Safeway Inc.


Safeway is an American supermarket chain founded by Marion Barton Skaggs in April 1915 in American Falls, Idaho. The chain provides grocery items, food and general merchandise and feature a variety of specialty departments, such as bakery, delicatessen, floral and pharmacy, as well as Starbucks coffee shops and fuel centers. It is a subsidiary of Albertsons after being acquired by private equity investors led by Cerberus Capital Management in January 2015. Safeway's primary base of operations is in the west with some stores located in the Mid-Atlantic region of the Eastern Seaboard. The subsidiary is headquartered in Pleasanton, California, with its parent company headquartered in Boise, Idaho.
Safeway stores operate under the logo of a stylized white "S" inside a rounded red square with the slogan "Ingredients for life". Following the organics trend, the stores have expanded the number of organic fruits and vegetables in the produce section and offer other items under the "O Organics" label. Stores may have a Starbucks, a deli counter, a meat department, a produce section, a flower department, a bakery, a pharmacy, a liquor section, and/or many aisles of nonperishable items. The stores offer many in-house private label brands as well as name brands across all product categories.

History

In April 1915, Marion Barton Skaggs purchased his father's grocery store in American Falls, Idaho, for $1,089. The chain, which operated as two separate businesses, Skaggs Cash Stores and Skaggs United Stores, grew quickly, and Skaggs enlisted the help of his five brothers to grow the network of stores. M.B.'s business strategy, to give his customers value and to expand by keeping a narrow profit margin, proved spectacularly successful. By 1926, he had opened 428 Skaggs stores in 10 states. M.B. almost doubled the size of his business that year when he merged his company with 322 Safeway stores and incorporated as Safeway, Inc.
The original slogan was "an admonition and an invitation" to "Drive the Safeway; buy the Safeway". The point of the name was that the grocery operated on a cash-and-carry basis — it did not offer credit, as grocers traditionally had done. It was the "safe way" to buy because a family could not get into debt via its grocery bill.
In 1926, Charles E. Merrill, the founder of the Merrill Lynch brokerage firm, saw an opportunity to consolidate the West Coast grocery industry. Towards this end, he purchased the 322-store Safeway chain of W.R.H. Weldon, who wished to exit retailing and concentrate on wholesale. Then, in June 1926, Merrill offered Skaggs either $7 million outright or $1.5 million plus 30,000 shares in the merged firm. Skaggs took the latter. On July 1, 1926, Safeway merged with the 673 stores from Skaggs United Stores of Idaho and Skaggs Cash Stores of California. On completion of the Skaggs/Safeway merger, M. B. Skaggs became the Chief Executive of the business. Two years later, Skaggs listed Safeway on the New York Stock Exchange. In the 1930s, Safeway introduced produce pricing by the pound, adding "sell by" dates on perishables, nutritional labeling, and some of the first parking lots.
The merger instantly created the largest chain of grocery stores west of the Mississippi. In the 1930s, Charles E. Merrill temporarily left Merrill Lynch to help manage Safeway. At the time of the merger, the company was headquartered in Reno, Nevada. In 1929, it was relocated to a former grocery warehouse in Oakland, California. Safeway headquarters remained there until the move to Pleasanton, California in 1996.

