Safeway 2011 Annual Report Download - page 24

SAFEWAY INC. AND SUBSIDIARIES
Safeway continues to operate a number of smaller stores that also offer an extensive selection of food and general
merchandise and that 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 2011:
Square footage
Number
of stores
Percent
of total
Less than 30,000 200 12%
30,000 to 50,000 693 41
More than 50,000 785 47
Total stores 1,678 100%
Store Ownership At year-end 2011, Safeway owned 42% of its stores and leased its remaining stores.
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 unique 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 and poultry, through both the Company’s Rancher’s Reserve Tender
Beef offering and Open Nature all natural beef, chicken and sausages. Safeway’s deli/food service department has
developed a variety of solutions for today’s busy shoppers, including Signature Café sandwiches, soups and salads as well
as Primo Taglio deli meats and cheeses. Many Safeway bakeries offer freshly made bread, and the floral department is
recognized by its signature gazebo.
Safeway has continued to develop its portfolio of Consumer Brands private label products. The Company has focused its
brands into three areas: Health & Wellness, Premium and Core. The prices in each category are generally lower than those
of comparable products from national brands.
The Health & Wellness portfolio includes the O Organics, Eating Right, Bright Green and Open Nature brands. These
offerings address consumers’ specific health needs or preferences. O Organics is one of the largest exclusively organics
brands. Eating Right offers a “spot your needs” labeling system, and Bright Green is an environmentally friendly
household product line. Open Nature, an all-natural product line, was launched in the fourth quarter of 2010 and already
achieved over $100 million in sales in 2011.
The Premium portfolio includes the Safeway SELECT, Signature Café, Rancher’s Reserve, Primo Taglio, Waterfront BISTRO
and Debi Lilly offerings. Safeway SELECT is a line of quality products that the Company believes are unique to the
category. Waterfront BISTRO is a seafood brand designed to make preparing a restaurant-quality meal at home easy.
In the Core portfolio are the Safeway brands, Lucerne, Refreshe, the Snack Artist and Pantry Essentials. In 2011, the
Safeway brand was subdivided into four brands: Safeway Farms, Safeway Kitchens, Safeway Home and Safeway Care.
The Lucerne brand has been producing quality dairy products for over 100 years. The Refreshe label was re-branded in
2010 to include all 14 private-label beverage brands. The Snack Artist offers high-quality and great value snacks in a
variety of categories such as chips, cookies and frozen categories in whimsical, resealable packaging, a unique feature in
the category. Pantry Essentials was launched in 2011 as a value line, including formerly branded Value Red and Dairy Glen
items.
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