Safeway 2004 Annual Report Download - page 17

Safeway Inc. (“Safeway” or the “Company”) is one of the
largest food and drug retailers in North America, with 1,802
stores at year-end 2004.
The Company’s U.S. retail operations are located
principally in California, Oregon, Washington, Alaska,
Colorado, Arizona, Texas, the Chicago metropolitan area and
the Mid-Atlantic region. The Company’s Canadian retail
operations are located principally in British Columbia,
Alberta and Manitoba/Saskatchewan. In support of its retail
operations, the Company has an extensive network of distri-
bution, manufacturing and food processing facilities.
Safeway also has a 49% interest in Casa Ley, S.A. de
C.V. (“Casa Ley”) which operates 115 food and general
merchandise stores in Western Mexico. In addition, the
Company has a strategic alliance with and a 54%
ownership interest in GroceryWorks Holdings, Inc., an
Internet grocer.
STORES Safeway’s average store size is approximately
45,000 square feet. The Company determines the size of a
new store based on a number of considerations, including
the needs of the community the store serves, the location
and site plan, and the estimated return on capital invested.
Safeway’s primary new store prototype, called the “Lifestyle
Store,” is 55,000 square feet. Lifestyle stores feature a
warm and inviting décor, with special lighting to highlight
products and departments.
Safeway’s stores provide a full array of dry grocery items
tailored to local preferences. Most stores offer a wide
selection of food and general merchandise and feature a
variety of specialty departments such as bakery,
delicatessen, floral and pharmacy. In addition, many stores
now offer Starbucks coffee shops and adjacent fuel centers.
Safeway continues to operate a number of smaller stores
that also offer an extensive selection of food and general
merchandise, and generally include one or more specialty
departments. These stores remain an important part of the
Company’s store network in smaller communities and
certain other locations where larger stores may not be
feasible because of space limitations and/or community
needs or restrictions.
The following table summarizes Safeway’s stores by size
at year-end 2004: Number Percent
Square Footage of Stores of Total
Less than 30,000 275 15%
30,000 to 50,000 767 43
More than 50,000 760 42
Total stores 1,802 100%
STORE OWNERSHIP At year-end 2004, Safeway owned
approximately one-third of its stores and leased its
remaining stores.The Company prefers ownership because it
provides control and flexibility with respect to financing
terms, remodeling, expansions and closures.
MERCHANDISING Safeway’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, and offers many specialty items through
its various specialty departments.
Safeway is focused on differentiating its offering with
high quality perishables. The Company is developing a
reputation for having the absolute best produce in the
market and the most tender and flavorful meat, through the
Company’s Rancher’s Reserve Tender Beef offering. In
addition, Safeway has developed a variety of new items in
the deli/food service department, including Signature
sandwiches, soups and salads that provide meal solutions
to today’s busy shoppers.
To showcase its commitment to quality, particularly in
the perishable departments, Safeway has developed a store
prototype called the “Lifestyle Store.” The Lifestyle store
has an earth-toned décor package, subdued lighting, custom
flooring, unique display fixtures and other special features
that impart a warm ambience that the Company believes
significantly enhances the shopping experience.
SAFEWAY INC. 2004 ANNUAL REPORT 15
SAFEWAY INC. AND SUBSIDIARIES
Company in Review