Store Brand - Private Label Memo: 'Big Score' At 'Big Y' Chain For Safeway's 'Eating Right' Healthy Foods Brand

Retailer Store Brands: Special Report

The family-owned, Springfield, Massachusetts-based Big Y supermarket chain is the first major food and grocery retailer in the U.S. to introduce and carry at least one of the two Safeway Stores, Inc. organic and healthy foods store brands -- "O' Organics" and "Eating Right" -- that the Pleasanton, California-based supermarket chain began marketing to other U.S. grocery retailers and wholesalers through its Lucerne Foods Inc. brands division last year, in its stores.

In Big Y's case, the popular supermarket chain is introducing numerous "Eating Right" brand healthy food and grocery items across multiple categories in its stores in New England.

Privately-held Big Y, which was founded in 1936 by Paul and Gerald D'Amour and was named after an intersection in Chicopee, Massachusetts where two roads converge to form a Y, currently operates 57 high volume supermarkets located in Massachusetts and Connecticut.

Among the Safeway Stores, Inc. "Eating Right" healthy food products being introduced this week at Big Y include: frozen entrees; cereal; soups; pasta; salad dressings; snack bars; cookies; and items in numerous other dry grocery and perishable categories, according to Carrie Taylor, Big Y's corporate dietitian, who's in charge of the supermarket chain's "Living Well Eating Smart" chainwide healthy foods program.

"With healthier eating a priority for many of our customers, we are pleased to bring new options to our shelves with the introduction of the 'Eating Right' brand at Big Y stores," Ms. Taylor says. "Our shoppers have long relied on us to meet all of their supermarket needs and with 'Eating Right' we're able to offer a great selection of functional and tasty products designed to help our customers reach their specific health objectives."

Safeway Stores Inc.'s Lucerne Foods, Inc. brand marketing division is handling the marketing of the "O 'Organics" and "Eating Right" brands to supermarket chains and wholesale grocers in the U.S. and globally.

There are currently 225 SKUS in 20 categories under the "Eating Right" brand, according to Alex Petrov, president of Safeway Stores' Lucerne Foods Inc. division.

Neither Big Y supermarkets nor Safeway Stores, Inc. is touting the fact that the "Eating Right" brand being introduced in the 57 Big Y supermarkets in Massachusetts and Connecticut is produced, owned and marketed by Safeway Stores, including the fact that the brand is a Safeway healthy foods store brand. Both are handling the introduction and marketing of the brand just as they would any other brand, regardless of its origin or ownership.

That's also why the marketing of the "Eating Right" brand to grocers like Big Y is being conducted by Safeway's Lucerne Foods Inc. division as a separate function from the store brand merchandising and marketing of the brand (and of "O' Organics") in Safeway's about 1,750 supermarkets in the U.S. and Canada. Safeway Stores, Inc. strategically views the brands not just as store brands, but as what the company hopes will become standalone organic and healthy food brands both in the U.S. and globally in the future.

Safeway doesn't operate any supermarkets in the New England states of Massachusetts or Connecticut where Big Y has its 57 supermarkets.

The closest states where Safeway has stores are in Washington, D.C., Maryland and Virgina.

This is an important distinction because in Big Y's case its customer base won't in most cases even be aware that the "Eating Right" brand items are a Safeway store brand, since there are no Safeway-owned supermarkets in the two states.

Our analysis is that Safeway will need to use this type of strategy to launch the two brands in the U.S., focusing on regional chains like Big Y which operate in markets where Safeway does not have a retailing presence.

For example, we don't see many retailers in the Western U.S., where Safeway is a major player and in many markets is the market share leader, carrying the "O Organics" and "Eating Right" brands because with little exception every retailer in the Western U.S. is a competitor of Safeway's.

Major competitor's like Kroger Co, Supervalue, Inc., Wal-Mart and Costco have their own organic and healthy store brands and aren't going to offer the store brands of a major competitor in their respective stores.

Major regional chains throughout the west also in many cases either have their own organic and healthy foods store brands or carry such private label brands through arrangements with a wholesaler. Additionally, since these regional chains are direct competitors with Safeway in states like California, Oregon, Washington, Colorado, Arizona and the like, they won't in all probability offer Safeway's "Eating Right" or "O Organics" store brands on their respective shelves either. It makes little sense for these chains to compete with Safeway on the brands.

We believe this will hold true in other parts of the U.S. where Safeway has a retail presence like the Washington D.C./Maryland/Virgina tri-state market region, Texas, Florida, Illinois-Indiana and Alaska, in addition to the Western U.S.

As a result, that's why we believe Safeway will have to conduct a niche retailer strategy, placing its "O Organics" and "Eating Right" brands in non-competitive, select chains primarily in parts of the U.S. where it isn't a retail player.

Natural~Specialty Foods Memo (NSFM) was one of the first, if not the very first, publication to report that Safeway Stores, Inc. was marketing its "O Organics" brand to another retailer, France's Carrefour (the world's third-largest global retailer) internationally, in the three stories from December, 2007, and the January 8, 2008 piece, linked below:

~December 27, 2007: Marketing Memo: Safeway's O' Organics Brand in Asia
~December 23, 2007: Safeway's O' Organics Brand: Part Duex
~December 21, 2007: Friday Fishwrap: Safeway's O' Organics Brand
~January 8, 2008: Media Memo: Safeway's O' Organics Brand In Asia

In April of 2008, we first reported in this piece [April 28, 2008: Marketing Memo: Safeway Stores, Inc. to Market its 'O' Organics' and 'Eating Right' Organic and Healthy Brands to Other Retailers in U.S. and Globally] about Safeway's corporate plans to market its "O 'Organics" and "Eating Right" brands to other supermarket chains in the U.S.

