you believe the Port Arthur, Texas store was a Safeway as late as 1988?)

Maybe it is best to have Signature as the main (only) brand and increase quality while decreasing price. Publix isn't exactly low-end (it sure it ubiquitous in Florida though) but pushes a consistent private label, and from what I've heard, that private label is good.

I also think that Kroger has it right when they've kept the name brand instead of the store brand, as that's totally different than what H-E-B does (H-E-B also has a Safeway-like tendency to get into arguments with vendors, sometime in the spring there was a conflict between DiGiorno Pizza and H-E-B that resulted in a highly reduced DiGiorno Pizza selection)

One of my bigger problems with Signature as it stands today, besides the not-actually-a-good-price problem is the fact that it just doesn't have an identity. I mean, sure, Kroger products are in every Kroger owned store whether it says Kroger on the front or not, but it at least has a strong identity. Maybe changing say, Safeway Select ice cream to Albertsons Select ice cream would've been too much of a shock.

[storewanderer]

The Signature brands feel very generic. The "Essential Everyday" stuff felt similarly generic though. I remember Supervalu did quite a bit of marketing of Essential Everyday to gain customer acceptance of that brand. I am not sure it was ever very well accepted. SoCal Division issued a lot of $1 and $2 off any EE Item coupons. Intermountain Division was running some really good deals on the items in their monthly big book of savings, usually required some kind of a coupon that was on the displays in the stores. The Albertsons LLC Stores routinely pushed the EE items very hard on 10 for $10 sales (spices, paper products, freezer bags, etc. all the time) and 2 for $1 sales (2 L Soda, canned vegetables, etc. often) and had some excellent prices on those items. I am just not seeing these kind of promotions on the "Signature" items for some reason.

The "Signature" line seems to be marketed in the fashion in which Safeway handled its private labels over the past decade. That is, very little promotion of the items on price. That is, regular prices usually just about 10 or 20 cents lower than the name brand option. Regular prices on private label items that are higher than regular prices on name brand items at competitors. That is, frequent sale prices on name brand items that go far lower in price than the private label items ever go.

What needs to be done with this Signature stuff is a big push to get people to buy it and build volume on the items. That means heavily promoting it on price the way(s) they promoted the EE stuff. That means not pricing the stuff higher than name brand items, ever. If the name brand item is on sale, put the private label on sale too. Of course that will mess up their vendor deals to move a lot of name brand items and get promotional dollars. So maybe if the name brand item is on sale this week or this 2 weeks at a great price then for the next week or next 2 weeks run the Signature item at that same low sale price or a dime lower. But then that'll hit their margins... no win game when you set up operations this way and have prices as high as they do.

[veteran+]

Safeway spent a ton of money on that "lifestyle" store program which was designed to make the entire chain consistent and upscale. By the time it was all said and done , even the majority of closed Genuardis and Dominicks were remodeled into being lifestyle stores, the company did actually follow through and get I think 85-90% of the stores remodeled. A few toward the end were done really cheaply but those were not the majority. Sure, you still find a few non-lifestyle stores creeping around for one reason or another but there are really very few.

Safeway long decided they were not interested in the lower class and even lower middle class customer. Even though those lower class and lower middle class customers tend to buy a lot from grocery stores since they tend to cook more of their own food as opposed to going to restaurants. Safeway was after a non-price sensitive middle class and upper middle class customer. Problem is that is the same customer who also spends a lot of money in restaurants and the first customer to go line up shopping at the new Whole Foods or Sprouts that opens nearby. Over the years they closed stores in those types or areas or let stores in those types of areas run on fumes and basically killed the stores.

Albertsons always veered more toward a middle class and upper middle class customer as well based on how they located their stores and even the items carried.

