Hayley Rush Alex Beverly Everett Gibson Andrew Keeling

Hayley Rush Alex Beverly Everett Gibson Andrew Keeling

Hayley Rush Alex Beverly Everett Gibson Andrew Keeling Charity Moore Kolt Pederson Emily Dale Carli Slingerland Historical Analysis Market Share of Profits 60 Percent Market Share 50 40 Large Stores(>100) Small Stores (11-100)

30 20 10 0 1948 1954 1963 1972 Acquisitions & Mergers (48-72)- 1,016 mergers amounting to $13.0 billion. National Commission on Food Marketing Report.

Mid-1960s- Federal Trade Commission Current Market Share 22% Kroger Safeway Delhaize America SUPERVALU Whole Foods Ruddick Casey's Weis Markets Winn-Dixie Ingles Markets Others Historical Forces of Change

Self-Service Impulse Buying In-store Branding The Super-Store History Safeway began in 1915 when M.B. Scaggs purchased a grocery store from his father. By 1926 Safeway had doubled in size. Scaggs philosophy was to give his customers value and expand by keeping a narrow profit margin Examples Current Owns 1,775 stores Operates on the NYSE as SWY Also owns the following stores: Vons,

Pavillions, Randalls, Tom Thumb, Genuardis, Dominicks and Carrs Owns 49% of the 137 Casa Ley stores Private-label success Strengths: Private-labels Financial ratios: Net profit margin and days supply of receivables Ingredients for Life Community Caring Environmental Campaign Opportunities: Prepared food niche Threat of new entrants is low SWOT Weaknesses:

One stop shopping Downgraded stock Consistency in stores Threats: Commodity prices have increased Altered shopping style Marketing Overview Ingredients for Life Campaign Store remodeling Increased emphasis on health & wellness Repositioning proprietary corporate brands

Transition from private label brands to consumer brands Brand-Enhancing marketing campaign New emphasis on packaging design Environmental Scan Social Factors Going Food Trends environmentally Friendly Green processing

Eco-Friendly Foods Local, Natural, Green distribution and Fresh Foods Food safety Green retailing concerns Rising food Green consumer costs Probiotics and prebiotics Whole grains Simple ingredients and clear labels Lower salt Artificial sweeteners Bottled water backlash

Environmental Scan: Economic Factors Economic is causing consumers to change their buying habits: Inflation inrecession food prices Looking for more meaningful discounts Consumers going to cheaper The smart shopper is backversions of products as well as store brand versions How

do youstock expect penetration Shoppers up private-label on items only when on sale to change in 2009, in terms of dollar Using more coupons than before sales? Reading more circulars to find the better deals These changes are expected to be more permanent than temporary 26% of people have left supermarkets for smaller more discounted venues 11% have left the smaller venues to go to supermarkets 3.1% Decreased Not at all 4.1% Up less than 2%

29.9% Up more than 2% 61.9% No answer 1.0% Government Factors FDA regulation- the FDA regulates five areas of the food retail industry: Management Human Element-Staff Human Element-Public Operations Facility Environmental Scan:

Technological Factors Small Format Stores RFID ECR motors Competitive Factors Difficult to Gain Competitive Advantage Similar products/services among competitors Difficult to achieve Differentiation Strategic Changes in the grocery industry Main Competition over Price (differentiation is low) Geographic Factors Owns close to 1,800 stores between the United States and Canada Also owns stores in Mid-Atlantic region, and Eastern Seaboard

Corporate Headquarters is located in Pleasanton, California 1,521 in the U.S., and 222 in Canada. 80% in western provinces Most Safeway stores: California 521, Washington 168, and Colorado 122 Sixteen Distribution Centers, thirteen of which are in the U.S. and the other three in Canada Management Overview Leadership CEO -Steven Burd Leader since 1993 Helped expand the company Level 5 Leader

Management Overview Cultural Elements Safeway culture developed over time 5 Step Process Ambition Leadership Reviewing Rewarding Commitment Management Overview Organizational Chart CEO

CFO SVP HR, Strategies, Planning, Supply SVP- Finance Regional Director of Retail Operations MGT- Financial Operations Manager of Retail Operations Mgt of Tech Support Retail Manager Retail Coordinator Retail Coord Tech

Analyst Tech Analyst Mgt Schematics Retail Coordinator Vendor Program Coord Retail Coord Senior Analyst Senior Analyst Store Grocery Analyst GM Analyst

Mgt of Client Services Vender Program Asst Large Phase 1 Initiation Phase 2 Formalization Phase 3a Expansion Phase 3b Coordination

Phase 4 Participation (Entrepreneurial Structure) (Bureaucratic structure) (Divisional structure) (Production group structure) (Matrix structure) Safeway stage 3 1940s-1980 Safeway Stage1 1912-1922 Safeway Stage 2

1926- 1930s Need to adapt and cope Lack of control Safeway Stage 4 1990s Lack of autonomy Small Need for direction Age of Company Organization Life Cycle