Linked below are four related past pieces on the topic from Natural~Specialty Foods Memo (NSFM):

~August 6, 2008: Marketing Memo: Safeway's Challenge: Going From Store Brand Marketer to Consumer Brand Marketer With its O' Organics and Eating Right Brands
~April 28, 2008: Marketing Memo: Safeway Stores, Inc. to Market its 'O' Organics' and 'Eating Right' Organic and Healthy Brands to Other Retailers in U.S. and Globally
~April 28, 2008: Retail Memo: Safeway CEO Burd Says Shoppers Buying Store Brands Over National Brands By As Much As Six -to- One in it's North American Supermarkets

Safeway's Lucern Foods, Inc. division isn't confirming or not confirming, but based on our reporting, sources and research, Springfield, Massachusetts-based Big Y appears to be the first U.S. supermarket chain that's agreed to carry one of the two Safeway brands, "O Organics" and "Eating Right." In Big Y's case, it's carrying the "Eating Right brand" only at present.

Big Y is a popular, high volume retailer in New England. As a result, landing the chain is a major niche retailer score for Safeway and its "Eating Right" brand, in our analysis.

Big Y also is a well-known regional chain in the trade. Safeway's landing of the chain for its "Eating Right" brand should create greater interest in the brand from similar retail chains in other parts of the U.S., particularly in market regions where Safeway doesn't operate supermarkets in.

We expect to see at least two more regional chains in the U.S. announce their respective plans to carry either just the "Eating Right" healthy foods brand or both the "Eating Right" and "O' Organics" brands from Safeway in the next couple months.

[Readers: You can follow Natural~Specialty Foods Memo (NSFM) on Twitter.com at www.twitter.com/nsfoodsmemo.]

Industry Achievement Memo: Former Safeway Stores, Inc. CEO and San Francisco Giants' Chief Peter Magowan Receives CEO Lifetime Achievement Honor

Former Safeway Stores, Inc. CEO Peter Magowan, pictured above during a game of his beloved San Francusci Giants, never dreamed of being, or planned to be, a grocer. Not even the CEO of one of North America's largest supermarket companies. Instead as a young man his dreams were of a career in baseball and then later a diplomat.

As an academically inclined and talent university student with a keen interest in politics, economics and world affairs, Peter Magowan went off to Britain's Oxford University after he completed his undergraduate studies at Stanford University in the San Francisco Bay Area. He earned a graduate degree at Oxford.

As a teeanger, Magowan worked at Safeway supermarkets in San Francisco, where he was raised after his father moved the family from New York, do in large part to a family connection. But Peter Magowan's thoughts while at Oxford were more along the lines of working perhaps as a diplomat or in some similar capacity in global affairs or business. And before that, right before he graduated from Stanford he tried to get a job working for the San Francisco Giant's baseball team since baseball was his true love.

However, married and returning to the Bay Area, Magowan went back to work for Safeway as a fast-track executive trainee. Safeway's executive trainee program back in those days required all future corporate executives to spend a considerable amount of time working at store level, first as an assistant manager and then as a store manager, before coming to corporate headquarters to work. In those days Safeway Stores, Inc. was headquartered in Oakland. Today it's based about 30 miles east in the Bay Area city of Pleasanton.

So Peter Magowan packed up his things, his wife and a child and moved to the Washington DC suburbs to take an assistant manager job at a Washington DC Safeway supermarket and then a store manager position in the area.

From there he returned to Safeway's corporate headquarters in Oakland, and not so many years later became the grocery chain's CEO at the ripe young age of 37, adding the chairman's title a bit later. Those were eventful years for Magowan, Safeway Stores, Inc. and the U.S. supermarket industry.

And of course the family connections helped Magowan's fast track climb to the CEO's position. But he was bright, innovative and brought a fresh perspective to Safeway and the supermarket business in general, earning the CEO's position in his own right.

Peter Magowan's love (international affairs is more of an intense interest and the supermarket did become business became a love for him) was always from childhood and remains today baseball, as we mentioned earlier.

And he got to fulfill that love in his second career after leaving Safeway.

Magowan was the driving force behind a group of San Francisco Bay Area investors who saved the San Francisco Giants baseball team, buying in at a time when its then owner was ready to sell the team to interests that would have moved it out of the city.

Magowan became the managing general partner for the new owners group, of which he still is an investor/owner, of the San Francisco Giants, built a management team that positioned the club as winners often, and spearheaded the construction of what today is one of the finest baseball stadiums in America, the San Francisco Giants downtown baseball park, where home runs that drop in the bay are fished out by Portuguese Water Dogs, where gourmet garlic french fries, craft beers and organic hamburgers are sold alongside hot dogs in the food court, and where San Francisco Giants fans enjoy America's favorite pastime at a stadium Peter Magowan loved spending as much time at as possible -- a place he called his best corporate office yet.

Magowan retired from his position as head of the Giants organization just a few months ago. He is 66 years old.

The San Francisco Business Times, a major business publication in the city and Bay Area, each year awards its CEO Lifetime Achievement Award to a Bay Area CEO who has achieved successes running one or more companies in the region. This year the publication is honoring Peter Magowan with the award for his work as CEO of Safeway and CEO of the San Francisco Giants. It's an award and recognition Magowan earned and deserves.

Magowan not only has been the head of two Bay Area institutions -- Safeway Stores, Inc., which is among the largest and best paying employers in the region, and the Giants -- he's also personally given millions, and while at Safeway and with the Giants led in the raising of tens of millions (maybe hundreds of millions) of dollars over the years for more charitable organizations and good causes than we can mention here.

