Integration of Albertsons and Safeway

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Re: Integration of Albertsons and Safeway

Post by architect »

This is a cross-post, but for the first time recently, I saw a co-branded Market Street-Albertsons mail ad in the DFW area, complete with coupons for Signature products. Tom Thumb was nowhere to be found, which is odd as all previous co-branding has been between Tom Thumb and Albertsons.
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Re: Integration of Albertsons and Safeway

Post by storewanderer »

We have been getting ads for Signature Products with 4 $ off coupons lately in the mail. They say good only at "S logo" and have the Safeway logo (no Safeway name, just the logo). We do not get the Safeway circular here but have been getting these for some reason.

One of the coupons offers a discount on Signature Select Mineral Water 1 liter. Then in small print it says "minimum purchase 1.99 required." Last time I checked, this water does not cost 1.99, it costs about 1.49. And the comparable exact item at Whole Foods (in Whole Foods brand) costs 1.29.
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Re: Integration of Albertsons and Safeway

Post by architect »

Speaking of ridiculous operational issues, Albertsons in DFW is headed downhill, unless they can right their ship fast.

In a quick survey of Tom Thumb Google ratings around Dallas and the surrounding suburbs, the majority of stores have ratings in the 3.0-4.0 range, with some falling even below 3.0 (which is pretty rare for grocers in the region). Most reviews posted over the last several months are particularly negative. Albertsons is the same story in the few instances in which the banner still operates. Market Street is the one bright spot, although even their ratings have slipped slightly over the last few months (all are still above 4.0 though). By comparison, the majority of Kroger locations in the area rate in the 4.0-5.0 range, with the outliers being stores which are either grossly undersized or outdated. Clearly, shoppers are not pleased with their experiences at the Albertsons-owned stores.

At quite a few stores which received high shopper traffic at the time of the Safeway acquisition, traffic has dropped substantially. The poster child of this is the Lovers/Greenville Tom Thumb, a large store in which typically has 15-20 cars max in the parking lot at peak shopping times (just across the street, Central Market will sometimes have a line to get into the parking lot, by comparison). Even under Safeway, this store was extremely high traffic and would fill on the weekends, largely catering to the residents of the nearby Village apartment complexes (with 10,000+ residents within easy walking distance, largely young professionals). Most people who I know that live in the area now have taken their grocery dollars elsewhere, mainly due to the slipping quality of produce and meats, long checkout waits, too often unpleasant employees, and ridiculous pricing. Other stores which have experienced notable traffic drops include the Tom Thumb locations at Preston/Frankfort, Coit/Campbell, and Parker/Tollway in Plano, just to name a few (all are high profile stores in affluent areas).

Honestly, if another competitor enters/strengthens in the market (particularly HEB entering, WinCo expanding more widely, or Kroger building more infill stores in established parts of Dallas), I expect that Albertsons' operations in DFW will begin to head the way of Randalls in Houston over the period of a few years. Market Street is their one saving grace at this point, but an operation of less than 10 stores simply cannot save the husk of what was once a great local grocer ruined by corporate absurdity.

Does anyone else feel the same way about their friendly local Albertsons-owned store(s)?
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Re: Integration of Albertsons and Safeway

Post by pseudo3d »

architect wrote:Speaking of ridiculous operational issues, Albertsons in DFW is headed downhill, unless they can right their ship fast.

In a quick survey of Tom Thumb Google ratings around Dallas and the surrounding suburbs, the majority of stores have ratings in the 3.0-4.0 range, with some falling even below 3.0 (which is pretty rare for grocers in the region). Most reviews posted over the last several months are particularly negative. Albertsons is the same story in the few instances in which the banner still operates. Market Street is the one bright spot, although even their ratings have slipped slightly over the last few months (all are still above 4.0 though). By comparison, the majority of Kroger locations in the area rate in the 4.0-5.0 range, with the outliers being stores which are either grossly undersized or outdated. Clearly, shoppers are not pleased with their experiences at the Albertsons-owned stores.