Expansion

The initial public offering price of Safeway stock was $226 in 1927. A five for one split in 1928 brought the price down to under $50. Over the next few years, Charles Merrill, with financing supplied by Merrill Lynch, then began aggressively acquiring numerous regional grocery store chains for Safeway in a rollup strategy. Early acquisitions included significant parts of Piggly Wiggly chain as part of the breakup of that company by Merrill Lynch and Wall Street.
YearFirm# of storesLocation
1926H.G. Chaffeegrocery storesSouthern California
1926Skaggs Cash Stores679 grocery storesIdaho
1926Skaggs United StoresCalifornia
1928Arizona Grocery/Pay'n Takit Stores24 grocery stores; 24 meat marketsArizona
1928Newway Stores15 grocery stores; 11 meat marketsEl Paso, Texas
1928Sanitary Grocery 429 grocery stores; 67 meat marketsWashington D.C. and Virginia
1928Eastern Stores Inc.67 grocery stores; 127 meat marketsBaltimore, Maryland
1928Piggly Wiggly Pacific91 grocery stores; 84 meat marketsOakland, California
1928Bird Grocery Stores 224 grocery stores; 210 meat marketsMissouri, Texas, Arkansas, Iowa, Kansas, Nebraska
1929Piggly Wiggly West91 grocery stores; 84 meat marketsNorthern California, Hawaii, Colorado
1929Sun Grocery91 grocery stores; 84 meat marketsTulsa, Oklahoma
1931MacMarr Storesgrocery storesLos Angeles
1936Stores from Kroger53 grocery storesOklahoma
1941Daniel Reeves498 grocery storesNew York
1941National Grocery84 grocery storesNew Jersey
1958Thriftway Stores 30 grocery storesIowa

Most transactions involved the swap of stock certificates, with little cash changing hands. Most acquired chains retained their own names until the mid-1930s.
In 1929, there were rumors of a Safeway-Kroger merger.
The number of stores peaked at 3,400 in 1932, when expansion ground to a halt. The Great Depression had finally impacted the chain, which began to focus on cost control. In addition, numerous smaller grocery stores were being replaced with larger supermarket stores. By 1933, the chain ranked second in the grocery industry behind The Great Atlantic & Pacific Tea Company and ahead of Kroger.
In 1935, Safeway sold its nine stores in Honolulu, Hawaii "...because of the inconvenience of proper supervision." Also in 1935, independent groceries in California convinced the California legislature to enact a progressive tax on chain stores. Before the act took effect, Safeway filed a petition to have the law put to a referendum. In 1936, the California electorate voted to repeal the law.
In 1936, Safeway introduced a money back guarantee on meat.

International expansion

CountryYear# of stores
Canada1929213
United Kingdom1962131
Australia1962123
West Germany196335
Mexico1981137
Saudi Arabia19826
Jordan20036

The company expanded into Canada in 1929 with 127 stores ; into the United Kingdom in 1962 ; into Australia in 1963 ; and into West Germany in 1964. The company also has operations in Saudi Arabia and Kuwait in a licensing and management agreement with the Tamimi Group during the 1980s. In 1981, it acquired 49% of Mexican retailer Casa Ley.
Safeway usually achieved international expansion by acquiring one or more small chains in a given country. It expanded into Saudi Arabia and Kuwait, however, through a joint venture. This initial nucleus of stores received Safeway systems and technology and then expanded organically. International chains acquired include:
YearFirm# of storesLocation
1929?9 grocery storesCanada
1935Piggly Wiggly 179 storesCanada
1962John Gardner Limited11 storesUnited Kingdom
1963Pratt Supermarkets3 storesMelbourne, Australia
1963Mutual Stores? storesAustralia
1964Big Bär Basar 2 storesWest Germany
1980Jack the Slasher31 storesQueensland, Australia
198149% of Casa Ley? storesMexico

