Safeway sorting out target market
NEW YORK — Safeway Inc., the second-largest supermarket chain operating more than 1,600 locations across the United States and Canada, continues to examine demographics and competition to better position itself for future success, said Melissa Plaisance, senior vice-president of finance and investor relations at Safeway.
In a May 29 presentation to analysts at the Citi Global Consumer Conference in New York, Ms. Plaisance said Pleasanton, Calif.-based Safeway has not experienced a lot of overlap with dollar stores, nor does she think the traditional Safeway shopper is necessarily a candidate for crossover to those types of stores. But the supermarket chain has spent the past couple of years looking at the value customer, and has addressed that customer in the center of store and clustering through its Pantry Essentials brand, which it describes as a “low-end, private label” or “entry-level” brand.
“We didn’t really cover that (low-end, private label) very well prior to this downturn, and I think we’ve done a much better job understanding end-of-month behavior,” she said. “When people are running out of money, you’ve got to run some specials that … cater to that customer and so forth, and the beginning of the month there’s a lot more money in the marketplace in general, even for food.”
And although the company “didn’t up our game for a couple of years,” Ms. Plaisance said Safeway also had made strides to improve its offerings on the opposite end of the spectrum: the premium side.
“It’s a matter of adding a number of s.k.u.s (stock-keeping units), whether it’s in deli and organics and even bakery and so forth, where just by adding … 20 s.k.u.s to a certain category you can really keep a shopper in your store,” she said. “It’s not that somebody who is shopping at one of these high-end outlets is going to stop shopping there altogether, but if they’re going there four times a month and now they’re going three, we’ve got a little more of their food dollars. And so we’re really trying to look at the demographic in each area, understand who our competition is, and then change the mix within the store.”
Ms. Plaisance acknowledged it is a “modest change.”
“It doesn’t cost a lot to add s.k.u.s, but you really have to know who your shopper is in a particular area, both on the high end and the low end,” she said.
In addition to the low-end and high-end customer, Safeway also has its sights set on two other demographics: Hispanics and aging boomers.
“Aging boomers want smaller package sizes,” Ms. Plaisance said. “They no longer have the family at home to feed, so they don’t want food to spoil. So there are a lot of different demographics we’re trying to cater to store by store.”
Beyond the traditional brick-and-mortar stores, Ms. Plaisance said Safeway has an on-line presence in five or six U.S. markets through such sites as www.safeway.com and www.vons.com. And while the sites extend Safeway’s reach and extend customer service, she said the company doesn’t necessarily see the on-line efforts as a growth vehicle.
“We find that there are customers who don’t want to have to carry big bags of dog food or cases of water home, so delivery is good for them,” she said. “There might be people who aren’t able to get around very easily and they like home delivery. But in our market areas … it’s not a real growth vehicle. It’s limited in scope, but it does extend our reach, and it helps provide customer service.”