At quite a few stores which received high shopper traffic at the time of the Safeway acquisition, traffic has dropped substantially. The poster child of this is the Lovers/Greenville Tom Thumb, a large store in which typically has 15-20 cars max in the parking lot at peak shopping times (just across the street, Central Market will sometimes have a line to get into the parking lot, by comparison). Even under Safeway, this store was extremely high traffic and would fill on the weekends, largely catering to the residents of the nearby Village apartment complexes (with 10,000+ residents within easy walking distance, largely young professionals). Most people who I know that live in the area now have taken their grocery dollars elsewhere, mainly due to the slipping quality of produce and meats, long checkout waits, too often unpleasant employees, and ridiculous pricing. Other stores which have experienced notable traffic drops include the Tom Thumb locations at Preston/Frankfort, Coit/Campbell, and Parker/Tollway in Plano, just to name a few (all are high profile stores in affluent areas).

Honestly, if another competitor enters/strengthens in the market (particularly HEB entering, WinCo expanding more widely, or Kroger building more infill stores in established parts of Dallas), I expect that Albertsons' operations in DFW will begin to head the way of Randalls in Houston over the period of a few years. Market Street is their one saving grace at this point, but an operation of less than 10 stores simply cannot save the husk of what was once a great local grocer ruined by corporate absurdity.

Does anyone else feel the same way about their friendly local Albertsons-owned store(s)?
That's really unfortunate. What is causing the decline of the stores? (I don't think that it will reach Randalls point, Randalls' decline was partly Safeway not understanding changing neighborhoods...or neighborhoods at all...and drastically altering the merchandise mix and services offered).
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Re: Integration of Albertsons and Safeway

Post by storewanderer »

I think at the end of the day the biggest problem Albertsons has is price. Also, their private label program is terrible. Too often, their private label costs significantly more than the comparable name brand item when the name brand item is on sale. The low grade "Value Corner" label is great if you like chalky tasting milk or bread that has a crumbly fall apart texture. Or you can go to Kroger and get standard mid grade quality versions of the same items for about 10% less than the "Value Corner" item is at the Albertsons banner. I feel like they've invested some money this year in more labor and the checkout is improving as are the lines. Perimeter execution continues to be inconsistent but my views of it the past few months are they "hit" more than they "miss" which is an improvement over the past.

But again, price. The problems are mainly price. Their pricing is just "off." And they do things with the prices that I find confusing. For instance they label Friskies Cat Food 20/13.00. That is some tough math. Kroger labels it 10/5.00. Easier math. Better price. Not the 48cents that Wal Mart charges, but close enough that you will probably pay the extra 2 cents a can to avoid the extra stop. Another confusing thing I found last night when I was looking to buy some meat: at Safeway they have 80% ground beef. They have small (1.5-2 pound packages) packs and they are all labeled with a regular retail of 6.49/lb (ouch...), but then some packs had a "sale price 4.99/lb" on the bottom of the label. Upon closer examination these packages which were all mixed together in the same row, some were labeled "Ground Beef 80% Lean 20% Fat" and some were labeled "Ground Beef 80% Lean 20% Fat Market Trim." The beef looked exactly the same, both were store packed, and the second sticker on the package with nutrition information was identical for both. There was also a third price (I think it was 4.49/lb) for a "value pack" of this same 80% lean ground beef. It is just a lot easier over at Smiths: 85% lean Private Selection Ground Beef is 4.49/lb everyday and the "value pack" is 3.99/lb. Simple and easy.
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Re: Integration of Albertsons and Safeway

Post by architect »

pseudo3d wrote:That's really unfortunate. What is causing the decline of the stores? (I don't think that it will reach Randalls point, Randalls' decline was partly Safeway not understanding changing neighborhoods...or neighborhoods at all...and drastically altering the merchandise mix and services offered).
storewanderer wrote:I think at the end of the day the biggest problem Albertsons has is price. Also, their private label program is terrible. Too often, their private label costs significantly more than the comparable name brand item when the name brand item is on sale. The low grade "Value Corner" label is great if you like chalky tasting milk or bread that has a crumbly fall apart texture. Or you can go to Kroger and get standard mid grade quality versions of the same items for about 10% less than the "Value Corner" item is at the Albertsons banner. I feel like they've invested some money this year in more labor and the checkout is improving as are the lines. Perimeter execution continues to be inconsistent but my views of it the past few months are they "hit" more than they "miss" which is an improvement over the past.