For example, While running Safeway he got the corporation involved in donating to and raising money for cancer research and numerous other health, medical and related causes. This year Safeway raised and donated about $13 million dollars alone to cancer research and treatment programs in the U.S., an amount just a bit higher than it raised last year. The chain does this every year.

And that's just the tip of the iceberg, both professionally and personally.

We salute Peter Magowan for his long career at Safeway -- through the good times and not so good times he had running the company.

We also tip our San Francisco Giants cap to him for having such a great second act; living his dream of running the Giants, something he thought about doing as a kid. He didn't think about owning part of it then though -- running it and hanging out with the players was enough of a dream then.

In fact, knowing Magowan, we suspect he will have a third act. After all he is a mere 66. Perhaps that third act might involve something in the international affairs area?

That would allow Peter Magowan to sort of return to that first interest, the one that took him to Oxford. That interest is involvement in the intersection of politics, economics and public and international affairs. It would also give him a childhood and teenage trifecta -- being able to do as an adult the three main career dreams he had as a young man.

Peter Magowan is a lifelong Republican -- but a San Francisco Bay Area Republican, which is the most moderate of all the species in the Republican party, except perhaps the New England Republicans. It's a toss up.

Therefore, we have a thought: Democratic Party President-Elect Barack Obama is reaching across the aisle to Republicans, especially moderates. As we write this he is meeting with the man he defeated, Senator John McCain, doing just that -- reaching across the aisle.

Peter Magowan is a moderate Republican. A lifelong one. So, perhaps there could be a foreign ambassador position -- which mixes plenty of business, economics, politics, foreign affairs and public service, as well as requiring a good knowledge of food (baseball knowledge can come in handy as well) -- down the road for Peter Magowan if he wants to go after it in the same way he's gone after everything else in his career -- with focus, determination and gusto.

Whatever Peter Magowan decides to do, and that includes enjoying retirement if that's what he desires, we wish he all the best.

The San Francisco Business Times published a feature profile of former Safeway Stores, Inc. CEO Peter Magowan today as part of awarding and honoring him with their CEO Lifetime Achievement Award.

Here's a quote from Magowan from the profile in today's edition of the publication:

“I have spent the past 29 years as the head of two incredible organizations,” Magowan said when he announced his retirement (from the San Francisco Giants) earlier this year. “I put everything I had in terms of time, energy and commitment into my work.”

You can read the profile, "Peter Magowan: the Bay Area’s most valuable corporate player," written by Eric Young, here.

And we do suggest you read the article. Not only does it offer a nice profile of Peter Magowan, it also offers a nice overview of the history of the supermarket business from about 1958 to today, particularly in the Bay Area. And that history is timely.

We mentioned earlier in this piece that Magowan worked at a Safeway store or two in San Francisco when he was a teenager because of a family connection. Well, two family connections actually: Peter Magowan's father, Robert, was once the CEO of Safeway, and his grandfather, Charles Merill, was an early, major investor in Safeway Stores, Inc. as the co-founder of the Investment Bank Merrill Lynch, which just recently lost its corporate independence after being acquired as a casualty of the current financial crisis.

See, it's a good read.

Halloween Memo: A Really 'Great Pumpkin' Charlie Brown: Stay At Home Dad Wins Safeway Stores' Pumpkin Weigh-Off Contest With Massive 1,528 Pound Gourd

Thad Starr (pictured at left with his prize-winning pumpkin), a 41 year old stay at home dad from Pleasant Hill, Oregon USA is the winner of the 35th Annual Safeway World Championship Pumpkin Weigh-Off in Half Moon Bay, California.

This is Starr's second consecutive year to win the annual competition sponsored by Pleasanton, California-based Safeway Stores, Inc.

Safeway Stores, the third-largest U.S.-based supermarket chain, has a supermarket in Half Moon Bay, which is about 40 miles from its corporate headquarters in the San Francisco Bay Area.

The stay at home dad and grower of mighty pumpkins won this year's contest on October 13 with a massive 1,528-pound gourd. Starr's 'Great Pumpkin' is the second-biggest pumpkin in the world weighed to date this year.

In just his third year of growing competition pumpkins, Starr won for the second year in a row, taking home $9,168 in prize money ($6 per pound) and topping the Half Moon Bay record he set last year. He easily defeated a formidable, veteran field of sixty five heavyweight contenders to win the coveted title and a "starring role" in the Half Moon Bay Art & Pumpkin Festival, which was held October 17-19, where his colossal guard was featured on display along with the top five overall winners' pumpkins.

The Safeway World Championship Pumpkin Weigh-Off is a part of the annual Half Moon Bay, California Art and Pumpkin Festival, which is held in the coastal Bay Area city each October. This year's festival was the 38th annual. Half Moon Bay is a major pumpkin-growing region. Safeway Stores has been sponsoring the weigh off contest for 35 years.

Click here for a list of additional Great Pumpkin winners, along with some additional photographs and information about this year's event.

The Safeway-sponsored Pumpkin Weigh-Off contest and related community festival is lots of fun for the residents of Half Moon Bay and the nearby communities who attend the vent in the thousands. However, for the competitors in the 'Great Pumpkin' Weigh-Off competition it's serious business. Like competitive eaters, chili cook-off contestants and competitive grilling masters, these growers of the giant gourds prepare all year for the big day.

We can imagine now that Thad Starr has won the contest two years in a row, the other competitors are going to be gunning for him next year, looking to prevent him from achieving that perfect trifecta (three years in a row) as the King of Pumpkin growers.

Retail Memo: After All is Said and Done in Food Retailing it's the People Who Make the Difference

Novato Safeway nut counter clerk Imani Murphy adds flavoring to a batch of raw nuts (Photo credit: IJ photo/Jeff Vendsel)

Retail Memo Profile

There's an old saying in the retail grocery business that goes something like this: "If it doesn't happen at retail, it doesn't happen at all." We might add that saying has the added benefit of being true.

