Consistency of Raley's Stores versus Safeway

[klkla]

Is the location of this Raley's in an area that is highly seasonal?

[lake]

Is the location of this Raley's in an area that is highly seasonal?

No... Sparks is a relatively normal middle class suburb of Reno.

[storewanderer]

This store in Sparks is at one of the highest traffic intersections in all of Reno/Sparks. Currently, there is some road work going on that has impacted some of the access to this shopping center. That started about six months ago. From my view, the amount of traffic in this store is no different now than it was before the road work started. In fact, this store looks a little busier lately than it had been since the Save Mart 3 miles away is closed pending conversion to Food Maxx (whenever they plan to do that... still not much work happening). There are also a Scolaris and Smiths that are about 2.6 and 2.8 miles away respectively from the closed Save Mart that also appear busier since then. You would drive by the Scolaris to get to this Raleys but the Scolaris is a really rough store (store 1, about 35,000 square feet, no bakery or deli, really disappointing produce and meat, last updated in about 1990 inside). The departments I photographed in the photo have looked the way they look for at least for the past two years.

Between this and the two "Quality of Life" Stores in Reno that have their closed Ozark Grill Departments with the old hot cases filled with chips and other odd items and very underutilized perishable spaces, spartan Hot Woks still open, and quite light on the rest of their perimeters, I just don't have much confidence in Raleys ability to "stick with" its perishable programs. That is why I take a bit of a skeptical view towards Raleys "new format" with extensive additional perishables. Why will it be different this time? I tell myself I hope it WILL be different this time, and they will actually execute these programs long term. But I think they need to fix the perishable programs in the "Quality of Life" and "Brown" Stores first where they added things in and those things have flopped and been covered up not so gracefully. I feel like they are not committed to these programs and when they do not get instant results they close departments and cover them up poorly.

Also the "Brown" store new build in Sparks had a Hot Wok but closed it and covered that area with a bunch of boxes of chips or bottled beverages (depends on the visit) so the side wall has this giant large awkward unused area between the still used sandwich bar and the remainder of the service deli. That store also removed its olive bar and put a bunch of boxed wine where that was. The "Brown Store" in Carson City also had its Hot Wok removed and for the longest time covered that area with a bunch of boxes of chips also, but I think more recently they went in there and actually pulled out those hot cases and put displays in that look a little better.

Then there was the Food Source in Reno that was opened with extensive hispanic deli, hispanic hot food, hispanic bakery, large hispanic service meat/seafood. Now those departments have all been closed up, walled off, gone. First went service meat/seafood and a few months ago went the service bakery/ service deli/ service hot food.

I am not sure if internally Raleys is looking at these service departments in a linear manner and saying okay Ozark Grill (this was a BBQ hot food to go department with a large exhibition style BBQ installed that looked out into the store and smelled great) only had $400 of sales in a day and it cost us $300 of labor to operate it for a day and $500 of product cost that thing is bleeding money and we need to close it because it is losing thousands of dollars a year. The problem is maybe Ozark Grill was a unique feature they offered that brought people into the store who may have brought other items. Plus a unique department offering. Plus people who bought food at Ozark Grill may have also bought items from service deli, service coffee, or bought center store items there too and it is really difficult to measure exactly how much a department that may lose money in itself helps to bring customers in.

I think they need a different approach. And before they keep diving into new perishable food formats with their new format store they may want to fix what they already have. This is what is holding Raleys back. They have great products and execute pretty well from a quality and service perspective, but their offerings are not terribly unique and they do odd things that just do not present well to the customer and do not make you feel like you are shopping in a store that is buzzing and brimming with lots of fresh and good looking/good tasting things to eat, when in reality their stores are offering really good things.

