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Safeway: Fewer Price Promotions
Safeway will scale back on promotional pricing in favor of more everyday value, the company said at an investor conference last week. The retailer was one of several that gave updates at the Bank of America Consumer Conference on their evolving business strategies. Over the next two years we will be less promotional and provide better everyday value, which is what our cost reduction
Elliot Zwiebach
March 17, 2008
2 Min Read
ELLIOT ZWIEBACH and MARK HAMSTRA
NEW YORK — Safeway will scale back on promotional pricing in favor of more “everyday value,” the company said at an investor conference here last week.
The retailer was one of several that gave updates at the Bank of America Consumer Conference on their evolving business strategies.
“Over the next two years we will be less promotional and provide better everyday value, which is what our cost reduction and process improvement programs are designed to accomplish,” said Steve Burd, chairman, president and chief executive officer, Safeway, Pleasanton, Calif., at the conference. “You will see us increasingly invest in everyday price.”
In response to a question, Burd said that each of Tesco's Fresh & Easy Neighborhood Markets that opens within 1.5 miles of a Safeway location has just 10% of the impact of a conventional store opening.
Also at the conference:
Jeff Noddle, chairman and CEO, Supervalu, Minneapolis, said the company is not considering divesting either its retail or distribution businesses or in any way separating them, but it might consider the possibility if one business compromised the growth or value of the other. “The supply chain business is part of our infrastructure that's very predictable, with excellent cash flow, and we know how to make money in that business. But we might think differently if one of two things happened: if we were financially stressed, which we are not; or if we got to a point at which operating both compromised the growth or value of the other. When and if we get to that point, we would consider selling one of the businesses, but I'm not going to speculate on when that might happen.”
Peter Lynch, chairman, president and CEO, Winn-Dixie Stores, Jacksonville, Fla., said the company has started to see cost inflation abate on some products, such as milk, and is poised to capitalize on “opportunities on the back side to increase margins” as prices stabilize. “We have a very good view of when prices are going to change — we have transparency, and we can time it right,” he said. He also said the expansion of the company's own private-label program will put pressure on branded manufacturers to “back off on some of their price increases.”
Dan Atwood, chief marketing officer, United Natural Foods, Dayville, Conn., said the company has expanded its supply relationship with about 40 Publix stores in the Miami area since opening a new distribution center in Sarasota, Fla., last September. The distributor also recently opened a DC in Portland, Ore., and has two openings planned for this year in Southern California and in the Mid-Atlantic.
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