So these factors are why I'm not really sure that a "value" brand belongs in Safeway/Albertsons. They do not want to dilute their image with a bad quality private label. Their image is already very diluted and they need to do things to strengthen it. Selling crappy low end private label items even at great prices won't fit the bill if the customer gets home and finds the milk tastes terrible, the napkins fall apart upon touch, etc. I think the better strategy is to have the basic Signature/Lucerne as the private label option, make sure the quality is better than name brand, and price the items competitively in all divisions. When you are a dollar more on most private label dairy items than Raleys in NorCal you really have a problem. A BIG problem. Raleys is a quality operator with nice stores and good service levels; you will be confident in the quality of what you buy from them and operations are pretty consistent from location to location. They provide a MUCH better in-store experience than Safeway NorCal provides with good staffing and very clean stores, and at this point also provide lower prices (thanks to Albertsons pricing attitude at NorCal Safeway).

You're right about the Owl/PSST items not being so present at some Kroger owned stores. I don't know if the QFC division carries that brand at all. Maybe on a few paper products. I have noticed typically when Kroger starts to reduce merchandise mix at stores due to limited size, the private label items seem to be the first to get cut out. At least that is what I have noticed at Ralphs, Smiths, and QFC: smaller size stores do not have nearly the assortment of Kroger brand items as larger size stores. I think they are careful to not be "missing" name brands. Likely learning from Safeway's mistakes of a decade+ ago who did the opposite... cut name brands to push private label.

About those Lifestyle formats: They remodeled quite a few stores into this format that had everyone (including employees) scratching their heads. One example comes to mind and that is Desert Hot Springs in the Coachella Valley (Palm Springs area). The demographics of that city are quite clear like other problem cities in the area (Indio, Coachella, Thermal and even most parts of Cathedral City).

That store had serious problems and never made money (the gas station was the only source of profit). They still open a lot of money turning it into a Lifestyle (there was no return on investment).

About their private labels: All your observations are spot on but what I find strange is the success of their O Organic line. They have more SKUS than any other retailer and I found the product to be of high quality and consistency. The retail industry along with the organic industry have acknowledged their success. They also distribute their organic products to other retailers (something Fresh & Easy and Wild Oats totally failed at).

This private label contradiction is weird.

[veteran+]

Safeway long decided they were not interested in the lower class and even lower middle class customer. Even though those lower class and lower middle class customers tend to buy a lot from grocery stores since they tend to cook more of their own food as opposed to going to restaurants. Safeway was after a non-price sensitive middle class and upper middle class customer. Problem is that is the same customer who also spends a lot of money in restaurants and the first customer to go line up shopping at the new Whole Foods or Sprouts that opens nearby. Over the years they closed stores in those types or areas or let stores in those types of areas run on fumes and basically killed the stores.

Albertsons always veered more toward a middle class and upper middle class customer as well based on how they located their stores and even the items carried.

So these factors are why I'm not really sure that a "value" brand belongs in Safeway/Albertsons. They do not want to dilute their image with a bad quality private label. Their image is already very diluted and they need to do things to strengthen it. Selling crappy low end private label items even at great prices won't fit the bill if the customer gets home and finds the milk tastes terrible, the napkins fall apart upon touch, etc. I think the better strategy is to have the basic Signature/Lucerne as the private label option, make sure the quality is better than name brand, and price the items competitively in all divisions. When you are a dollar more on most private label dairy items than Raleys in NorCal you really have a problem. A BIG problem. Raleys is a quality operator with nice stores and good service levels; you will be confident in the quality of what you buy from them and operations are pretty consistent from location to location. They provide a MUCH better in-store experience than Safeway NorCal provides with good staffing and very clean stores, and at this point also provide lower prices (thanks to Albertsons pricing attitude at NorCal Safeway).

You're right about the Owl/PSST items not being so present at some Kroger owned stores. I don't know if the QFC division carries that brand at all. Maybe on a few paper products. I have noticed typically when Kroger starts to reduce merchandise mix at stores due to limited size, the private label items seem to be the first to get cut out. At least that is what I have noticed at Ralphs, Smiths, and QFC: smaller size stores do not have nearly the assortment of Kroger brand items as larger size stores. I think they are careful to not be "missing" name brands. Likely learning from Safeway's mistakes of a decade+ ago who did the opposite... cut name brands to push private label.