1940s–1970s

In 1941, Marion B. Skaggs retired from the Safeway board of directors.
In 1947, the company's sales exceeded $1 billion for the first time. By 1951, total sales had reached nearly $1.5 billion. The company adopted the S logo, which it still uses, in 1962.
In 1955, Robert A. Magowan became Chairman of the Board of Safeway. Magowan had married Charles Merrill's daughter, Doris. Magowan also assumed the title of President in 1956. He remained President until 1968, and a member of the board until 1978. In 1966, Robert A Magowan brought his star Meat Processing Plant Manager, Michael F. Concannon to Oakland to become the Head of Meat Processing in North America. He retired in 1978 as well. Mike was instrumental in opening the Stockton plant, The Wichita plant and Meat Processing in Canada began in the 1970s.
In 1959, Safeway opened its first store in the new state of Alaska—the first major food retailer to enter that market. The company opened three stores in Anchorage and one in Fairbanks over the next several years. The store in downtown Fairbanks was built on the site of a red-light district, known as The Line, which operated for close to a half century. Most of these stores were in buildings constructed by Anchorage real estate developer Wally Hickel, who later became governor of Alaska and U.S. Secretary of the Interior.
Also in 1959, the firm also opened the first "marina-style" store on the Marina in San Francisco. Hundreds of stores in this barrel-vaulted-roof style opened during the next decade.
In 1961, the company sold its New York operations to Finast. In 1963, Safeway again opened stores in Hawaii, having exited this market in 1934. It leased one store in Culver City to animator/filmmaker Don Bluth, who used it as a theater until 1967.
In 1969, Safeway entered the Toronto market in Canada and the Houston market in Texas through opening new stores, rather than by acquisition. The firm ultimately failed against entrenched competition in both these markets.
In 1977, Safeway management instituted a program to fight counterfeit $100 bills by, among other things, telling employees that bills that lacked the words "In God We Trust" were counterfeit. Because Safeway had not sufficiently investigated the history of $100 bills, it was unaware that some bills still in circulation did not have the phrase. Eventually, an innocent shopper was incorrectly reported to Oakland, California police for passing a "counterfeit" bill. He was arrested and strip-searched before Oakland police contacted the Treasury Department and realized the error. The 1981 jury verdict of joint and several liability for $45,000 against Safeway Stores and the City of Oakland was upheld in full by the Supreme Court of California on December 26, 1986.
In 1979, Peter Magowan, son of Robert Magowan and grandson of Charles Merrill, was appointed Chairman and CEO of Safeway. Magowan managed Safeway for the next 13 years—presiding over the dramatic decline of the firm in terms of store numbers

1980s: Takeover and sell-offs

Following a hostile takeover bid from corporate raiders Herbert and Robert Haft, the chain was acquired by Kohlberg Kravis Roberts acting as a white knight in 1986. With the assistance of KKR, the company was taken private and assumed tremendous debt. To pay off this debt, the company began selling off a large number of its operating divisions.
YearDivision sold# of storesSale priceBuyerOutcome
1983Omaha/Sioux Falls64 storesn/aMultiple buyers including Hy-Vee & FarewayStores continue to operate as Hy-Vee and Fareway
1985Southern Ontario22 storesn/aOshawa GroupOshawa acquired by Sobeys in 1998
1985West Germany36 storesn/a:de:Meierei C. Bolle|Meierei C BolleStores now part of Edeka
1987Dallas141 storesn/aUnable to sell whole divisionSold in pieces to Kroger, Brookshire's, Tom Thumb Food & Pharmacy, Minyard Food Stores and Furr's; some stores shuttered
1987Salt Lake City60 stores$75mBorman's Borman's sells stores in pieces at under book value in 1988 to Flemings and Albertsons; Borman's acquired by A&P late 1988
1987El Paso59 stores$140mFurr's Supermarkets Firm hits financial difficulties; MBO of some stores; other sold; bankruptcy in 2001
1987Oklahoma106 storesn/aMBO by management and Clayton & Dubilier forming Homeland Firm listed then goes into bankruptcy in 1996. Later it was bought by and became a subsidiary of Associated Wholesale Grocers.
1987Safeway UK121 storesUS$1bArgyll FoodsStores continued to trade under Safeway name until 2005, when they were acquired by Morrisons
1987Richmond62 storesn/avarious buyersDivision merged into Washington DC division, stores eventually sold off to competitors, including Farm Fresh
1988Kansas City66 storesn/aMorgan Lewis Githens & Ahn/W S Acquisition Corp.Renamed Food Barn; bankruptcy 1994; stores sold to Associated Wholesale Grocers, which either closed or divested them to their members.
1988Little Rock51 storesn/aAcadia PartnersRenamed Harvest Foods; bankruptcy in 1995; stores sold off; some now part of Associated Wholesale Grocers after the demise of Affiliated Foods Southwest
1988Houston99 stores$174.6mMBO with Duncan Cook and Co. and the Sterling GroupRenamed AppleTree Markets; bankruptcy 1992; stores sold to competitors
1988Southern California172 stores$408mVonsThe $408m that Safeway acquired in the deal consisted of $325m in cash and 30 percent interest in Vons; Safeway later acquired 100 percent ownership in 1997