Another thing: I thought Raleys sold only 100% USDA Choice Beef. I was looking at Ground Beef there today. All of it that is store packaged is labeled "ground beef" - even stuff that is $7/pound, natural, and other fancy terms. The stickers say Raleys 100% Ground Beef. What is missing from those stickers is the "USDA Choice" language. I asked the butcher if it is USDA Choice and he did not know about all of it but that the 20% fat one was trim from the department and was USDA Choice but some of the lower fat content one comes in pre-ground from somewhere else. Also, why isn't it labeled as Ground Round, Ground Chuck, Ground Sirloin, etc.? It used to be. The whole pink slime thing trained me to only buy ground meat labeled "ground chuck, ground round, ground sirloin" because those cannot have the additive. At Smiths you have one "Ground Round" offering a $3.99/pound Private Selection Grind that is 15% fat in the service case or prepackaged, the rest is all generic "Ground Beef" too. Raleys doesn't even have one Ground Round, Chuck, or Sirloin offering. I was a little surprised by this.

[storewanderer]

Wow, that is truly terrible. I wonder if it also has to do with distribution a bit because even low volume stores in Sacramento (Citrus Heights for instance) do not look like this at all. Then again, not even Winnemucca looked like that. I would bet that Raley's is much more complacent with waste in their Sacramento stores as it's pretty cheap to send a truck from Natomas to a Sacramento store, but sending a truck from Natomas to Reno is pretty pricey. It would make sense if they would find a third party distributor up in Reno for some items to control their prices. Smith's has a big advantage over Safeway, Raley's, and SaveMart that they do not supply their Reno stores from California.

Also, I was playing around on the Raley's Sparks Facebook page and found their post about how much money in SomethingExtra vouchers they gave away. Although there are tons of factors that alter this, I've found this is the easiest way to tell a volume of the store. Most Raley's give somewhere around $300,000 to $500,000 per store in SomethingExtra vouchers. The top stores (Land Park, Natomas, Redwood Shores) give away around $1,000,000. This store gave away $140,000. Even Winnemucca was above that.

Have they kept the Sizzling Wok and Peet's open at this location? I know Raley's has a habit of closing those down if they don't do any business.

Yes, the Sizzling Wok and Peet's are still open in this location (they have closed Sizzling Wok in the Sparks new build as I noted, and also in Carson City).

I think the Something Extra vouchers being so low are because not a high rate of use of those cards is taking place up here. At the Sparks Raleys where there are routinely just 1-2 checkouts open plus self checkout, you see a lot of customers go through self checkout and not interact with any employees (never anyone working at the self checkout in this store). Most of the customers likely do not have any knowledge of Something Extra so they don't bother to sign up. The store has limited staffing so there is simply nobody to stand around trying to get people to sign up; the few employees they have are working to help the customers or maintain the store.

The Winnemucca Raleys closed its service deli in early 2015 (covered with boxes of chips) and cut the bakery mix by more than half and cut hours on the Peet's. Closure was announced by June 2015 and then Ridleys saved them in August 2015 (reopened deli immediately after conversion but quality is not at the level of Raleys).

I think Raleys waste in Reno is primarily if not 100% going to local food bank/food shelters. Same for Scolaris, Smiths, Save Mart, Wal Mart. Safeway's waste I am told is all going to a pig farmer or picked up by their trucks and taken back to CA, nothing is donated anymore. There are some issues with taking certain food waste through the CA Agriculture Station so most chains once they bring product to Reno, do not try to bring it back to CA.

For many years here in Reno back in the 90's, all of the Sunnyside products (at that time sold at both Scolaris and Raleys) were made at the dairy in Reno called Model Dairy, which was a full service dairy making all items. Back then Model Dairy was locally owned. Since, through a number of mergers, it is now a Dean dairy and makes milk and not much else. At some point it changed and they started to pull all of the Sunnyside product from CA. WinCo, Scolaris (no longer selling Sunnyside other than ice cream, yogurt) and Wal Mart continue to use Model Dairy for all milk including private label (Albertsons did too up until the Save Mart conversion, even though NorCal Albertsons got all of its milk from CA). Smiths milk is all brought from Utah. I suspect selling milk in Reno for $2.68 vs. selling it in Utah for closer to $2/gallon is helping Smiths pay its rather high fuel/transportation costs to supply Reno, NV from Layton, UT. Smiths also has higher meat prices in Reno than in Utah but other than that the pricing is the same.