San Francisco Bay Area-based (Pleasanton, California to be exact) Safeway Stores, Inc. opened a new 50,000 square foot Lifestyle format supermarket in its Bay Area corporate backyard in August, in the Marin County city of Novato.

Marin County residents, among the most affluent of all Americans, take food and grocery shopping rather seriously. Sure they love a bargain as much as the next shopper. But price isn't the top item on their grocery store choice lists.

Rather, at the top of the average Marin County food shoppers are concepts like quality, variety, freshness, organic, gourmet, green and the like.

And Marin shoppers have lots of food store choices in the region to choose from, ranging from Safeway and Lucky supermarkets to upscale local grocery chains like Mollie Stone, United Markets and many others, including Whole Foods and a number of independent natural and specialty foods stores.

Safeway is well aware of this fact. That's why it's new Novato store is among the most upscale of its Lifestyle format stores.

The 50,000 square foot Novato Safeway also is service-oriented. The grocery chain hired 200 hundred employees to work in the store, many of which work at the various in-store full service departments such as service deli and prepared foods, the service butcher shop, fresh bakery and...the in-store service nut bar. No nut and berry Marin County jokes please.

And working that Safeway Novato in-store full service nut bar, which offers over 40 varieties of nuts, including many warmed to a customers desired temperature, is 31-year old Imani Murphy, who the Marin Independent Journal newspaper says is a big hit with the store's customers. He takes "service with a smile" to new heights, including not only greeting every nut bar customer with a smile -- but also with a handshake.

The Marin County newspaper profiled Imani Murphy, who also works as a store checker in addition to his nut bar duties, in Saturday's edition.

It's a short and interesting profile...and will make you smile just like Mr. Murphy does when he greats each nut bar customer.

Click here to read the profile, "Marin Snapshot: Novato Safeway nut bar clerk loves dishing out smiles, snacks." There's also a nice slide show of Imani Murphy and the Novato Safeway nut bar at the link.

Many decades ago Safeway Stores had a saying it would tell its employees. That saying: "There's the 'right way,' the 'wrong way' and the 'Safeway' of doing things."

Imani Murphy obviously knows the "right way" of customer service, regardless if its the "Safeway" or not.

Safeway Stores, Inc. should be nuts about Imani Murphy. After all it appears the Novato store's customers are. He's what you call "value added." And that's both the "right way" and the "Safeway" of doing things in our opinion.

Independent Grocer Memo: Same Store, New Name, Same Harold

Guest Memo

By Kristina Jarvis

The Prince Albert Daily Herald - Prince Albert, Saskatchewan, Canada

September 29, 2008

Harold Guy (pictured at left with his son and partner Byron) has seen his fair share of changes since opening his grocery store on 28th Street East 38 years ago.

He's been through several distributor and wholesaler changes. He saw his store burn down in 1992, only to be rebuilt in 1993. He also saw the store through a change of ownership, when his son Byron bought it in 1998.

But one thing has always remained the same - the service.

"We've always been about high service," he says. "The sign is probably less important than the Harold's name, Harold's is the constant"

Harold's recently changed its name from "Harold's IGA" to "Harold's Family Foods," a shift motivated by the need to maintain the store's independence. The move takes Harold's away from the Sobey's brand and towards MacDonalds Consolidated, part of the Safeway grocery company. MacDonalds provides brand and Safeway specific labels to its stores, including the "O" Organics line of groceries.

Harold says there were no hard feelings between the store and Sobey's about the switch, and says that the new wholesaler is one whose values are closer to the store."

In reviewing different flags, or banners, we found that the Family Foods banner suited our independent needs," he says. "The name too, Family Foods, it's kind of who we are. It's a family dealing with families and relationships over the years."

George Marchildon and his wife, Roxanne, don't seem to mind the name change. They've been customers for 20 years, and say their only concern is the service.

"We don't have to agree with it. As long as they're happy and the service stays the same, we're happy," he says. "It's still Harold's as far as I am concerned."

Marchildon works as a distributor for Pepsi to many stores in Prince Albert, including Harold's, and says he appreciates being treated as an ordinary customer when he goes on his days off to shop."

When I shop here, they treat me like a customer," he says. "When I shop somewhere else, they treat me like the Pepsi guy."

"It gets to be a problem," adds Roxanne. "When we're out in a store and just because he works for Pepsi and they're out of Pepsi, they'll come bug him instead of letting us go out and have our family time."

In the end, Harold says that it comes down to what the store needs to survive.

"You have to pay your bills and you're all alone at it so you have to do the best you can to maintain and to employ the people you require to do the best job for your customers," he says. "Everything we do starts and ends here."

Byron says there are plans to host a grand re-opening once the store has completed its renovations.

Natural~Specialty Foods Memo Editor's Note: Safeway Stores, Inc.'s private label relationship with Macdonalds Consolidated in Canada (see italics in the story above) is part of Safeway's strategy to market its O' Organics and other brands -- Eating Right, Safeway, Lucerne -- beyond its own Safeway stores in the U.S. and Canada, as we've reported on and written about in numerous stories. You can read a selection of those pieces from the blog here and here.

Retail Memo: Washington D.C's Famous Georgetown Neighborhood Could Finally Get its Long-Desired 'Social Safeway' Supermarket

From the Natural~Specialty Foods Editor's Desk: Nearly three years ago Pleasanton, California USA-based Safeway Stores, Inc. embarked on the huge task of converting what are now about 1,755 supermarkets under numerous retail banners in the United States into what it calls its "Lifestyle" format.

