PLEASANTON, Calif. — Safeway is glad it made the price investment it did — it only wishes it had done so earlier.
That's what Steve Burd, chairman, president and chief executive officer, told the chain's annual meeting here last week.
“We knew we needed to make that investment,” he said. “While we would prefer to have done it before the economic downturn, we didn't have that luxury.”
Burd acknowledged late last month, at the time the chain reported first-quarter financial results, that “aggressive promotional investments” in February — which analysts said cost the company $35 million — did not produce the kind of returns Safeway had hoped for.
“Consumers were not inventorying product,” Burd said at the time. “We were trying to put more items in the basket, and it just didn't happen.”
Asked last week by a shareholder what he considered his biggest challenges, Burd replied, “Sales, sales and sales. In this environment that's the biggest challenge.
“We don't like this business downturn and the softer results, but we're in a unique position to react. As the business cycle corrects itself, we will be in a strong position to take market share this year, and with 2010 back to a normal economy, we look forward to being in the winner's circle then and to great years after that.”
Burd said Safeway plans to open two more small-format stores this year, though he did not say where they would be located. “We've learned a lot [from the original small-format store, called The Market by Vons, in Long Beach, Calif.], and that will help us run our store fleet better.”
He also said Safeway plans to get more involved in working with other businesses in the shopping centers it anchors. “We are the main draw in a strip center, and since we are the business that creates value for other retailers in the center, we believe we can cash in and create more value by taking a stronger development role, using our core competencies to capitalize on our unique position.”
Shareholders reelected 10 directors and reapproved Deloitte & Touche as the chain's accountants.
While they rejected two proposals by individual shareholders — to allow cumulative voting on directors and to eliminate post-death benefits for executives — they did approve a third shareholder proposal by a vote of 60.4% — authorizing the board to change the company's bylaws so holders of 10% of outstanding common stock could call special shareholder meetings.