The divested domestic divisions of Safeway proved to be poisoned chalices for almost all those who acquired them. Essentially every purchasing entity hit financial troubles and either went bankrupt or was later acquired.
The international stores were more successful for their acquirers. UK stores, Safeway plc, were sold to Argyll Foods, which itself was ultimately absorbed by Morrisons in 2004. Safeway Australia was sold to the Australian-based Woolworths Limited in 1985.
Safeway sold its stores in Southern California, including those in established markets like Los Angeles and San Diego, to The Vons Companies in 1988 in exchange for a 30 percent interest in the company. Safeway also diminished operations in Fresno, Modesto, Stockton, and Sacramento. Save Mart Supermarkets purchased the few remaining Fresno Safeway stores in 1996.
Many stores in the Eastern Division were also closed or sold in the 1987–1989 timeframe, including many recent additions in the DelMarVa Eastern Shore area.
Safeway's national presence was now reduced to several western states and Northern California, plus the Washington, D.C. area. Altogether, nearly half the 2,200 stores in the chain were sold.

Expanding again

The company was taken public again in 1990, with the Jordan stores sold to the Masri family in 1991. In December 2003, the Masri family sold it to The Sultan Center of Kuwait. The late 1990s and early 2000s once again saw Safeway rapidly expand into new territories under a variety of regional names. In 1997, Safeway bought out the rest of The Vons Companies, giving it Southern California stores once more. In 1998, Chicago-based Dominick's Finer Foods was acquired from Yucaipa Companies. While Safeway had stores in Alaska, in 1999 they bought Carrs-Safeway, with the same year bringing the purchase of Houston-based Randall's Food Markets, which also had stores in Austin, Texas. Randalls also had stores in the Dallas-Fort Worth area through Randalls' other brand, Tom Thumb, along with gourmet grocery store Simon David. The purchase of Randalls also started the practice of Safeway-owned gas stations, as Randalls already had stations at their stores.
In 2000, Safeway started grocery delivery operations and in 2001 acquired the family-owned Genuardi's chain, with locations in Pennsylvania, New Jersey, and Delaware. While Safeway also created the subsidiary Blackhawk Network, a prepaid and payments network, a card-based financial solutions company, and a provider of third-party prepaid cards, around this time, Genuardi's would be the last grocery purchase Safeway would make.

Lifestyle stores

By the early 2000s, Safeway's expansion beyond the West Coast had been poorly received, citing Safeway's brands and West Coast-based buyers, with Dominick's on the sale block, and Randalls and Genuardi's losing market share.
To reinvigorate the flagging divisions, increase brand involvement, and to differentiate itself from its competitor, Safeway began a $100 million brand repositioning campaign labeled "Ingredients for life." in 2005.
The launch included a redesigned logo, a new slogan "Ingredients for life" alongside a four-panel life icon to be used throughout stores and advertising, and a web application called "FoodFlex" to improve consumer nutrition. Many locations are being converted to the "Lifestyle" format. The new look was designed by Michigan-based PPC Design. In addition to the "inviting decor with warm ambiance and subdued lighting", the move required heavy redesign of store layout, new employee uniforms, sushi and olive bars, and the addition of in-store Starbucks kiosks. The change also involved differentiating the company from competitors with promotions based on the company's extensive loyalty card database. This would be the design going forward for new and remodeled stores.
At the end of 2004, there were 142 "Lifestyle" format stores in the United States and Canada, with plans to open or remodel another 300 stores with this type of theme the following year. "Lifestyle" format stores have seen significantly higher average weekly sales than its other stores. By the end of 2006, shares were up, proving this rebranding campaign had a major impact on sale figures.
In July 2007, the company stock rose on speculation that Sears Holdings Corporation was seeking to purchase Safeway.

