Making Shopping Easier
A Safeway case study
• an American supermarket chain.
• second in North America, after The Kroger Company
• has 1,678 stores located throughout US and Mexico.
• The company is headquartered in Pleasanton, California.
• Supermarket News ranked Safeway No. 4 in the 2011.
• "Top 75 North American Food Retailers" based on 2010 fiscal
year estimated sales of $41 billion.
• Based on 2009 revenue, Safeway is the 11th largest retailer in
the United States.
• UK‟s retail grocery market increased from 44% in 1971 to
over 80% in 1995.
• The typical household will now shop with a multiple retailer
and, again typically, this will be done at one of the
supermarkets owned by a national business such as Safeway.
• Challenge for the company:
regularly bring customers back to their stores.
closest attention to what their customers want and
ensure that it is delivered consistently at high
Safeway 2000 - the rationale for change
• The focus of competition was shifting to customers‟
perception of value for money and it soon became clear to
Safeway‟s management that, in this area at least, the
company‟s performance stood in need of improvement.
• „Safeway 2000‟ a fundamental review of the business was
initiated and completed within 18 months.
• Through this review the company identified the following
Price perception was poor - Safeway was seen as too
Product ranges lacked real focus.
In-store availability of products was not reliable
It was strongest with the under 30s, particularly
single people and pre-family couples, but lost too
many of these customers to its competitors once they
started their families.
• It refocused the Safeway „offer‟ on families, particularly
those with young children.
• Emphasis moved on to restructuring the business and
changing its predominant style of management in order to
deliver the new offer to its customers.
For a food retailing chain the following issues are critical:
Product range and services
• This involves choosing the target market and differentiating
the brand from the competition.
• The benefit of targeting is that it allows the retailer to focus the
marketing mix (including product assortment, service levels,
store location, prices and promotion) on the needs of the
• Differentiation provides the reason to shop at one store rather
• Creating and keeping a competitive advantage requires
innovation – a constant stream of new ideas for products and
• Store location is critical to consumers as
it provides convenience, which is a
powerful influence on the decision
where to shop.
• Identifying suitable locations depends
on factors such as the disposable
income of the catchment area.
• The presence of other competitors as
well as individual site conditions such
as access to major trunk roads or
motorways and space for parking.
Product Range and Services
• Supermarkets are likely to offer a wide range of non-food
products, together with customer services such as coffee shops,
as well as their normal range of fresh, chilled and frozen foods
and packaged groceries.
• The choice is determined by the positioning strategy of the
company as well as customer expectations.
• As price differentials have narrowed, retailers have sought to
differentiate themselves on customer service, around the store.
• Customer research shows that many people regard supermarket
shopping as a chore, so retailers are taking a range of initiatives
• For some customers price is a key factor in choosing a store,
particularly on basic commodity foods where the advantages of
bulk buying come into play and are passed on to consumers in
the form of lower prices.
• A small number of supermarket chains focus on offering a
relatively narrow range of commodity food products at low
• The big national chains, however, combine everyday low pricing
on certain commodity products with frequent promotional
activity on a range of other lines.
• Promotions are important because they encourage impulsebuying.
• Design, layout and in-store signage are carefully planned to
meet customers‟ needs.
• Colour, the width of the aisles and lighting are all important
when providing an atmosphere conducive to comfortable
and enjoyable shopping.
The Customer Offer
• This offer has two major elements – “getting the basics right
every time” and “making shopping more convenient and
• “Getting the basics right everytime” means:
offering excellent value
providing helpful, friendly service
making sure products are in stock
offering a wide choice of products and services
ensuring Safeway‟s products are fresh and of
the highest quality
making things easy to find
keeping the stores clean.
• “Making shopping more convenient and extra special”
helping to take the stress and
effort out of shopping.
reducing the time it takes.
delighting customers with
specially targeted products and
finding new ways to be pleasantly
Getting the basics right has resulted in:
improving Safeway‟s value for money perception.
An economy-priced range of commodity food lines,
„Safeway Savers‟, was launched covering over 100
Several new Safeway-branded products (for example,
Select Cola, Oracle dental care and Vecta household
cleaners) have also been launched, offering better value
than the relevant brand leader.
A sustained effort to communicate the offer to customers
more effectively, both through Safeway‟s award-winning
„Molly‟ advertising campaign and by better point of sale
• Providing crèches in store where mothers can leave their
children in professional care while they do their shopping.
• Launching the Safeway loyalty (or „ABC‟) card, which
enables customers to accumulate points and then gives them a
choice between straight cash savings or a range of other,
attractive products and services.
• Pioneering time-saving technology such as „Shop & Go‟, a
field in which Safeway is the world leader. The system
greatly reduces time spent in queuing at check outs by
avoiding the need for unpacking and repacking purchases.
• Extending the own-brand product range to include children‟s
clothes and babywear.
• Basic processes and structures of the business were
redesigned and simplified to help Safeway people implement
these changes and get new ideas to the market place as
quickly as possible.
• These changes in roles and structures resulted in 3,500
redundancies or early retirements but also opened up new or
substantially different roles for 9,000 people and promotion
for a further 3,000.
Safeway‟s declared aim, announced in 1995, was to increase
average sales per square foot from £12.86 to £15.00 within 3
years. It achieved that target,one year ahead of schedule.
Total sales in 1996/97 grew by 10% to stand at £6.627 bn.
The proportion of target customers who did their main
shopping with Safeway grew from 17.1% in 1995/96 to
Value perception improved significantly with around half of
Safeways‟ customers buying at least one „Savers‟ product.
Safeway‟s own-brand range of Vecta household cleaners
gained a 25% market share and Oracle mouth care products a
20% share of their respective markets in Safeway.
The Company also launched a range of kids‟ toys and an
innovative range of produce for children. Over the year as a
whole, Safeway launched or upgraded around 3,200 product
improving quality of service while reducing the cost base.
The distribution network is now centred on six major sites,
supported by a similar number of smaller ones.
The supply base is also being consolidated as suppliers fall
increasingly into two categories: volume producers with
relatively large shares of Safeway‟s business, who are both
low cost and innovative in product development and
specialists who provide the range, quality and innovation
needed for regional and local markets.
• Accurate sales forecasting, effective communication with
suppliers, using electronic data interchange to transmit orders,
moving products through the depots as fast as possible and
reducing waste in the stores.
• “Make a Difference!” programme introduced by Safeway in
1995 is aimed at improving behavior within the employees and
towards the customers.
• Safeway shows how large food retailing business can
fundamentally change way it works and re-invent its brand
offer, experience intensive and disruptive reorganization and
simultaneously improve its sales and profit.
• Safeway 2000 was a major restructuring and repositioning of
the brand to prepare business for next century but delivering
longer-term benefits will require further, continuous
• By focusing most of its current effort on delivering the
customer offer, Safeway recognises that the ultimate arbiters
of its success are the millions of customers who visit its