SAFEWAY GETS FRESH

Mark Hamstra

Safeway got a little fresher in 2005, as the company extended its "lifestyle" store-format conversion plan to nearly a fourth of its store base.

After debuting the changes in a handful of stores in 2004, the company rolled it out much more aggressively in 2005 and backed each remodel with a marketing package traditionally used for new-store openings. Consumers responded, illustrating what some see as the future path for supermarkets: fresh-focused stores with plenty of natural offerings and prepared foods.

The continuing success of Whole Foods Market, the Austin, Texas-based natural-foods chain, further supported this direction. Whole Foods added nearly $1 billion in sales in fiscal 2005, which ended Sept. 25, finishing the year with 175 locations and $136.4 million in net income.

In about a month Supervalu, Minneapolis, promises to unveil its entry in the natural-foods niche: Sunflower Markets, a small-format store offering sharp pricing that will debut in Indianapolis, with a second store slated for Columbus, Ohio, by mid-year.

Publix Super Markets, Lakeland, Fla., also said it would launch a natural-foods concept next year in Boca Raton, Fla., based on its GreenWise organic departments, while Albertsons' Bristol Farms division acquired a natural-foods independent called Lazy Acres that it reportedly plans to expand in California.

Publix also introduced a new banner targeting Hispanics, called Publix Sabor, with locations in Kissimmee and Hialeah, Fla.

Other retailers experimented with new pricing schemes during the year, including several attempts at hybrid everyday-low-price strategies. Companies including Giant Eagle, Raley's, Fresh Brands and Clemens Markets all tried some form of limited EDLP program as they seek to combat the persistent low-price message of Wal-Mart Stores, Bentonville, Ark., and other discount formats.

"This kind of pricing structure, where we stabilize prices and have a consistent, value-based pricing system, is a way to simplify [shopper's] lives," said Bill Coyne, chief executive officer, Raley's.