But again, price. The problems are mainly price. Their pricing is just "off." And they do things with the prices that I find confusing. For instance they label Friskies Cat Food 20/13.00. That is some tough math. Kroger labels it 10/5.00. Easier math. Better price. Not the 48cents that Wal Mart charges, but close enough that you will probably pay the extra 2 cents a can to avoid the extra stop. Another confusing thing I found last night when I was looking to buy some meat: at Safeway they have 80% ground beef. They have small (1.5-2 pound packages) packs and they are all labeled with a regular retail of 6.49/lb (ouch...), but then some packs had a "sale price 4.99/lb" on the bottom of the label. Upon closer examination these packages which were all mixed together in the same row, some were labeled "Ground Beef 80% Lean 20% Fat" and some were labeled "Ground Beef 80% Lean 20% Fat Market Trim." The beef looked exactly the same, both were store packed, and the second sticker on the package with nutrition information was identical for both. There was also a third price (I think it was 4.49/lb) for a "value pack" of this same 80% lean ground beef. It is just a lot easier over at Smiths: 85% lean Private Selection Ground Beef is 4.49/lb everyday and the "value pack" is 3.99/lb. Simple and easy.
Honestly, I think that a variety of factors are contributing to the stores' decline. As storewanderer mentioned, pricing is a huge issue. In my opinion, Albertsons simply can't decide whether they want to skew high-end or low-end, and in the process, is simply confusing shoppers are sending them away in droves. On one hand, the Tom Thumb/Randalls stores still retain vestiges of an upscale operation under Safeway, particularly through the Lifestyle decor, sushi/olive bars, certain higher-end/exclusive products, and high prices to match their target demographic. On the other hand, these stores have also skewed lower-end under Albertsons through "innovations" such as Kmart-esque lighting revamps, a general lack of maintenance (particularly with warn floors, water stains on ceilings which have not been cleaned up, and Lifestyle decor which is falling apart), poor staffing (long checkout waits are becoming the norm), and difficult to understand pricing games, as storewander described.

To add insult to injury, the pricing problem is exacerbated even more in Texas, where a combination of Walmart, HEB, Aldi and a competitive Kroger operation keep prices low (and make Albertsons/Tom Thumb/Randalls everyday prices look ridiculous by comparison). Things are bad when Central Market (an extremely high-end operation), and sometimes even Whole Foods are beating Tom Thumb prices for everyday items. When a package of Lucerne butter costs more than specialty Central Market European butter at stores across the street from one-another, you have a serious problem (typically around $4.50 for Lucerne vs. $3-$4 for Central Market, and around $2.50 for mainstream HEB butter).

Also, unlike Safeway, Albertsons doesn't seem to understand the demographics of higher-end stores, and how to merchandise them properly. When the Signature-branded products were adopted, many higher-end Safeway Select products were discontinued (at least in Texas), products which were directly competing with Kroger's Private Selection and HEB's Central Market branded line. Now, in many cases, even average Kroger stores in DFW/Houston carry a better high-end product selection than nearby Tom Thumb/Randalls locations.
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Re: Integration of Albertsons and Safeway

Post by storewanderer »

I think they are trying to skew as "high priced." Not high end or low end. Just "high priced" for average quality goods. This is a losing formula.

They also do not seem to have the logistics to handle promotions. I have had some instant win free item coupons from the Monopoly Game (game ended 5/9 but coupons are still good until 5/30) for a container of Signature Salt and some Signature Sandwich Bags and I've checked multiple stores the past month and they are out of stock every single time on these items (I guess they gave too many away free). They also were out of stock a few times on other "instant win" items I had but ultimately those returned to stock the week after the Monopoly game ended.

You are right they have gutted the Safeway Select line pretty badly. Or it is not being promoted properly. I am not sure which. Yet they are interested in adding crappy crappy quality "Value Corner" items that are selling at too high of prices. This may be the right approach if they were operating discount formats in low income neighborhoods but they are not so this brand is not right for them. They shouldn't even have that brand. They should be better developing "Signature" and "Select" brands, getting prices down on those, and building volume. The Select Southwest Salsa I like is now only sold in one size (I used to prefer the smaller jars though the unit price was higher, I don't go through it fast enough that the large jar makes much sense). The Select preserves are now made by a different supplier and are not as good anymore (I may as well just buy the PS Preserves at Kroger which are better than the replacement Select ones are and come in about triple as many flavors). Oddly they have kept and even added a little bit to the Select Frozen Pizza line.

