Albertsons/Safeway Merger - Two Years Old

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Albertsons/Safeway Merger - Two Years Old

Post by pseudo3d »

Today is the second anniversary of the Albertsons-Safeway merger! There's a rather positive article from Drug Store News (I think those numbers are off, built 25 and acquired 150? Not by my numbers) but to be honest, well, there's still a lot of work that has yet to be done, if ever. I know I made a post like this after a year after the merger, but let's look at some of the facts.

+ Some moving toward common banners
+ United still seems mostly intact
+ Expansion in own markets
+ Lifestyle seems to be pretty much retired (except NorCal)
+ Haggen purchased though not much has gone on there either way
+ Some programs from acquired stores kept (Paul's, G&G)
+ The Safeway conversions in Florida seem to have done rather well according to Yelp
- Albertsons converted to Safeway have had merchandise mix altered, and Safeway seems to be taking over Albertsons, not the other way around
- Staffing and pricing are still bad in many markets
- Websites still not unified
- Club card still not excised in stores that use them
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Re: Albertsons/Safeway Merger - Two Years Old

Post by wnetmacman »

pseudo3d wrote:Today is the second anniversary of the Albertsons-Safeway merger! There's a rather positive article from Drug Store News (I think those numbers are off, built 25 and acquired 150? Not by my numbers) but to be honest, well, there's still a lot of work that has yet to be done, if ever. I know I made a post like this after a year after the merger, but let's look at some of the facts.

+ Some moving toward common banners
I haven't seen this as much outside of some bigger places like Denver, where Albertsons is going away in favor of the more popular Safeway. Others (like Randalls) aren't taking over the Albertsons stores they are managing from a distance in Louisiana.
pseudo3d wrote:+ United still seems mostly intact
...and this most likely won't change.
pseudo3d wrote:+ Expansion in own markets
+ Lifestyle seems to be pretty much retired (except NorCal)
+ Haggen purchased though not much has gone on there either way
These are pretty much spot on. I don't see them keeping the Haggen name for 10-18 stores in their home territory. Lifestyle has been modified and updated. Expansion, well, not everywhere.
pseudo3d wrote:+ Some programs from acquired stores kept (Paul's, G&G)
+ The Safeway conversions in Florida seem to have done rather well according to Yelp
Both good news. Some of the programs from both SWY and ABS were old and outdated. The 3 remaining Florida stores doing well is a good omen, especially deep in Publix territory.
pseudo3d wrote:- Albertsons converted to Safeway have had merchandise mix altered, and Safeway seems to be taking over Albertsons, not the other way around
The Safeway merchandise mix is because Albertsons gave that up with the 2005 split. All the old Albertsons branded stuff went away, while Safeway still maintained theirs.
pseudo3d wrote:- Staffing and pricing are still bad in many markets
- Websites still not unified
- Club card still not excised in stores that use them
Staffing, pricing and websites are not as important, though I will say this: I was in what was the top Albertsons in Louisiana in Lafayette on Saturday, and traffic was WAAAAAAY down from what it used to be. It was fairly well staffed, but prices were high compared to Walmart and other competitors.

Club Card/App usage isn't going to get better; if anything, they will expand the app and force it to get discounts as opposed to the club card. With the noted exceptions out there, cards or apps will be the way of the future for years to come for sales and discounts. They won't be dropped.
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Re: Albertsons/Safeway Merger - Two Years Old

Post by pseudo3d »

wnetmacman wrote: Staffing, pricing and websites are not as important, though I will say this: I was in what was the top Albertsons in Louisiana in Lafayette on Saturday, and traffic was WAAAAAAY down from what it used to be. It was fairly well staffed, but prices were high compared to Walmart and other competitors.

Club Card/App usage isn't going to get better; if anything, they will expand the app and force it to get discounts as opposed to the club card. With the noted exceptions out there, cards or apps will be the way of the future for years to come for sales and discounts. They won't be dropped.
I'd be fine with rewards if they weren't subsidized by higher prices (which isn't always the case). The problems in Louisiana is either from the Houston division management (still plagued with a lot of Safeway management) or perhaps the new Rouses down the road (which is much better managed). Expansion didn't happen in every market (we can only dream) though Austin DID get a new Randalls store in Leander.