Safeway's "Lifestyle" format is a fairly upscale store design package which features soft colors inside the store, hardwood flooring in departments like produce and wine, and spot lighting instead of bright lights, along with numerous other attractive design elements.

The "Lifestyle" format combines Safeway's traditional value-oriented style of food and grocery retailing with a greater focus on natural, organic, premium and specialty products merchandising across all store categories.

This merchandising emphasis includes expanded selections of natural, healthy and organic food and grocery products like Safeway's own popular O' Organics and Eating Right store brands, along with manufacturers' brands.

The "Lifestyle" merchandising focus also includes store branding of Safeway's fresh, prepared foods offerings, including its premium Signature Cafe brand of ready-to-eat and ready-to-heat items. Additionally, under the "Lifestyle" format Safeway has dramatically expanded the number of premium, specialty, ethnic and gourmet food and grocery items it carries in its supermarkets.

Perhaps the most interesting and important aspect of the "Lifestyle" format is that with it Safeway has tried to create a much more social supermarket. The retailer has used design features like outdoor patios and terraces in some cases, farmers market-style produce departments, wine cellars and old fashion butcher shop-style meat departments in both its new and remodeled supermarkets as ways to create a more social and enjoyable shopping experience for customers.

By and large the "Lifestyle" format has been a big success for Safeway, which has thus far converted about 70% of its U.S. supermarkets--which operate under such banners as Safeway (Northern California, Oregon, Washington state, Arizona, Colorado, Washington D.C., Maryland and Virginia); Vons (Southern California and Nevada); Carrs (Alaska); Dominicks (Illinios and Indiana) and others--into the "Lifestyle" format, according to CEO Steve Burd. Plans call for all of the supermarket chain's stores (except the handful of Pak-N-Sav warehouse stores it operates in Northern California) to be converted to the "Lifestyle" format by the end of 2009, Burd told Natural~Specialty Foods Memo earlier this year.

One strategy Safeway has been using during its three year "Lifestyle" conversion format is to expand the size of certain stores and upscale them considerably in neighborhoods in which the shopper demographics are strong for food stores offering a lifestyle experience along with expanded selections of natural, organic, premium and specialty foods.

The supermarket chain has a number of stores that were opened long ago that sit in such premium demographic neighborhoods. Many of those stores, such a one currently being proposed (a remodel) in Oakland, California's upscale College neighborhood, another in Berkeley, California and yet another in the upscale Georgetown district in Washington D.C., are older, small supermarkets that once fit well in these neighborhoods but have long outgrown the gentrification and upscaling that's gone on in them. These stores and others present a huge sales opportunity (at least a doubling of annual gross sales) if expanded and remodeled based on the respective neighborhoods' demographic profiles.

Washington D.C's Georgetown, home to Senators, lobbyists and the well known Georgetown University, has long wanted Safeway to grow and upscale the Safeway supermarket that's been in the neighborhood for decades.

This has particularly been the desire of Georgetown University students and faculty who like most university communities are on the cutting edge of the natural and organic foods trend. Additionally, the wealthy political and business movers and shakers of Washington D.C., many who reside in Georgetown, have wanted a Safeway supermarket in the neighborhood like the ones ("Lifestyle" format) in nearby Alexandria, Virginia, which is one of the more wealthier suburbs of the nation's capital city.

This desire for a more "social" Safeway has been discussed in the Washington Post newspaper, on numerous area online food forums, and in the pages of the Hoya, the student newspaper of Georgetown University.

Well, it looks like Georgetown University students and the Georgetown neighborhood's who's who of political and corporate residents and their frequently entertaining spouses are going to get their long-desired "social Safeway", according to a story in today's edition of the Hoya, the Georgetown University student newspaper that was founded in 1920.

And, according to the article reprinted below, it looks like Safeway plans to serve up a "Lifestyle" format supermarket for Washington D.C.'s Georgetown neighborhood (where former President John F. Kennedy lived before being elected to office) befitting the areas demographics, love of food and desire for a more social grocery shopping experience.

Perhaps the new Georgetown "Social Safeway" will be ready for the new U.S. President and his family when he--either Barack Obama or John McCain--takes office next year?

Safeway to Get a Little More 'Social'
The Hoya--Georgetown University
By Kaitlyn Gallagher Sep 01 2008

Who would have thought that a mundane trip to Safeway could turn into a social event?

In an effort to create a more welcoming atmosphere, owners of the Wisconsin Avenue Safeway are planning extensive renovations to turn the current grocery store into a “Social Safeway” shopping center almost 50 percent larger.

The new establishment is envisioned as a curbside, two-level shopping complex complete with an outdoor terrace and two parking levels.

Craig Muckle, a Safeway public affairs manager, said the renovation plans are still in the developmental stages. “We are still working with the Advisory Neighborhood Committee and the District government, so the start date hasn’t been identified yet,” Muckle said.

The building would be moved curbside to make it more accessible and inviting than its current spot behind a large parking lot. It would also be turned into a two-level complex, with the lower level occupied by separate businesses and the grocery store on the top. Safeway administrators are currently unsure which businesses would occupy the downstairs level, according to Muckle.

Muckle also said the terrace would be added to give weary shoppers a place to rest. “It essentially will be like an indoor/outdoor café setup where you can purchase food, sit and overlook the store.”

The enormous parking lot will be scaled down, but according to the renovations, parking won’t become scarce: There will be two levels of parking behind and below the store. As a result, there will also be two entrances.

The Georgetown store’s redevelopment is part of Safeway’s long-term rebranding strategy announced in 2004 in which existing stores in North America will get hardwood floors, muted lighting and improved produce, delicatessen, bakery and floral sections.

The renovations specific to the Wisconsin Avenue Safeway, though, such as the shopping area and outdoor terrace, were designed to suit the Georgetown community.

