Retail Watchers

Apparently, the City of Seattle is proposing a new tax that companies with a certain revenue threshold have to pay a new tax to help out with homeless at a tune of $540 per employee per year. Naturally, some companies like Safeway are unhappy with that, and they've threatened to either raise prices or close stores if grocery stores aren't exempted. They're not alone--Fred Meyer/QFC believes that they'll be hurt, too, but it appears to shine light on how marginally profitable many of the Seattle Safeway stores really are as-is. Even if they weren't marginally profitable, I think it's a bad idea to basically incentivize cutting back employees. If the proposed tax goes through, I think that Albertsons would probably just pack up and sell their 21 stores in the city limits to independents and others, even if it looks bad.

http://q13fox.com/2018/04/27/safeway-sa ... customers/

The average Safeway is probably doing $20-$25 million dollars a year in sales. The tax would amount to $30,000-$40,000 per store or around .0016% of sales.

They need to stop wining. Raise prices .0016% and help the community.

Seattle is one of Safeway's more profitable markets.

I wonder if the $15 minimum wage has also hindered their profitability in Seattle vs. what it was, say, a few years ago... based on what I saw of Safeway in Seattle, they are charging the same prices in the city as they do out in the suburbs or rural cities in Washington.

I can tell you based on what I saw at some QFCs in Seattle, it appears there are some issues in the city stores that did not previously exist involving shrink and some other things that would absolutely hinder profitability. There seems to be more loitering, more vandalism, other things that simply used to be very rare in Seattle.

So I would not be surprised at all if Safeway is less profitable in Seattle proper than they were 5 years ago...

Seattle has a lot of odd taxes that are not charged in the rest of Washington. I wouldn't be surprised if they tried to charge a tax on the air you breathe.

The reality is as costs vary from city to city, retailers have to implement zone pricing. Safeway has seemed to shy away from zone pricing in recent years but used it very heavily in the past. They seem to now use division by division pricing and have few zones within the divisions. For instance, Safeway NorCal uses the same pricing in Reno that it uses in San Francisco on everything except liquor (which is different due to it being a different state). This makes no sense, the prices are too high for Reno and probably could even be a bit higher in San Francisco.

Some retailers opt to zone price and others don't. In Seattle when I was there, McDonald's pricing was MUCH higher than elsewhere and they even had signage stating they do not participate in promotions due to higher wage costs. I get it, but the signage and such left a bad taste in my mouth. Starbucks pricing seemed to be the same in Seattle as it is outside Seattle. Rite Aid's pricing in Seattle was the highest Rite Aid pricing I've ever seen.

Safeway could just zone price up the Seattle Stores to resolve the profit issues they discuss in the article. Of course then they risk being attacked for doing that... kind of a no win situation.

I have lived most of my life inside Seattle City Limits. I don’t think Grocers and others are being whiny. Yes, nobody like taxes. But compounding it all is a city council that has such an extremist world view that enables dysfunction and addiction. Businesses see how Seattle does not spend their money wisely. So while more taxes suck, businesses have every right to be angry as Seattle squanders their tax revenue! I am grateful that I have moved to the suburbs!