Safeway readies ad drive as grocer redefines itself

The supermarket chain redesigns stores, redraws its logo and introduces new brands to compete with discounters and specialty rivals.

April 15, 2005|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Safeway Inc. is caught in the middle of extremes in a supermarket world where specialty stores dominate one end and discounters the other.

With new television commercials set to begin Monday, the California-based company - the second-largest grocer in the Baltimore area behind Giant Food - is spending $100 million on a new advertising campaign. To further redefine itself, the 90-year- old chain is remaking stores, its logo and its slogan.

"Wal-Mart at one end of the spectrum, and Whole Foods and Trader Joe's at the other end of the spectrum have chipped away at the total grocery share," said Michael Minasi, Safeway's senior vice president of marketing. "The traditional grocery share was being eroded, and we felt we needed to be more competitive and more responsive."

The campaign, the most expensive in Safeway's history, will aim commercials at some of the hottest prime-time shows, including 24, Desperate Housewives and the season finales of American Idol, Everybody Loves Raymond and Survivor. Also using billboards, radio and print advertising, Safeway hopes to reach 80 million people in the first several weeks.

Traditional grocers such as Safeway and Giant have felt increased pressure from discounters such as Wal-Mart Stores Inc. and Target Corp., and specialty stores such Trader Joe's and Whole Foods Markets Inc. have drawn off consumers willing to pay a little more for specialized products.

The changing nature of the approximately $500 billion grocery industry propelled Florida-based Winn-Dixie Stores Inc., a 75-year-old fixture in the South, into bankruptcy recently.

"The retailers that are doing fabulous when it comes to groceries are at either end of the spectrum," said Phil Lempert, editor of Supermarket guru.com and a food editor of NBC-TV's Today show. "The traditional supermarket has the toughest time right now."

In the Baltimore area, where Safeway has about 30 stores, the competition is expected to increase when Rochester, N.Y.-based Wegmans Food Markets Inc., which specializes in large gourmet supermarkets, opens a store soon in Hunt Valley.

Grocery stores are also faced with trying to adjust to the changing lifestyles of many American families. People eat out more, which also slices into grocery margins.

Softer lighting

Safeway said it began its image transition two years ago when it introduced several brands, such as Ranchers Reserve meats and Signature sandwiches, soups and salads.

It also introduced a store design that replaced linoleum floors and bright lights with wood floors and softer lighting for a warmer, less sterile shopping environment.

The company remodeled or built 142 stores in the new style last year, including two in Ellicott City and a store in Hanover across from Arundel Mills.

About 300 stores will be converted this year, including one in Phoenix, in Baltimore County. About 1,500 stores will be remodeled in the next three to five years.

New slogan

The advertising campaign features a new logo with more contemporary, stylized lettering and a new "Ingredients for Life" slogan.

Grocery analysts said yesterday that more of the traditional supermarkets are seeking ways to distinguish themselves in a much more volatile market. Many have increased the amount of prepared foods and offered shoppers one-stop-shopping formats.

North Carolina-based Food Lion started a "lifestyle supermarket" similar to Safeway's new style, grouping food displays around building a whole meal and offering more ready-meal options.

Some grocers also have responded to the changes by cutting costs to compete with Wal-Mart or improving stores to retain and attract customers.

"It all depends on how well Safeway can differentiate themselves, especially right now when customers are facing so many cost pressures," said Naa Aku Addo, a grocery analyst with Economy.com in West Chester, Pa.

"The U.S. customer has become accustomed to rebates and discounts. Price impression is very high. It depends on what they offer in terms of experience that will them shop more."

A sign over the produce section at a recently renovated Ellicott City Safeway reads "Fresh From the Fields," echoing Whole Foods' former name, Fresh Fields. But Minasi said Safeway isn't trying to mimic the specialty or discounter grocers, just trying to compete better.

"I think we're trying to appeal as broadly across the spectrum as we can," he said. "But we still believe the big opportunity is in the middle market."

Shoppers at the Safeway on U.S. 40 in Ellicott City on Wednesday seemed to like what the grocer has done.

"I think the changes are for the better," said Mike Lawson, who owns a recycling business and lives in Clarksville. "You can see the merchandise better."

`Not so cold'

Christine King, a day-care provider from Ellicott City, said she started shopping at the store more frequently after the remodeling. Her husband thinks she spends too much time at the supermarket, she said.

"It makes for a more pleasant shopping experience," she said. "It's not so cold and bright anymore. It no longer feels sterile like a hospital."

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