Safeway 2006 Annual Report Download - page 24

SAFEWAY INC. AND SUBSIDIARIES
Store Ownership At year-end 2006, Safeway owned approximately 40% of its stores and leased its remaining
stores. The Company prefers ownership because it provides control and flexibility with respect to remodeling,
expansions, closures and financing terms.
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 believes it has developed
a reputation for having the best produce in the market, through high quality specifications and precise handling
procedures, and for having 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.
Safeway has continued to develop its premium line of consumer brand products. Hundreds of items have been
developed 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 comparable best-selling,
nationally advertised brands, or are unique to the category and not available from national brand manufacturers.
The Safeway SELECT line of products includes: unique salsas; bagged salads; whole bean coffees; the Indulgence line
of cookies and other sweets; the Verdi line of frozen pizzas, fresh and frozen pastas, pasta sauces and olive oils; and
Artisan fresh-baked breads. The Safeway SELECT line also includes an extensive array of ice creams, frozen yogurts and
sorbets; cereals and low-fat cereal bars; and Gourmet Club frozen entrees and hors d’oeuvres.
Other Safeway brands include the Lucerne line of dairy products; Primo Taglio line of meats and cheeses; and
Signature brand soups, sandwiches and salads.
In late 2005, Safeway unveiled the line of OORGANICS food and beverage products sold exclusively at Safeway.
Everything in the OORGANICS line, which includes nearly 200 items, comes from certified organic growers or
processors and is USDA-certified organic. The OORGANICS line includes, among other products: milk, chicken, salads,
juices and entrees. Further expansion of the line is expected in 2007.
Priority, a line of pet foods and pet care products, and Basic Red, value-priced paper goods, were introduced in 2006.
Manufacturing and Wholesale The principal function of manufacturing operations is to purchase, manufacture
and process private label merchandise sold in stores operated by Safeway. As measured by sales dollars, approximately
22% of Safeway’s private label merchandise is manufactured in Company-owned plants, and the remainder is
purchased from third parties.
Safeway’s Canadian subsidiary has a wholesale operation that distributes both national brands and private label
products to independent grocery stores and institutional customers.
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