[storewanderer]

Some more photos showing how Raleys handles covering up closed departments. In the North Hills, Reno Store they seem to use paper products (I guess that is low cost) while in the Reno Robb Drive Store, similar to Sparks, they seem to like to use liquor displays. Also curious the Ozark BBQ equipment has been all removed from North Hills, Reno and that is just an odd empty space now; but the Reno Robb Drive Store still has its Ozark there as a centerpiece rather well covered by liquor displays.

Also below for comparison, how Save Mart handles its perimeter space that they opt not to stock with product. The Save Mart in question is a stock 60,000 square foot 1996 build Albertsons; the only capital on this since opening has been Save Mart's repaint of the walls. Deli is small by today's standards, bakery is average size.


This was the Ozark BBQ space in the Reno Robb Drive Raleys. This actually is at an angle facing the back wall. Very visible as you "turn the corner" from the back aisle way where dairy is. Not at all visible as you walk that way from the front of the store. This is a solidly medium volume store if not a little better than medium volume, but the deli, bakery, and hot food areas are all pretty light on product; while I was there, I watched two customers asking bakery if something was left and another customer asking deli if something was left. All three customers were told, "no."


This was the self service hot case for the Ozark BBQ space in the above store; it is an island directly across from the above photo. The other side of this case is stocked with a few hot chickens and the other prepackaged hot food offerings (fried chicken, chicken strips).


I forget what fixture was here previously. This is the Reno North Hills Raleys. Low volume store. Probably time to make a not so easy decision.


This was the customer service counter. Covered by paper products rather than disassembled. Reno North Hills Raleys.


This was the bank space; again covered by paper products. Reno North Hills Raleys

Now for comparison, how Save Mart handles its excess capacity perishable space in its Reno Store that is about a mile from the Robb Raleys photographed above. This is a laughably low volume Save Mart (I think it does even worse than any Raleys in Nevada), but they own the building and keep it open. It is across the road from an always packed Wal Mart and a medium volume poorly executed Safeway. This is a very solidly middle class area. Safeway was the first store in that part of town in 1989; then Super Kmart in 1995 (closed); then Albertsons in 1997; then Scolaris (closed) and Raleys both closer to 2005 range. Safeway has historically been the busiest conventional in that neighborhood but in the past few years I think the Robb Drive Raleys has actually become busier. Smiths does not operate in this trade area at all; the nearest Smiths to that trade area is 8 miles away and the nearest WinCo is 5 miles away. The nearest Costco is 9 miles. This is not the most price competitive part of town for groceries.


Save Mart has done this to the bakery in many of its former Albertsons.


Save Mart deli is interesting. A year or two ago they decided to get large food graphics and stick them on parts of the deli cases, these had a nice looking photo of a sandwich and said "Let's Do Lunch." In March of this year, Save Mart re-introduced Kretchmar deli meats in its stores (something they used to have here and quit selling due to lack of volume) and re-opened its previously un-used deli spaces in certain locations, this being one of them. It appears re-opening the un-used space did not work at this store so they are back to not using the left side of the service case again but must have not kept the old good looking sandwich sticker to cover the case with.


Save Mart recently installed new back-lit candy merchandisers in all stores. At this particular location they only keep candy at 3 of the 5 registers so this register has Hot Wheels on the candy merchandiser. I don't think they ever open this register so it probably does not matter.

[veteran+]

I have to tell you that I have not seen this kind of nonsense in retail since the 1960's. Many large and small supermarket companies were going through some big changes for a plethora of reasons. Some made the necessary changes and transitions well and some did awfully.

That mickey mouse patchwork is so unprofessional but very telling of what kind of leaders the decision makers are. That is the worse kind of advertising a company could do. It says in capitol letters "WE ARE LOSERS".

I would be ashamed, angry and sad.

[storewanderer]

I guess part of it is what do you do to fill this space up? Low volume stores, wanting to control waste, limited labor so not a lot of time to deal with rearranging items constantly...

Save Mart obviously is in over its head. Plus they are just running what they bought from Albertsons; maybe they wouldn't have put bakery or delis that large in if it were up to them. Their best competence is operating Food Maxx Stores, not full service 60k square foot conventional stores.

