SAFEWAY ACTS TO UNIFY MOST PRIVATE LABELS

RICHARD TURCSIK

OAKLAND, Calif. -- Safeway here is consolidating several of its house brands under the Safeway label, while retaining the Safeway Select name for its upscale premium private-label offerings.

Safeway's family of brands includes Townhouse canned goods and dry grocery products, Edwards coffee, Bel Air frozen foods, Captain's Choice frozen fish, White Magic soaps and detergents, Busy Baker cookies and crackers, Mrs. Wright's bread and rolls, Lucerne dairy products and the Crown Colony line of spices.

According to Safeway's 1994 annual report, "To capitalize on our strong franchise we soon will begin consolidating most of our other brands, aside from Safeway Select, under the Safeway name and introduce distinctive new packaging."

Debra Lambert, a Safeway spokeswoman, told SN the company has been steadily consolidating its house brands over the years from more than 100, when the company first introduced private label, to about a dozen today. Townhouse and Edwards are the latest casualties.

"After we make some formulation and specification reviews, we will introduce those same products under the Safeway label. We are doing this [with Townhouse and Edwards] because these items are the ones that best match the national brands," she said.

"We believe this change is customer-friendly. The whole idea is that the new look will make it easier for the customer to find our private-label products on the shelf."

She added, "We will be introducing our new Safeway brands to customers through print [ads]

and in-store point-of-sale materials."

Lambert said the consolidation is an ongoing process and does not have a set time frame. Safeway is looking at additional consolidation as well, but the Lucerne name would be retained for dairy because "it is a household word" in Safeway's operating areas, she said.

Industry analysts and consultants praised Safeway's consolidation move and said it would make the chain an even stronger force in private label.

"With the trends driving the industry, and variety vs. duplication becoming a reality, this is just good, smart business sense in terms of offering variety, but not unnecessary duplication," said Donald J. Stuart, a partner with Cannondale Associates, a consulting firm maintaining dual offices in Wilton, Conn., and Evanston, Ill.

"It makes all the sense in the world as they attempt to strengthen their own store brand and name positioning in the marketplace by focusing on what Safeway is through the Safeway brand. One of the key roles of private label is to make a strong store-brand marketing statement. When you start dispersing your energy over three, four or five brands, it becomes very difficult to make a strong, focused store-brand marketing statement," he said.

Jonathan Ziegler, an analyst with Salomon Bros., New York, said by using a unified private label, Safeway will be able to build its identity in the minds of consumers.

"Every time the housewife puts something on the table or opens the cupboard to see that Safeway image, it's free advertising. It's just like driving down the highway and seeing the Safeway truck on the road. It is free image advertising and that's what it is all about," he said.

Suzanne McGrath, managing director at Piper Jaffray, Portland, Ore., said Safeway made a wise decision during the last recession to build its private label, and now that plan is coming to fruition.

"Safeway has achieved what they started to do in the late 1980s and early 1990s to their private label. If the quality is good enough and people use it long enough, they will actually begin to prefer a private-label brand. So Safeway never accepted second-best green beans to put under their Townhouse label," she said.

"It makes sense for Safeway to have their private label under one name. It is cheaper for buying and advertising," said Gary Giblen, managing director at Smith Barney, New York.

"It is a lot more efficient to promote one brand at each price point than multiple brands," said Bill Spencer, president of the consulting division at Gage Marketing, Minneapolis.

Edward Comeau, a securities analyst at Lehman Bros., New York, said Safeway is following the trends of private-label consolidation that is sweeping the industry.

"Many private-label programs have kind of just evolved over time. Most of them have been vendor-driven and oftentimes had different names. They never really had a coordinated strategy of a premium vs. regular," he said.

Howie Flinker, principal at Flinker & Co., New York, said by consolidating its labels, Safeway is capitalizing on its name as a retailer.

"Today many consumers do not go to a store looking to buy a specific brand name, and if they find the store brand offers an equal quality at a lower price, they are prone to buy it," he said.