Decline and sale

In 2012, the company dissolved the Genuardi's chain in suburban Philadelphia through a combination of store selloffs and closures. Giant acquired 15 of the chain's stores and made an offer for a 16th which was instead sold to a local chain as part of an antitrust settlement. Weis also bought three Genuardi's locations. A number of unprofitable Genuardi's units also had closed in 2010 and 2011 as their leases expired. Earlier, Zagara's, a small chain of upscale, gourmet supermarkets started by Genuardi's in 1990 was also shuttered in 2000, immediately following its parent company's acquisition by Safeway. The only Genuardi's in the northern half of New Jersey also closed soon after the merger with Safeway, and a location in Bensalem, Pennsylvania was sold to ShopRite in 2004.
The Genuardi's stores in Wilmington, Delaware, were converted to the Safeway name in 2004 due to legal issues stemming from a union contract signed by the management of early Safeway stores in Delaware that closed in 1982. The current Safeway locations in Delaware are served by division offices in the Baltimore–Washington metropolitan area, where Safeway has long been a major grocer.
In 2011, Safeway signed an agreement with UNFI, for the distribution to all of Safeway's banners in the United States for non-proprietary natural, organic and specialty products effective October 2011.
In 2013, it was announced that Cerberus Capital Management were exploring a deal for all or part of Safeway. On June 12, 2013, Sobeys announced it would acquire Safeway's operations in Canada for CDN$5.8 billion, subject to regulatory approval. The move will bolster its presence in Western Canada, where Safeway was predominant. Sobeys completed the sale five months later while keeping the Safeway banner on its newly acquired stores while changing private labels to be more inline with those used by its new parent.
In October 2013, Safeway announced that it would cease operating Dominick's stores in the Chicago area by early 2014. The announcement spurred its competitors to seek employees and desirable store locations they could purchase. One location would remain open in Bannockburn, Illinois until January 25, 2014.
On February 19, 2014, Safeway began to explore selling itself. On March 6, 2014 Albertsons, backed by Cerberus Capital Management announced it would purchase Safeway for $9.4 billion in a deal expected to close in the 4th quarter of the year. As part of the purchase, Blackhawk Network was spun off into an independent company.

Safeway as a supermarket brand

On January 30, 2015, the merger between Safeway and Albertsons was finalized. As part of the merger, Bellingham, Washington-headquartered grocery chain Haggen announced it would buy 146 Vons, Albertsons, and Pavilions stores across Washington, Oregon, California, Nevada, and Arizona as part of anti-monopoly requirements following the merger. Some of the major metropolitan areas affected were Los Angeles, Portland, Phoenix, Tucson, San Diego, Bakersfield, Seattle, and Las Vegas. Other stores in the West Coast, along with the Dallas-Fort Worth Metroplex market, also saw divestments.
Following the purchase, Safeway and its remaining brands, Randalls, Tom Thumb, Vons, and Pavilions, along with their respective divisions, were integrated into the operations of Albertsons, and Safeway, with its proprietary brand names, appeared in all of the Albertsons-Safeway banners, replacing Albertsons' SuperValu products.
Until the stores' sale to Publix in 2018, on January 11, 2016, it was announced that the three remaining Albertsons stores in Florida, located in Largo, Altamonte Springs and Oakland Park, would be re-bannered as Safeway; this marks the first time that the Safeway brand would exist on a supermarket operation in Florida.
Other Albertsons stores in various markets have rebannered as Safeway, including Denver and Seattle.

Private brands

"Signature Select" is the company's signature private label that offers an everyday range of products. "Signature Reserve" is the company's private label for more upscale products.The label "Primo Taglio" is used for upscale deli products and "Lucerne" is the main dairy line for the company. In 2006, Safeway introduced an organically grown and processed line of products named "O Organics". A number of prepared dishes and soups are available under "Signature Cafe". After its acquisition by Albertsons, the combined company adopted Safeway's private label brand program, previously named "Safeway Select."

Brand list

Some of the brands in use are:
Signature Select / Refreshe Brand Cola is produced by Cotts Beverages for Safeway Inc.; it is bottled in San Bernardino, California. Safeway Refreshe brand bottled water is bottled by Advanced H20, LLC in Stockton, California. Safeway closed its water bottling plant in downtown Los Angeles in January 2012.

