Safeway 2012 Annual Report Download - page 22

SAFEWAY INC. AND SUBSIDIARIES
10
During 2012, contracts covering approximately 55,000 employees were ratified. In particular, United Food
and Commercial Workers International Union (“UFCW”) collective bargaining agreements which covered
approximately 54,000 employees, primarily in stores in the Company's Northern California, Eastern, Phoenix,
Denver and Northwest divisions were ratified.
Available Information Safeway’s corporate Web site is located at www.safeway.com. You may access
our Securities and Exchange Commission (“SEC”) filings free of charge at our corporate Web site promptly
after such material is electronically filed with, or furnished to, the SEC. We also maintain certain corporate
governance documents on our Web site, including the Company’s Corporate Governance Guidelines, our
Director Independence Standards, the Code of Business Conduct and Ethics for the Company’s corporate
directors, officers and employees, and the charters for our Audit, Nominating and Corporate Governance,
and Executive Compensation committees. We will provide a copy of any such documents to any stockholder
who requests it. We do not intend for information found on the Company’s Web site to be part of this document.
Item 1A. Risk Factors
We wish to caution you that there are risks and uncertainties that could affect our business. These risks and
uncertainties include, but are not limited to, the risks described below and elsewhere in this report, particularly
in “Forward-Looking Statements.” The following is not intended to be a complete discussion of all potential
risks or uncertainties, as it is not possible to predict or identify all risk factors.
Competitive Industry Conditions We face strong competition from traditional grocery retailers, non-
traditional competitors such as supercenters and club stores, as well as from specialty and niche
supermarkets, drug stores, dollar stores, convenience stores and restaurants. Increased competition may
have an adverse effect on profitability as the result of lower sales, lower gross profits and/or greater operating
costs.
Our ability to attract customers is dependent, in large part, upon a combination of location, quality, price,
service, selection and condition of assets. In each of these areas, traditional and non-traditional competitors
compete with us and may successfully attract our customers to their stores by aggressively matching or
exceeding what we offer. In recent years, many of our competitors have increased their presence in our
markets. Our responses to competitive pressure, such as additional promotions and increased advertising,
could adversely affect our profitability. We cannot guarantee that our actions will succeed in gaining or
maintaining market share. Additionally, we cannot predict how our customers will react to the entrance of
certain non-traditional competitors into the grocery retailing business.
Because we face intense competition, we need to anticipate and respond to changing consumer demands
more effectively than our competitors. We strive to achieve and maintain favorable recognition of our unique
private-label brands, effectively market our products to consumers, competitively price our products and
maintain and enhance a perception of value for consumers. Finally, we need to source and market our
merchandise efficiently and creatively. Failure to accomplish these objectives could impair our ability to
compete successfully and adversely affect our growth and profitability.
Labor Relations A significant majority of our employees are unionized, and our relationship with unions,
including labor disputes or work stoppages, could have an adverse impact on our financial results. We are
a party to over 430 collective bargaining agreements, of which 86 are scheduled to expire in 2013. These
expiring agreements cover approximately 25% of our union-affiliated employees. In future negotiations with
labor unions, we expect that health care, pension and wage costs, among other issues, will be important
topics for negotiation. If, upon the expiration of such collective bargaining agreements, we are unable to
negotiate acceptable contracts with labor unions, it could result in strikes by the affected workers and thereby
significantly disrupt our operations. Further, if we are unable to control health care and pension costs provided
for in the collective bargaining agreements, we may experience increased operating costs and an adverse
impact on future results of operations.