As for Safeway taking over, it's not just the brand but the merchandise mix.
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Re: Albertsons/Safeway Merger - Two Years Old

Post by wnetmacman »

pseudo3d wrote:I'd be fine with rewards if they weren't subsidized by higher prices (which isn't always the case). The problems in Louisiana is either from the Houston division management (still plagued with a lot of Safeway management) or perhaps the new Rouses down the road (which is much better managed). Expansion didn't happen in every market (we can only dream) though Austin DID get a new Randalls store in Leander.
With Albertsons, sales have always been subsidized by overpricing everything else in the store.

As far as Louisiana is concerned, you have to compete with the local markets in order to survive. That is why Albertsons doesn't operate in New Orleans any longer. They made no attempt to compete with local flavor or desires there. They had a couple of stores that did in a week what the better stores did in half of a day. You can't make it. When Rouses came to Lafayette, they tried to compete on price, but not on selection, and that's hurting them. They are also no longer competing on price, which is worse. We went Saturday only to get sale items; no regular priced stuff. I knew we could beat the regular prices elsewhere. Rouses has them beat by far on service, and most of the time on price.
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Re: Albertsons/Safeway Merger - Two Years Old

Post by pseudo3d »

wnetmacman wrote:
pseudo3d wrote:I'd be fine with rewards if they weren't subsidized by higher prices (which isn't always the case). The problems in Louisiana is either from the Houston division management (still plagued with a lot of Safeway management) or perhaps the new Rouses down the road (which is much better managed). Expansion didn't happen in every market (we can only dream) though Austin DID get a new Randalls store in Leander.
With Albertsons, sales have always been subsidized by overpricing everything else in the store.

As far as Louisiana is concerned, you have to compete with the local markets in order to survive. That is why Albertsons doesn't operate in New Orleans any longer. They made no attempt to compete with local flavor or desires there. They had a couple of stores that did in a week what the better stores did in half of a day. You can't make it. When Rouses came to Lafayette, they tried to compete on price, but not on selection, and that's hurting them. They are also no longer competing on price, which is worse. We went Saturday only to get sale items; no regular priced stuff. I knew we could beat the regular prices elsewhere. Rouses has them beat by far on service, and most of the time on price.
Albertsons came fairly late to New Orleans (the whole market, not just N.O. proper) and their problems seem that it wouldn't be corrected with a simple merchandise mix alteration--when they went in, they were going up against A&P, Schwegmann, and Winn-Dixie, all of which had been in New Orleans for decades prior. Yeah, the full answer is always more complicated--bad locations, corporate problems, high pricing, bland merchandising, whatever, but they already had their work cut out for them from day one. To a lesser extent, Houston was similar (Kroger, Randalls, and the fast-growing H-E-B Pantry) with the same problems (location, corporate, pricing, merchandising) and met a similar end.

That being said, if/when Winn-Dixie retracts some more, that can be an opportunity for Albertsons to re-visit New Orleans, but I don't think it's learned all of its lessons yet.
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Re: Albertsons/Safeway Merger - Two Years Old

Post by wnetmacman »

pseudo3d wrote:That being said, if/when Winn-Dixie retracts some more, that can be an opportunity for Albertsons to re-visit New Orleans, but I don't think it's learned all of its lessons yet.
If I didn't know better, and I may not, it could be possible that Albertsons/Safeway may be positioning itself to make a run for Southeast Grocers. There is now almost no overlap, save for one Lafayette WD and a few Albertsons stores in BR. It could happen, and they're about the company to try to pull it off.
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Re: Albertsons/Safeway Merger - Two Years Old