They were also pushing O Organics and Open Nature hard earlier this year but that seems to have stopped. Again there are a lot fewer SKUs in those brands than Kroger has in "Simple Truth" and prices are too high. Above comparable items at Whole Foods or Trader Joe's also.

I am most disappointed they have not taken the time as a private company to swallow the bitter pill to get their everyday pricing down. Rather than invest money in price, they are investing in buying up stores and trying to become as dominant as possible in certain markets. Eventually they are going to IPO and at that point it will be too late for them to swallow the "bitter pill" needed to bring their pricing down where it needs to be. That is something that can only be done when you are privately held.
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Re: Integration of Albertsons and Safeway

Post by architect »

storewanderer wrote:I am most disappointed they have not taken the time as a private company to swallow the bitter pill to get their everyday pricing down. Rather than invest money in price, they are investing in buying up stores and trying to become as dominant as possible in certain markets. Eventually they are going to IPO and at that point it will be too late for them to swallow the "bitter pill" needed to bring their pricing down where it needs to be. That is something that can only be done when you are privately held.
Like you mentioned, I am also disappointed that Albertsons is not taking the steps necessary to achieve long term success prior to their IPO, but in a much broader sense. Once they go public, every move which Albertsons makes will be heavily scrutinized, making it difficult for them to truly innovate in markets which require a non-standard approach to their operations and marketing. I see this being an especially critical issue in Texas, where both pricing and marketing are completely out of touch with the competition. The Texas market is largely dominated by local/regional players (particularly HEB, Brookshires, and United (even though owned by Albertsons, they are still run somewhat independently and have resisted a corporate feel)). The only reasons why Kroger has been successful have been due to their decentralized management approach, competitive pricing and unique Texas-centric marketing. If the Albertsons-owned banners take on a heavy corporate feel, shoppers will immediately notice and will leave in droves even more than they currently are. This has been the biggest reason why HEB's market share in Houston has exploded in recent years; they have taken the place of Randalls as the "true local Texas grocer" for the market.
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Re: Integration of Albertsons and Safeway

Post by pseudo3d »

architect wrote:
pseudo3d wrote:That's really unfortunate. What is causing the decline of the stores? (I don't think that it will reach Randalls point, Randalls' decline was partly Safeway not understanding changing neighborhoods...or neighborhoods at all...and drastically altering the merchandise mix and services offered).
storewanderer wrote:I think at the end of the day the biggest problem Albertsons has is price. Also, their private label program is terrible. Too often, their private label costs significantly more than the comparable name brand item when the name brand item is on sale. The low grade "Value Corner" label is great if you like chalky tasting milk or bread that has a crumbly fall apart texture. Or you can go to Kroger and get standard mid grade quality versions of the same items for about 10% less than the "Value Corner" item is at the Albertsons banner. I feel like they've invested some money this year in more labor and the checkout is improving as are the lines. Perimeter execution continues to be inconsistent but my views of it the past few months are they "hit" more than they "miss" which is an improvement over the past.