“Every store is different in and of itself, but this plan is strictly for Georgetown,” he said.

The square footage of the new store would be approximately 65,000 square feet, which will be nearly 45 percent larger than the existing store.

“I definitely think it will make the shopping experience more enjoyable, and it will definitely be a way for more people to meet,” said local resident and frequent Safeway customer Elizabeth Williams. “This already is considered the ‘social Safeway’ in D.C., but these changes will only make it that much more social.”

The closure of the current store during construction is projected to be an issue for local customers, but Muckle said he hopes customers will remain loyal to Safeway and use its home delivery service or visit nearby grocery stores in the interim.

Marketing Memo: Safeway's Challenge: Going From Store Brand Marketer to Consumer Brand Marketer With its O' Organics and Eating Right Brands

Pleasanton, California USA-based Safeway Stores, Inc. is preparing to roll out its popular O' Organics organic foods and Eating Right healthy foods store brands to a wider audience-- competing food retailers in the U.S.--along with to grocers globally, as we reported and wrote about in this April 28 piece: Marketing Memo: Safeway Stores, Inc. to Market its 'O' Organics' and 'Eating Right' Organic and Healthy Brands to Other Retailers in U.S. and Globally.

The supermarket retailer's target date to begin selling the brands (they won't be store brands anymore) to other U.S. food retailers and wholesalers is sometime this fall, just a few short months away.

Natural~Specialty Foods Memo was the first publication of any kind to report in this piece in December, 2007 and in others that Safeway Stores, Inc. was already selling some items in its O' Organics organic food and grocery product brand in Asia and South America through a distribution deal with the giant French supermarket chain Carrefour, which is the second largest retailer in the world after Wal-Mart, Inc.

Safeway plans to extend international sales of both its O' Organics and Eating Right brands to other international retailers and to other parts of the world. Plans call for the increased international marketing also to begin this fall in conjunction with the launch to various U.S. supermarket chains and wholesalers at home.

Today's Advertising Age, the trade publication for the marketing and advertising industry in the U.S., has a story about Safeway's plans to launch the two brands into the stores of many of its competitors this fall, as we've previously detailed in Natural~Specialty Foods Memo.

Safeway's O' Organics brand--which currently consists of an impressive 300 items in over 30 product categories, including dry grocery, perishables, fresh meats, dairy and fresh produce--did about $150 million in gross sales in its first year, 2005. Last year the brand did about $300 million in annual sales. Safeway is projecting sales of $400 million for the brand this year in its 1,750 stores in the U.S. and Canada. That's impressive by any score card.

Safeway CEO Steve Burd told Natural~Specialty Foods Memo earlier this year that the Eating Right healthy foods brand was on track to do even more the O' Organics' $150 million in its first year, which won't be until a bit later this year. Safeway is projecting annual sales of about $200 million for Eating Right this year. That would surpass first year sales of the O' Organics brand by about $50 million. Even more impressive.

In our earlier pieces we've projected that with the rollout to competing retailers in the U.S. beginning this fall, along with the expanded international marketing program, O' Organics and Eating Right have the potential to become the leading brands/product lines in their respective categories--organics and healthy foods--in the U.S. By this we mean not the leading store brands--but the leading brands period in those respective categories.

Safeway is banking on this as well, as it makes its unique for a U.S. supermarket chain transition from store brand marketer to consumer brand marketer.

In fact, in today's Ad Age article, James White, president of Safeway's Lucerne Foods division, which is handling the marketing for the two brands, and Safeway corporate vice president for consumer brands, says he believes the organic food and grocery market particularly is strong enough in the U.S. and internationally that Safeway will neither see a drop in sales in its own stores, or have a problem gaining distribution and sales to its competitors, with the O' Organics brand.

The O' Organics brand is "democratizing the organics market by making organics available for everyone." He (James White) said both lines represent a "great-tasting, highest-quality, more-affordable option [than established organic brands], which allows for the mainstreaming of market," White is quoted as saying in the Ad Age story.

Further, the Ad Age piece quotes Mr. White as saying: "The economy isn't affecting the organic segment's pricing power. "There is a significant consumer market for organics, and I don't think that will slow down."

We disagree with Mr. White on these two counts, despite being fans of both O' Organics and Eating Right, as well as being very impressed with the two brands' performance.

First, in terms of O' Organics' democratizing the organics category, we think that's yet to be seen. In fact, when it comes to price, O' Organics products are far from being all that reasonably priced. For example, in its current weekly advertising circular, Safeway is promoting O' Organics Boneless,-Skinless Chicken Breasts for $8.99 pound in its California, Nevada and Arizona stores. Natural~Specialty Foods Memo has seen independent natural foods stores selling organic boneless-skinless chicken breasts for $2 less per pound everyday.

This pricing scenario plays itself out on many of the O' Organics brand products vis-a-vis other supermarkets' and natural and specialty foods retailer's house brands. For example, overall Trader Joe's, Kroger divisions, Costco and Tesco's new Fresh & Easy Neighborhood Market stores in California and elsewhere in the Western USA have considerably lower everyday and promoted prices on organics than Safeway offers with its O' Organics brand.

Safeway does offer some good deals on a variety of O' Organics brand items--but its far from a pricing policy one could call a democratizing of the organics category in our analysis. The Safeway O' Organics' marketers' pricing pencils need to be sharpened a bit to achieve that.

It will be very interesting to see the retails on the O' Organics brand items in competing retailers' stores, since they should be higher priced than what they currently are selling for in Safeway stores since the company has to take a margin on the items as a brand marketer and distributor, along with building some margin into the cost of goods to retailers and wholesalers for marketing and promotional brand building expenses.