Safeway Grocery Delivery

Safeway has offered online grocery delivery service in select markets starting in the Northwest US region in 2000. The service grew to deliver in 6 states and the District of Columbia, mostly along west and east coast.

Past concepts

Safeway has tried a range of new store formats over the years, most of which have ultimately failed.
In 1963, Safeway developed the Super S format—which combined a general merchandise and drug store and a new Safeway supermarket in the same building. The stores shared a common entrance, but operated as separate businesses with their own checkstands. The first outlet opened in Anchorage, Alaska. In 1965, 22 existing Super S stores were sold to Skaggs Drug Stores. Safeway sold the remaining stores in 1971.
In 1964, Safeway opened a trial two-level International Store at 12th and F Street in Washington, D.C., with a conventional Safeway downstairs and a gourmet store on the upper floor. The Safeway International Store range included wild boar steaks, snow hare, suckling pig, and reindeer steaks.
The company also made a number of attempts to repurpose older, smaller store sites, opening Food Barn, a discount grocery outlet, and Liquor Barn, a discount liquor outlet, in the 1970s. Safeway also trialled Town House in Washington, D.C., small stores targeting apartment dwellers, and a gourmet store concept, Bon Appetit in San Francisco and Tiburon, California.
In 1969, Safeway formed a joint venture with Holly Farms Poultry Industries to open Holly Farms Fried Chicken in an effort to diversify into fast food restaurants and compete with KFC. The first store opened in Colonial Heights, Virginia in August 1969.
Safeway also acquired Pak 'n Save Foods, a box warehouse concept, as part of the 1983 purchase of Brentwood in Northern California.

Logos

Safeway ATM Network

The Safeway ATM Network, run for Safeway by Cardtronics, operates in Colorado, Oregon, Wyoming and Washington. Usually, one machine is located near the front of each store that has an ATM. Cirrus, Plus, Star, and NYCE are on the network. The network started late 1998 in Denver and expanded into Wyoming, Washington, and Oregon.

Support offices

Safeway transitioned from regional control of its product assortments to national category management, known as the Safeway Category Optimization Process. With all dry grocery corporate buying done from Safeway's Pleasanton offices, it is said it will increase representation of manufacturers by experienced sales professionals with extensive product and category knowledge. Corporate produce buying offices are located in Phoenix, Arizona. This will mean consistency across the Safeway chain, meaning one could go into a store in Winnipeg or San Francisco and find the same products at the same price, as all negotiation is now done at the corporate level.

Animal welfare concerns

In 2012, Mercy for Animals conducted an undercover investigation at Christensen Farms, a pork supplier to Safeway, Walmart, Costco, Kroger, and Kmart. Before the public release of Mercy For Animals' investigation at Christensen Farms, Safeway announced it would begin requiring pork suppliers to phase out gestation crates.
In 2008, Greenpeace started ranking America's major supermarket chains on their seafood sustainability practices because, according to Phil Radford, Greenpeace U.S. CEO, "three quarters of global fish stocks are suffering from overfishing, and 90% of top marine predators are already gone." Criteria included the number of threatened fish species supermarkets sold, their seafood purchasing policies, and ocean legislation policies it supported. Greenpeace annual Carting Away the Oceans report ranks supermarkets on a scale of 1 to 10, with 1 being least sustainable with seafood policies and 10 being the most sustainable with seafood policies. Safeway ranked second best on the 2013 CATO Report by ensuring that its store brand of canned tuna was sustainably fished and by lobbying for science-based ocean conservation policies.
In 2016, Safeway parent company Albertsons joined a growing wave of companies moving toward "cage-free" egg production and announced a planned shift to cage-free eggs by 2025 following campaigns by The Humane League, Mercy for Animals, The Humane Society of the United States, and others.

Safeway music

Safeway music is provided by InStore Broadcasting Network. The satellite network also beams commercials and advertisements for Safeway products and brands that play intermittently with the music.