But again, price. The problems are mainly price. Their pricing is just "off." And they do things with the prices that I find confusing. For instance they label Friskies Cat Food 20/13.00. That is some tough math. Kroger labels it 10/5.00. Easier math. Better price. Not the 48cents that Wal Mart charges, but close enough that you will probably pay the extra 2 cents a can to avoid the extra stop. Another confusing thing I found last night when I was looking to buy some meat: at Safeway they have 80% ground beef. They have small (1.5-2 pound packages) packs and they are all labeled with a regular retail of 6.49/lb (ouch...), but then some packs had a "sale price 4.99/lb" on the bottom of the label. Upon closer examination these packages which were all mixed together in the same row, some were labeled "Ground Beef 80% Lean 20% Fat" and some were labeled "Ground Beef 80% Lean 20% Fat Market Trim." The beef looked exactly the same, both were store packed, and the second sticker on the package with nutrition information was identical for both. There was also a third price (I think it was 4.49/lb) for a "value pack" of this same 80% lean ground beef. It is just a lot easier over at Smiths: 85% lean Private Selection Ground Beef is 4.49/lb everyday and the "value pack" is 3.99/lb. Simple and easy.
Honestly, I think that a variety of factors are contributing to the stores' decline. As storewanderer mentioned, pricing is a huge issue. In my opinion, Albertsons simply can't decide whether they want to skew high-end or low-end, and in the process, is simply confusing shoppers are sending them away in droves. On one hand, the Tom Thumb/Randalls stores still retain vestiges of an upscale operation under Safeway, particularly through the Lifestyle decor, sushi/olive bars, certain higher-end/exclusive products, and high prices to match their target demographic. On the other hand, these stores have also skewed lower-end under Albertsons through "innovations" such as Kmart-esque lighting revamps, a general lack of maintenance (particularly with warn floors, water stains on ceilings which have not been cleaned up, and Lifestyle decor which is falling apart), poor staffing (long checkout waits are becoming the norm), and difficult to understand pricing games, as storewander described.

To add insult to injury, the pricing problem is exacerbated even more in Texas, where a combination of Walmart, HEB, Aldi and a competitive Kroger operation keep prices low (and make Albertsons/Tom Thumb/Randalls everyday prices look ridiculous by comparison). Things are bad when Central Market (an extremely high-end operation), and sometimes even Whole Foods are beating Tom Thumb prices for everyday items. When a package of Lucerne butter costs more than specialty Central Market European butter at stores across the street from one-another, you have a serious problem (typically around $4.50 for Lucerne vs. $3-$4 for Central Market, and around $2.50 for mainstream HEB butter).

Also, unlike Safeway, Albertsons doesn't seem to understand the demographics of higher-end stores, and how to merchandise them properly. When the Signature-branded products were adopted, many higher-end Safeway Select products were discontinued (at least in Texas), products which were directly competing with Kroger's Private Selection and HEB's Central Market branded line. Now, in many cases, even average Kroger stores in DFW/Houston carry a better high-end product selection than nearby Tom Thumb/Randalls locations.
I think the root problem is two-fold. The first is that Albertsons' private label is a disaster. No identity with even itself, a fairly limited item count with varying quality, and trying to go halfway on manufacturing (I've heard Kroger does other brands, does Safeway market the same stuff in other brands? Might explain a few things). Losing the old brands to SuperValu was unfortunate, and ABS seriously needs to take another look at the brands it does sell. Why is the store brand so high?

The second thing is for Tom Thumb itself. The original Cullum Tom Thumb was a bottom-up operation with fairly high-end locations (I think that this is why Tom Thumb sold stores to Albertsons when it did...Albertsons entered Austin this way but Tom Thumb never left). Randalls took a different approach (and switched the stores to top-down management) in that it tried to appeal to different markets (and around the Tom Thumb acquisition, Randalls opened several stores that didn't work out, and closed before 1999) but it also diluted Tom Thumb and essentially made it Randalls in all but name (and they did re-flag the Tom Thumb stores as Randalls in Austin). Safeway's approach ignored the different market approach and probably only benefitted in the fact that Tom Thumb had stores in good locations, whereas Randalls' demographics were changing. Trying to reflag the stores as Tom Thumb while ignoring nuances in markets is not working out, and while the Tom Thumb name could work, they need to focus on re-marketing stores properly. (This is a bit strange considering that while this is going on, Pavilions is re-emerging as a more upscale name again)

Rather than the everyday low prices of Albertsons while still being middle market, or the decidedly more service-oriented and amenity-filled Tom Thumb, it's...neither.
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Re: Integration of Albertsons and Safeway

Post by dcpeachy »

I'm guessing that this week's radio ads were mistakenly "mixed up" for Albertson's in Albuquerque. However, today on local radio they were playing several variations on the "We do beef the best" campaign for Market Street. The closest Market Street to Albuquerque is in Amarillo, TX, which is just over 4 hours east of Albuquerque.

Last week they had the "We do beef the best" ads on as well, but they were for Albertsons.
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