Yeah, Safeway did largely move upscale, as just looking at some of their old stores that were let go with the divisions in the 1980s it seems incredible regarding the cities and stores they stuck around with (can you believe the Port Arthur, Texas store was a Safeway as late as 1988?)

Maybe it is best to have Signature as the main (only) brand and increase quality while decreasing price. Publix isn't exactly
low-end (it sure it ubiquitous in Florida though) but pushes a consistent private label, and from what I've heard, that private label is good.

I also think that Kroger has it right when they've kept the name brand instead of the store brand, as that's totally different than what H-E-B does (H-E-B also has a Safeway-like tendency to get into arguments with vendors, sometime in the spring there was a conflict between DiGiorno Pizza and H-E-B that resulted in a highly reduced DiGiorno Pizza selection)

One of my bigger problems with Signature as it stands today, besides the not-actually-a-good-price problem is the fact that it just doesn't have an identity. I mean, sure, Kroger products are in every Kroger owned store whether it says Kroger on the front or not, but it at least has a strong identity. Maybe changing say, Safeway Select ice cream to Albertsons Select ice cream would've been too much of a shock.

About arguments with vendors: Oh wow, you have know idea how true that is. Safeway is famous for this with vendors and manufacturers. Boars Head and Red Bull come to mind. Sometimes they resolve the issues after a long cooling off period and sometimes they do not resolve at all. Even if the customer complaints are humongous, Safeway would not budge.

[storewanderer]

About those Lifestyle formats: They remodeled quite a few stores into this format that had everyone (including employees) scratching their heads. One example comes to mind and that is Desert Hot Springs in the Coachella Valley (Palm Springs area). The demographics of that city are quite clear like other problem cities in the area (Indio, Coachella, Thermal and even most parts of Cathedral City).

That store had serious problems and never made money (the gas station was the only source of profit). They still open a lot of money turning it into a Lifestyle (there was no return on investment).

About their private labels: All your observations are spot on but what I find strange is the success of their O Organic line. They have more SKUS than any other retailer and I found the product to be of high quality and consistency. The retail industry along with the organic industry have acknowledged their success. They also distribute their organic products to other retailers (something Fresh & Easy and Wild Oats totally failed at).

This private label contradiction is weird.

Lots of rural stores that were not really right for a "lifestyle" store or did not care about a "lifestyle" store were definitely done but back then with Steve Burd it was all about consistent and cookie cutter type operations. Many companies talk about doing this sort of thing but end up not making it work out after the first batch or few batches of remodels, but Safeway really did it... in looks anyway.

I think O Organics had/has success due to being on the right items and due to its roll out at the same time as the lifestyle remodels were going in full gear. It was, at the time, a deeper nutrition brand than any competitor was offering to my knowledge. In my view the brand doesn't do too well in a lot of locations and I feel like it doesn't have many SKUs anymore outside dairy and produce. I feel like it has fewer SKUs than it used to have. Maybe I am wrong. I sure don't see much promotion on it price-wise. I was seeing promotion on Open Nature earlier this year but as of late am not seeing as much of that.

Kroger seems to move a lot of Simple Truth at the Smiths location I shop, a store with a solidly middle class customer base; the stuff does not move very well at the other Smiths here which are all in lower middle class areas. Simple Truth feels a little blurred to me as items that are of the very distinct Safeway Eating Right, O Organics, and Open Nature would all qualify to be under Kroger's "Simple Truth" line. I have bought some of the Simple Truth items and think quality is good, pricing is okay; at least the ingredient lists look pretty clean. Not sure about the most recent introductions, SImple Truth paper products, laundry detergent, etc. though... we will see how that works out. Didn't Safeway have a private label for that stuff too, under the name Bright Green? I seem to recall an old promotion of if you bring reusable bags to Safeway you got 10% off your next purchase of Bright Green items (automatically with club card). I am pretty sure Bright Green was a Safeway brand.

[pseudo3d]

Bright Green is a Safeway brand but isn't even as extensive as A&P's Green Way was (which included food and non-food products, something I found a bit off-putting). Even during the heavy promotion of Signature when it was first released didn't bring up Bright Green, instead similar national brands, like heavily promoting the new "Tide purclean".