Safeway 2007 Annual Report Download - page 28

SAFEWAY INC. AND SUBSIDIARIES
The following table summarizes Safeway’s stores by size at year-end 2007:
Square footage
Number
of stores
Percent
of total
Less than 30,000 242 14%
30,000 to 50,000 742 43
More than 50,000 759 43
Total stores 1,743 100%
Store Ownership At year-end 2007, Safeway owned approximately 41% 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 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 Cafe
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, cookies, frozen pizzas, fresh
and frozen pastas and an extensive array of ice creams and hors d’oeuvres.
In late 2005, Safeway unveiled the line of OORGANICS food and beverage products. Everything in the OORGANICS line,
which includes more than 300 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 2008.
Safeway launched Eating Right, a line of great-tasting, better-for-you products, in July 2007. Eating Right products span
more than 20 categories, including frozen entrees, soups, produce and salad dressings, with further expansion expected
in 2008.
Priority Total Pet Care, a line of pet foods and pet care products, and Basic Red, value-priced paper goods, were
introduced in 2006. Other Safeway brands include the Lucerne line of dairy products & the Primo Taglio line of meats and
cheeses.
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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