Post by pseudo3d »

wnetmacman wrote:
pseudo3d wrote:That being said, if/when Winn-Dixie retracts some more, that can be an opportunity for Albertsons to re-visit New Orleans, but I don't think it's learned all of its lessons yet.
If I didn't know better, and I may not, it could be possible that Albertsons/Safeway may be positioning itself to make a run for Southeast Grocers. There is now almost no overlap, save for one Lafayette WD and a few Albertsons stores in BR. It could happen, and they're about the company to try to pull it off.
I still don't think they would buy the company whole, especially with so many of its stores in bad shape. At this point, SEG will either chop off Louisiana first (and not all of those stores are likely to be picked by Albertsons) or Lone Star Funds will dissolve the company and sell the stores to the highest bidder.
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Re: Albertsons/Safeway Merger - Two Years Old

Post by mjhale »

I'm in the DC area and here's my view since the merger:

+Stores are cleaner.
+New lighting has made a huge difference to brighten up the stores. The Lifestyle format as built was too dark.
+Overall stock levels are much better.
+Sale ads seem to be more aggressive especially for commonly purchased items that go with various times of the year (ie-chips and dip for Super Bowl).
+Staff seems friendlier and more willing to help out.
+Produce and meat quality is much better, more competitively priced and include many more organic selections, also at competitive prices.

-Staffing is still an issue in terms of having enough people working at peak hours.
-There are still big inconsistencies between stores in the quality and quantity of perimeter items.
-Just for You savings are significantly reduced as compared to pre-merger savings.
-General pricing still needs to come down some especially in a competitive market such as Metro DC.

I'll give the whole merger a B in terms of overall execution and quality. The closest grocery to me is Safeway. Pre-merger I used the store as a glorified convenience market. Now I'm more willing to do my weekly shopping there because of the improvements that have been made. I do still mix in Wal-Mart and Aldi for staple items because you cannot beat their pricing.
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Re: Albertsons/Safeway Merger - Two Years Old

Post by BillyGr »

pseudo3d wrote:
wnetmacman wrote: If I didn't know better, and I may not, it could be possible that Albertsons/Safeway may be positioning itself to make a run for Southeast Grocers. There is now almost no overlap, save for one Lafayette WD and a few Albertsons stores in BR. It could happen, and they're about the company to try to pull it off.
I still don't think they would buy the company whole, especially with so many of its stores in bad shape. At this point, SEG will either chop off Louisiana first (and not all of those stores are likely to be picked by Albertsons) or Lone Star Funds will dissolve the company and sell the stores to the highest bidder.
Of course, if the second option were to happen, it would make sense that they would be a bidder - it would be quite similar to how they did with the dissolving of A&P.
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Re: Albertsons/Safeway Merger - Two Years Old

Post by storewanderer »

I'd give this merger an A- for its handling of the previous Supervalu Stores...

And I will give them a B- for their handling of the previous Safeway Stores...

Supervalu was completely clueless. They literally did almost nothing right.

Safeway had many ideas but constantly missed the mark, understaffed its stores, had very high pricing, and suffered from horribly inconsistent execution. The new company seems to suffer from much of the same. But they seem to be trying to some extent; more promotional most of the time, especially on meat. Shifted to all USDA Choice Beef almost immediately. Attempting to upgrade deli mix and quality with Dietz and Watson or Boar's Head. Center store and private label programs seem to be a mess. The innovation and new items Safeway was steadily rolling out when it was its own company seems to have slowed down considerably. And no, rebranding "Deli Counter" Cheese to "Signature Cafe" cheese does not count as a new item rollout. Neither does rebranding "Pantry Essentials" to "Value Corner." The biggest thing though, given that Safeway was on a path of shutting down entire divisions, it appears the situation has become more stable under Albertsons, with no divisions that appear to be a few weeks from shutting down which seemed to be the case with Safeway, even at the end with Texas being rumored to be headed toward a similar fate to that of Dominicks and Genuardis, which is also very important. It seems this new company has done a good job at showing a focus to more diverse markets, vs. Safeway, who seemed to focus just on California and ignored the rest of the operation.

They still seem customer unfriendly with the complicated promotional scheme, backing things like the California Bag Ban to which they contributed hundreds and thousands of dollars to support the ballot initiative on, and poor IT systems that result in inefficient front ends.
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