Raleys is, by design, and in how it markets itself, a chain that should be above this sort of thing. If they are so great, so innovative, they should not have these kinds of conditions in ANY of their stores. They have items, programs, the ability, to do better than this. I see the problem with Raleys much bigger as they build or remodel into grand stores with nice features then don't stick with what they add in when they don't see immediate results. And they don't replace it with something new in the same store once it fails (like Whole Foods might do; the Whole Foods in my town failed with its in-store massage room and an in-store cooking school but there is no trace of either anymore and they've added fun new features since eliminating those like a tap room, trail mix bar, additional wellness items)... they move on to another store to try something new instead, and spend hundreds and thousands of dollars if not millions of dollars, then go through the same cycle again, and again. I think this is why Raleys continues to underperform Safeway in so much of NorCal.

[lake]

The more and more I look into these choices, it seems more and more to point to Raley's (and SaveMart's) head office and their unwillingness to invest in the Reno market. These type of things don't really happen in Sacramento or the Bay Area for either chain actually. For instance, a SaveMart near me used to have a Bank of America in it but when it closed, they completely boarded up the front and there is little sign that a bank ever occupied this spot. Similarly, a Raley's in Folsom did the same thing when their credit union moved to a larger location. Another Raley's close to me lost their TriCounties Bank last year and immediately boarded it up and placed a display in front of it. There was little sign it ever existed. A few months ago, they gutted the former bank and turned it into an expanded Hallmark store since the location is in a large employment center and sells a lot of Hallmark type gifts. This store isn't even a top performer with usually 2-3 checkout stands open and no self checkout. Reno is a market that simply doesn't do well for grocers. In it's golden days, it was the place to be as it exploded with growth driven by the casino industry but it failed to keep up with Vegas and casinos such as Red Hawk, Cache Creek and Thunder Valley have opened in NorCal and Reno has suffered immensely. Raley's, Albertsons (now SaveMart), Safeway and Scolari's rushed to the city trying to be the dominant player in the market, but as the Reno market has struggled, they have had trouble competing for the declining amount of wealth in the city. I think they're all trying to just hold on in hopes that Reno will find it's footing and become a booming city once again. The problem is that it has the reputation of being unsafe, outdated, and downright dirty to Northern California residents and will likely never be able to become a successful gambling town again. Going to Reno for anything other than a youth sports tournament is generally unheard of for most Californians, although a large amount of elderly do still frequent out of habit more than anything else. The city has to reinvent itself as something else and saying that it is the gateway to the Sierras is not the right way. Being the gateway to the Sierras is going to drive up traffic at RNO, build business for rental cars, and add a lot of stress to I-80 as people leave the city for Tahoe. Not much money is going to Reno is this situation. The Tesla factory is a good start and the city should continue to try and market itself as the cheap place for California companies to open cost efficient operations. If it can build on that, then it has a chance of being a booming city once again.

[storewanderer]

The Reno market is very crowded. Wal Mart has been very successful here with Supercenters. That is barely a player in the rest of NorCal. In Reno, it is a major player in every trade area, same for the rural towns. Extremely high food volumes at these Wal Mart Supercenters. Pricing is sharp at some locations, not so sharp at others. WinCo has only 2 stores here but the volumes are high enough that they are a factor that impacts all of Reno/Sparks. Whole Foods is also very high volume in Reno and has impacted Raleys a lot more than they would like to admit. You also have Smiths and Scolaris here who are not in the rest of NorCal, but Scolaris has been winding down operations closing most stores in 2012-2015, though they stated after the last closure in 2015 that they are done closing stores. Scolaris closed most of its nicer stores and kept some of its dumpiest stores, even closing some stores they had done remodels on in the early 2000's.

At the end of the day, based on the closure activity that has taken place and based on what customers think, I think Raleys, Smiths, Wal Mart, and WinCo will be the operators with a future in Reno. Scolaris and Save Mart are not very well liked. Safeway is down to 2 stores, really inconsistent execution, and their pricing is hindering them significantly. But Raleys really needs to try harder.

[submariner]

Hey guys, time for a new topic. This Raley's conversation isn't relevant to Safeway's Twitter feed. Thanks!