Further, if Safeway doesn't sell the O' Organics brand items for less than competitors' stores do, it could lose substantial sales in the brand. Conversely, if Safeway sells the brand's items for too much less than its competitor's are, it will create a disincentive for those retailers to carry the brand. A fine balancing act it will be indeed.

We happen to know Safeway makes a very healthy gross margin, based on its current retails, on the O' Organics brand items. Therefore, it has some room to get more value-centered with the brand in its stores if it wants to--and might have to because of the current poor U.S. economy--and lower the retail prices across the brand.

Safeway itself is seeing its customers move from higher priced national brands to value-based store brands like its Safeway, Lucerne and other economy branded food and grocery product lines, as company CEO Steve Burd himself said in this April 28 story in the blog. Within the store brand organics category this has helped O' Organics in part since Safeway makes sure the items in the brand are about 10 -to-15% cheaper overall than similar national and regional organic branded items in its stores, thus tapping into the consumer store brand trend within the organic category to take sales away from those national and regional brands and drive shoppers to buy O' Organics over the national and regional brands.

But in this poor U.S. economy, average consumers just can't afford $8.99 per-pound organic chicken breasts or $7 per gallon organic milk. Not when they can buy conventionally-raised boneless-skinless chicken breasts at the very same Safeway store on sale for $2.19 pound; or Lucerne non-organic milk for less than half the price of the O' Organics organic milk next to it in the dairy case. For most shoppers the discretionary money for organics just isn't there right now.

Whole Foods Market, Inc's poor quarterly sales performance this week demonstrates how even organic-loving shoppers are trading down in the poor U.S. economy out of need rather than choice.

Safeway shoppers are no different, nor are customers of those competitor stores Safeway plans to sell O' Organics to. We are going to see organics take a considerable sales hit until the U.S. economy turns around. Retailer scan data already is showing lower organic category sales across the U.S. Sales numbers for 2008 category sales don't come out until next year--and we bet they show a drop in overall category sales.

It's also important to note that once O' Organics is marketed by Safeway to competing retailers, it no longer becomes a store brand. This means no favored shelf placement, no special treatment by those retailers in terms of end-cap display space, no "free" weekly ad circular feature ad placement, and the like. The brand will have to be marketed as and compete equally without the advantages Safeway is able to give it as a store brand. Those home court advantages after all are part of the reasons we call them store brands.

As a result, Safeway will have to compete with its organics brand just like all of the national and regional organic products' brand marketers are in this down economy--along with suffering the lower sales fate most category marketers are currently suffering ,which has as a key feature soaring food price inflation--because the average (and many above average) U.S. consumers just can't afford to buy that $8.99 pound organic chicken, even if the breasts are boneless and skinless. Just ask the Whole Foods guys. They are seeing organic category sales dropping across the board--from fresh produce and meats to dry grocery.

However, while we disagree with Mr. White regarding his view that the poor U.S. economy won't hurt organic sales in general and O' Organics' sales specifically, we understand and appreciate his marketers' optimism. We also think the O' Organics and Eating Right brands have the potential to do very well at competing supermarkets, as well as continue to sell well and grow in Safeway's stores.

One important note is that sales of the O' Organics brand in Asia have been at best mediocre. A regular reader who lives on the island of Taiwan has reported to use that since our piece about the brand being sold in Carrefour stores there, she has seen many of the O' Organics brand items discontinued in the Carrefour hypermarts on the island. She has been told by store managers it is for lack of sales performance. (Well, that's what happens to non store brands.)

Of course that's Taiwan, not the U.S. or Western Europe. But it does illustrate that Safeway will need to market the brand in ways other than just using price promotions--which has been the case in the Carrefour stores--if it hopes to build the brand in stores other than those owned by Safeway.

Food and grocery retailers can use push marketing to build a store brand and grow sales in their own stores, using the techniques we mentioned above, but it's much more difficult to do so in competitor's stores when its just a brand and not that particular retailer's store brand.

Despite these concerns, we see a bright future inside of and outside Safeway stores for O' Organics and Eating Right. Of course, in the competitors' stores it will all come down to distribution, marketing, merchandising and promotion, along with allocating the budget to achieve all four.

And, of course, Safeway will get a taste of being on the other end of those slotting fee, ad space and display space fees in its role as a consumer brands marketer. Our advice: Better build in plenty of extra margin on the O' Organics items as brand marketers have learned to do with the brands they sell to Safeway Stores, Inc.

Shopper Marketing Memo: Use Retail-Specific Data to Create Retail-Specific Shopper Marketing programs Rather Than Taking the 'Cookie Cutter' Approach

Shopper marketing, simply defined as marketing directly targeted to the shopper rather than using the media for example, along with what happens within the retail space, is becoming one of the fastest growing forms of product marketing in the food, grocery and consumer packaged goods industries.

Shopper marketing takes many forms, including simple in-store off-invoice allowance reflections flagged at the shelf, club card discounts, in-store and FSI coupon programs, sweepstakes promotions, product samplings and tastings, giveaways, and combinations of two or more of these activities, as well as other campaigns focused directly on the shopper.

Large consumer packaged goods companies have learned one of the keys to successful shopper marketing is to target a specific program to a specific retail chains customer base. For example, chain A's customers might respond strongly to in-store coupons, while Chain B's shoppers barely participate or go for such campaigns.

Medium-size and smaller food and grocery companies, especially those in the natural and specialty foods space, tend not to seek out this data from retailers--and it is most often available--but rather will create a shopper marketing program, such as coupons or product sampling, and roll it out to all of the retail chains and independents in a market.