Phase 1- Sam Seelig Phase 2- Charles Merrill Phase 3- 80s Bust Phase 4- Steven Burd Phase 5- Present Day Safeway Stage 5 2000-Present Farmer Suppliers Manufacturing Plant Distribution / Warehouse Centers Stores Stores

Stores Supply Chain Developed Over Time New Technological Advances Simple, But Efficient Strategic Technological Position Strong Position New Technological Advances Coding, Distribution Efficient Supply Chain Keep everything simple but efficient Keeps From Complication Runs Smoother Current Events Safeway Corporate Social Responsibility

Kroger Free Online Samples Aldi New Product Lines Safeways Liquidity Current Ratio 3.50 3.00 Safeway 2.50 Kroger 2.00 Supervalu

1.50 Whole Foods 1.00 Winn Dixie 0.50 0.00 2004 2005 2006 Year 2007 2008

Accounts Receivables Turnover 120 100 Safeway 80 Kroger 60 Supervalu 40 Whole Foods 20 Winn Dixie

0 2004 2005 2006 Year 2007 2008 Days Supply of Receivables Safeway 12 10 Kroger

8 Supervalu 6 4 Whole Foods 2 Winn Dixie 0 1 2 3 Year 4

5 Industry Average Inventory Turnover Safeway 20.00 15.00 Kroger 10.00 Supervalu 5.00 Whole Foods 0.00

Winn Dixie 2004 2005 2006 2007 2008 Year Industry Average Working Capital Turnover Safeway 2000.00 1500.00 Kroger 1000.00 Supervalu 500.00

Whole Foods 0.00 Winn Dixie -500.00 2004 2005 2006 2007 2008 Year Industry Average Safeways Profitability Net Profit Margin 4.00 Safeway 2.00 Kroger

0.00 Supervalu -2.00 -4.00 Winn Dixie -6.00 2004 2005 2006 Year 2007 2008

Industry Average ROA 10.00 Safeway 5.00 0.00 Kroger -5.00 -10.00 Supervalu -15.00 -20.00

Winn Dixie -25.00 2004 2005 2006 Year 2007 2008 Industry Average ROE 40.00 30.00

20.00 10.00 0.00 -10.00 -20.00 -30.00 -40.00 Safeway Kroger Supervalu Winn Dixie 2004 2005 2006 Year 2007

2008 Industry Average Debt to Equity 40.00 30.00 Safeway 20.00 Kroger Supervalu 10.00 Winn Dixie 0.00

Industry Average -10.00 2004 2005 2006 Year 2007 2008 Competitive Advantage: Market Share When compared to traditional retail stores, Safeway has a good share of

the food retail industry Safeway could set a goal to gradually close the gap between itself and Kroger Co. Safeway makes greater use of its space than its competitors Utilizing its capital to the fullest extent Competitive Advantage: High Barriers to Entry Consumers ate an average of 861 meals at home in 2007, from 817 meals in 2002. Inflation in food prices Consumers are trading down Creates higher margins for food retailers Competitive Advantage:

Product Quality & Strength Safeways private-label brand has a reputation for quality and freshness The Quality Assurance Division of the company strives to uphold this reputation with its consumers. Kroger also offers more than 14,000 privatelabel items Account for 26 percent of its sales dollars. Competitive Advantage: Product Life Cycle DemandTec, Inc.s software Assist Safeway in understanding their product life cycle Support sales & marketing objectives Method of pricing & promotions Kroger Co. has a skilled logistics technician Day-to-day freight shipment activity

Trained to make sure that the right products are going to the right places and that they are getting there on time and in quality condition. Competitive Advantage: Product Replacement Cycle Manager is responsible for removing outdated products Food compost Safeway generally keeps more products in its stores to avoid stock outs Wal-Marts product replacement Bar code information Competitive Advantage: Customer Loyalty & Satisfaction Club card The Smart Way to Shop Save money on weekly specials Receive additional savings

Save money on Safeway gas GroceryWorks.com Tom Thumb Tom Thumb card Competitive Advantage: Manufacturing Capability Revolves around its private-label merchandise 22% of Safeways private-label merchandise if manufactured in company-owned plants. Competitive Advantage: Supplier Strength & Material Availability

Safeway has suppliers for all different categories of perishables and non-perishables Safeway Quality Assurance Auditor Safeways Quality Assurance Supplier Expectations Manual, A Bridge to Quality Safeway has more of a hold on the suppliers than its suppliers have on Safeway Boldly pronounce the quality of its products Competitive Advantage: Financial Strength According to the numbers, Safeway seems to be financially sound in the food retail industry Industry is extremely competitive Safeway has worked hard for its position and will have to continue to maintain superior performance Competitive Advantage:

Relative Cost Position Safeway is changing its cost position to match the current state of the economy Consumers want to reduce their spending Safeway is where they get more for their money Competitive Advantage: Investment in R&D Safeway created new concept stores The Market 15,000 square feet 15% of the stock Trademark & Patent ownership Over 400 Kroger Remodeling stores all over the country

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