Safeway "new low prices" - 5 Nevada Stores only

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storewanderer
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Safeway "new low prices" - 5 Nevada Stores only

Post by storewanderer » October 7th, 2019, 8:12 pm

Looks like Safeway NorCal has finally decided to do something with its too high of pricing strategy in these Nevada Stores. Their ad this week has a double page flyer proclaiming "new low prices." The flyer isn't very exciting but a trip to the location yielded a lot more excitement.

Traffic must have gotten bad enough in the Reno and Sparks Stores that it finally got someone's attention who had the power to do something about this. Maybe if they had done this sort of thing 10 years ago, they wouldn't have had to close 3 of their stores up here. What is funny is they are even doing this in Fallon (only competitor is Wal Mart and I thought this store was doing pretty well), Hawthorne (no competitor unless you count Family Dollar and Dollar General), and Lovelock (no competitor unless you count Family Dollar).

Their little print flyer does not do justice to what they have actually done here. They have roadside banners, parking lot signs, cart return signs, white, red, and yellow balloons on the front walkway, signs all over inside the store, even saw one employee wearing a t-shirt advertising this. They have cut tons and tons of prices literally overnight. I have not seen such a wide scale price drop all at once, by any chain, ever.

Looking around the store, it appears as if they went over to Smiths and just literally copied their prices for most of produce, dairy, and a good amount of name brand grocery in center store. They are actually beating Smiths on some items now. Pricing is still very weak on private label and on non-food and frozen does not seem to have been cut down to Smiths levels but is lower than it was before. Boar's Head products in their deli are now the same price as Smiths and Sprouts (they had been $2/lb higher on everything).

It will be interesting to see how this works out. I believe they will capture more of my business as a result of this change. Hopefully it will work out from a profitability perspective. I worry they may have cut too many prices too quickly and it will be a profitability drain, but evidently drastic measures were needed. Hopefully they can get the volume increases necessary to compensate for this. This kind of reminds me of those "value stores" they were running in Denver back before the Albertsons merger (most of which have since closed) but these price cuts go much deeper on center store.

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Re: Safeway "new low prices" - 5 Nevada Stores only

Post by pseudo3d » October 10th, 2019, 5:32 am

I'm guessing that with Smith's war on common credit cards, Albertsons figured that they can capitalize on that to go for the kill.

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Re: Safeway "new low prices" - 5 Nevada Stores only

Post by storewanderer » October 10th, 2019, 6:57 pm

pseudo3d wrote:
October 10th, 2019, 5:32 am
I'm guessing that with Smith's war on common credit cards, Albertsons figured that they can capitalize on that to go for the kill.
Only one of the Safeways is within the trade area of a Smiths. The others are 10+ miles from one.

I think it may be the market in general. There is so much competition here. Safeway must be doing very badly to finally do this. I am not sure if Safeway is really doing that badly here but maybe in comparison to the rest of Northern California, these stores are doing enough less business that someone noticed and questioned why. I suspect if you put these stores into Denver or Phoenix Safeway which have a lot of lower volume stores, they would be "average" type performers.

Also that Safeway is planning a new store in Reno. If the existing market is struggling, it is questionable how bright of an idea it is to build a new store here. They may be feeling out the market for if they can operate profitably here, with the price structure necessary to compete with other stores. The new store they want to build is directly in the trade area of a Wal Mart Supercenter, Sprouts, WinCo, and Smiths. All very price competitive operations. Raleys and Save Mart, the other two high price operators, are 5 miles away and not really in the same trade area. Customers used to shopping the cheaper stores, would have a tough time stomaching Safeway's CA prices that are 30-40% higher. But now with these price cuts it gets them in line with those places... the new store hasn't started construction yet. I'd like to see how it would work out if they opened a new store with this pricing; I think it would be very successful.

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