SAFEWAY BRINGS PROTOTYPE TO EAST COAST

MARK HAMSTRA

PLEASANTON, Calif. -- Safeway here plans to bring its new prototype to 16 locations in the Baltimore-Washington market in the next year, a spokesman for the company told SN last week.

The new prototype, which features a rustic ambiance in the produce department and an expanded prepared-foods area, will be used for all new stores and all major remodels in the region, including a new Genuardi's the company is set to begin building in Conshohocken, Pa., said Greg TenEyck, the Safeway spokesman. It has been tested in about a dozen sites in Northern California. Safeway has 181 stores in its Eastern Division.

"We not only have world-class fruits and vegetables, but now we show them in a world-class way," TenEyck told SN.

SN recently visited the first East Coast store displaying the new features, in Hanover, Md. The produce department is set off from the rest of the store with simulated-wood floors, more focused lighting, and wooden fixtures. Fruits and vegetables are showcased in wooden crates and baskets.

TenEyck said the store carries 800 varieties of produce, including 70 organic items. Adjacent to the produce area is a full aisle of natural and organic groceries.

The prepared-foods area, includes made-to-order sandwiches, sushi and dinner items, with separate kiosks for hot soups, salads and an olive bar. Reach-in coolers offer take-and-bake pizzas, salads and other deli-type items.

The company declined to reveal the prototype's cost.

"I think it's the right strategy," said Andrew Wolf, analyst, BB&T Capital Markets, Richmond, Va. "Now they have to execute and build the business."

Competitors with a strong emphasis on fresh and prepared foods include Wegmans, Harris Teeter, and Whole Foods.

"Whether Safeway's late to this game, and will be successful in differentiating themselves, has yet to be seen," said Jason Whitmer, analyst, FTN Midwest Research, Cleveland. He applauded the effort, however. "They are trying to go up the ladder rather than down the ladder in terms of pricing and positioning and merchandising."