Safeway 1998 Annual Report Download - page 16

The following table summarizes Safeway’s stores by size at
year-end 1998:
Store Ownership At year-end 1998, Safeway owned approxi-
mately one-third of its stores and leased its remaining store s .
In recent years, the Company has pre f e rred ownership
because it provides control and flexibility with respect to
financing terms, remodeling, expansions and closures.
Merchandising S a f e w a y ’s operating strategy is to provide value
to its customers by maintaining high store standards and a
wide selection of high quality products at competitive prices.
To provide one-stop shopping for today’s busy shoppers, the
Company emphasizes high quality produce and meat, as well as
specialty departments including in-store bakery, delicatessen,
floral and pharmacy.
Safeway has developed a line of approximately 900 pre m i u m
corporate brand products since 1993 under the “Safeway
SELECT” banner. The award-winning Safeway SELECT
line is designed to offer premium quality products that the
Company believes are equal or superior in quality to compara-
ble best-selling nationally advertised brands, or that are
unique to the category and not available from national brand
m a n u f a c t u rers. The Safeway SELECT line is being intro d u c e d
in Dominick’s stores during the first quarter of 1999.
The Safeway SELECT line of products includes carbonated
soft drinks; unique salsas; the Indulgence line of cookies and
other sweets; the Verdi line of fresh and frozen pastas, pasta
sauces and olive oils; Artisan fresh-baked breads; Twice-the-
Fruit yogurt; NutraBalance Pet Food; Ultra laundry deter-
gents and dish soaps; and Softly paper products. The Safeway
SELECT line also includes an extensive array of ice cre a m ,
f rozen yogurt and sorbets; Healthy Advantage items such
as low-fat ice cream and low-fat cereal bars; and Gourm e t
Club frozen entrees and hors d’oeuvres.
In addition, Safeway has repackaged over 2,500 corporate
brand products primarily under the Safeway, Lucerne and
Mrs. Wright’s labels.
Number Percent
of Stores of Total
Less than 30,000 square feet 348 23%
30,000 to 50,000 770 52
More than 50,000 379 25
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Total stores 1,497 100%
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Manufacturing and Wholesale The principal function of manufac-
turing operations is to purchase, manufacture and process
private label merchandise sold in stores operated by the
C o m p a n y. As measured by sales dollars, approximately one-
half of Safeway’s private label merchandise is manufactured
in Company-owned plants, and the remainder is purchased
from third parties.
During 1993, Safeway began a review to identify manufac-
turing facilities that were not providing acceptable re t u rn s .
This review resulted in the sale or closure of 20 plants fro m
1993 through 1998 and the reorganization of an administrative
office during 1994. In 1998, Safeway opened a new manufactur-
ing facility in California to replace one that was closed in 1997.
The ongoing review of all remaining manufacturing facilities
may result in additional plant closures.
Safeway’s Canadian subsidiary has a wholesale operation
that distributes both national brands and private label prod-
ucts to independent grocery stores and institutional customers.
Safeway operated the following manufacturing and process-
ing facilities at year-end 1998:
In addition, the Company operates laboratory facilities for
quality assurance and re s e a rch and development in certain of
its plants and at its U.S. manufacturing headquarters in Wa l n u t
C reek, California.
Distribution Each of Safeway’s 11 retail operating areas is
s e rved by a regional distribution center consisting of one or
m o re facilities. Safeway has 15 distribution/warehousing cen-
ters (12 in the United States and three in Canada), which col-
lectively provide the majority of all products to Safeway
stores. Safeway’s distribution centers in northern California
and British Columbia are operated by third parties. During
1998, Safeway completed construction of a re p l a c e m e n t
d i s t r i bution center in Maryland.
U.S. Canada
Milk plants 8 3
Bread baking plants 6 2
Ice cream plants 5 2
Cheese and meat packaging plants 1 2
Soft drink bottling plants 4 –
Fruit and vegetable processing plants 2 3
Other food processing plants 3 1
Pet food plant 1 –
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Total 30 13
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