Safeway warehouse park will open today in P.G. $91 million complex in Upper Marlboro

Food retailing

November 07, 1998|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Safeway Inc. will open a $91 million, state-of-the-art distribution center today in Prince George's County, doing so to position itself for growth and greater efficiency in the Baltimore-Washington region.

The center in Upper Marlboro, which replaces an outdated warehouse in nearby Landover, should help the food retailer better compete in an area teeming with new and expanding grocery chains as well as discounters that now sell groceries, said Greg TenEyck, spokesman for Safeway's Eastern Division.

The five-building complex on 164 acres, totaling 748,900 square feet, will employ 650 workers, most of whom have transferred from Landover, and serve all 124 stores in the division covering parts of Maryland, Virginia and Washington.

The new warehouses have a greater capacity because of higher ceilings and make use of the latest distribution and storage technology, TenEyck said.

For instance, the warehouses have more finely tuned temperature controls and separate coolers for red meat, poultry, seafood and dairy products. The perishables warehouse features computerized banana-ripening rooms to ensure that the chain's top produce item arrives at stores at its peak. Grocery chains have begun focusing on produce as a way to distinguish themselves from discounters, such as Wal-Mart.

"The Wal-Marts and the Kmarts are getting into more and more of the grocery items," TenEyck said. "Grocery stores can separate from the competition with the quality of the product. That's what sets us apart."

Construction on the complex began in April 1997, after Safeway and four Teamsters union locals reached a contract agreement in June 1996 to keep distribution -- and jobs -- in Maryland. The company had considered farming out the work to an out-of-state contractor. Safeway dropped demands for wage and benefit cuts after the union agreed to cost-saving changes in work rules.

Safeway also received economic development incentives -- for purposes such as job training -- of about $2 million.

The complex represents the largest single capital expenditure ever for Safeway, a national chain second in sales only to Kroger Co. Safeway announced last month that it is buying Chicago grocer Dominick's Supermarkets Inc. to form a company with projected annual sales of $26.5 billion.

The new complex gives Safeway more than 50 percent more storage space than at the 46-year-old Landover facility, leaving room for the chain to expand in the region. Additionally, the buildings' modular design will allow for expansion as needed, TenEyck said.

"We have been averaging five new stores a year," TenEyck said. "We don't anticipate that amount changing. If anything it may increase, for the foreseeable future."

The division opened four stores this year, including one on Harford Road in Northeast Baltimore, another in Columbia and another converted from a Giant Food Inc. store in Eldersburg. Stores in Bel Air and Westminster are scheduled to open next year.

The warehouse distribution complex includes grocery and perishables warehouses covering the same area as 13 football fields, a truck repair shop, an administration building and a product return center. It has more than 1,500 parking spaces and 187 truck docks. The grocery and perishables operations will be up and running by the end of the year.

"It'll make them more efficient because the systems and logistics will be greatly improved," said Jeff Metzger, publisher of Columbia-based trade journal Food World. "They were in the dark ages from a distribution standpoint."

Safeway continues to operate a warehouse in Landover for general, health and beauty merchandise. It closed an obsolete frozen foods warehouse in 1994 and began distributing frozen food through an outside contractor.

Pub Date: 11/07/98

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