While sometimes this can work, more often by using this cookie cutter approach not only do natural and specialty foods' manufacturing and marketing companies miss out on all the sales gains they could achieve in a chain-specific shopper marketing program, they also spend far more money out of their budgets than is needed in order to receive less than successful results. In other words--this cookie cutter approach more often than not results in less bang for the promotional dollar buck than if the marketer would have taken a little more time to gather the available data from each chain and customize the shopper marketing program accordingly.

For example, if there are three major chains in a market, and Chain A's shopper data shows its shoppers respond best to in-store coupon programs, that's the way to go with that retailer.

Conversely, lets say Chain B's data shows such programs get a minimal response from its customers. However, Chain B's shoppers buy big when club card promotions of 15% -to- 20% discounts are conducted. Your road map for Chain B should be clear. No coupons please.

Lastly, lets examine our hypothetical Chain C. It happens to be an upscale regional chain of 90 stores. The upscale retailer's data shows its customers really don't respond all that well to price promotions of any kind--off invoice, in-store coupons, club card deals and the like. Rather, what turns Chain C's shoppers on, and gets them to purchase more, are food tastings or sampling events, especially when the product is gourmet or healthy.

Chain C's shoppers are foodies, and they like quality and new items. Give them a taste of something new in-store, and do so with flair, and they will buy two or three packages regardless of price.

Obviously then, using in-store coupons or a club card program would be a big mistake with this chain. Rather, a marketer wants to allocate its budget for tasting events, as that's where the action is with Chain C's shoppers--and increased product trial and sales.

As you can see, we went from a one-size shopper marketing program for all three hypothetical chains--which is more common among natural and specialty foods' marketers than it is uncommon--to a customized in-store shopper marketing program for each of the three chains.

The key to being able to do this retailer-specific shopper marketing is obtaining the data from the chain. However, if the data isn't there, a marketer can obtain plenty of good anecdotal data on which shopper marketing programs work best from category managers and merchandising managers at a given chain.

These experienced folks know what has worked and not worked in the past, and want marketer programs to work. Therefore, if asked, which often isn't the case, they will generally share all they know about what types of shopper marketing programs are effective in their stores.

In other words, all shopper marketing campaigns are not created equal because every retailer has a unique customer base. For a campaign to be successful, marketers should tailor it to their shoppers’ preferences and include media that influences them to purchase.

For example, according to findings released by Worthington, Ohio-based BIGresearch, a marketing intelligence firm, at the Promotion Marketing Association’s recent first annual Shopper Marketing Summit, 71.6% of Kroger shoppers say coupons influence their grocery purchases; while 59.2% of Safeway shoppers say the same. That's a significant difference in coupon use when it comes to the two respective chains and getting optimum bang for the promotional dollar buck.

The consumer packaged goods research firm conducted a study of shopper marketing looking at these two chains, the number one (Kroger Co.) and number three (Safeway Stores, Inc.) supermarket chains respectively in the U.S.

The data is valuable for food and grocery product marketers, sales promotions managers, National and regional sales managers, brokers and others who create shopper marketing programs.

Even more important is to remember and use the concept of chain and retailer-specific shopper marketing based on learning as much as can be learned about a particular food retailer's customer base and what shopper marketing programs they tend to respond to best. This is true whether the shopper marketing program is in-store only or a combination of in-store and external promotional activity. After all, it's all about getting the best return on investment a marketer can.

Below are some key findings about Kroger and Safeway shoppers, which BIGresearch presented at the recent Promotional Marketing Association's Shopper Marketing Summit:

>Although Kroger shoppers are more influenced by coupons than Safeway shoppers, this form of media is most likely to influence both groups in their grocery purchases. Newspaper inserts follow (51.1% for Kroger shoppers and 48.5% for Safeway shoppers). In-store promotion rounds out the top three as 45.9% of Kroger and 43.5% of Safeway shoppers said the media influences their grocery purchases.

>Kroger shoppers said that the in-store promotion that influences/greatly influences them the most is product samples (60.6%) followed by shelf coupons (47.8%) and store loyalty cards (47.6%).

>Product samples (58.5%) are also most likely to influence/greatly influence Safeway shoppers; however, reading product labels (48.9%) was second for them. Store loyalty cards (46.6%) came in at #3.

>Grocery shoppers “date around.” More than one-third (34.3%) of Kroger shoppers buy their health and beauty products at Wal-Mart. 22.5% of Safeway shoppers pick up their prescriptions at Walgreens.

>More than 75% of both Kroger and Safeway shoppers indicated that gas prices are impacting their spending. 28.8% of Kroger and 28% of Safeway shoppers said that they are spending less on groceries as a result of fluctuating gas prices.

BIGresearch arrived at this data by surveying 7,500-plus respondents and then averaging their responses together to obtain the percentages reported above. As with all survey research, remember you can generalize somewhat to the general population from a sample, especially a large one, but it isn't always the case.

Our key point in offering the Kroger and Safeway data from the research firm's survey isn't so much to give you that specific information or data, that's gravy. Rather, it's to illustrate the importance and power of obtaining retailer shopper-specific data both from specific retail chain's and outside sources, as well as garnering as much anecdotal information a marketer can from retail category managers, merchandising managers and local market region brokers, who have lots of experience setting up shopper marketing programs with specific chains.

Do this, and as a shopper marketing practitioner you will not only generate more trial of new products and increase promoted product sales during the shopper marketing campaigns, but you also will dramatically increase your ROI on each shopper marketing campaign you do.

Marketing Memo: Ingredients For 'Free Media' Marketing Success: Safeway Stores Finds Them With Announcement of its New 'Eating Right For Kids' Line

The marketing positioning statement for Pleasanton, California-based Safeway Stores, Inc. is Safeway: Ingredients For Life. The marketing message ties-in and communicates the grocer's "Lifestyle" food retailing format, which involves its store design and decor, overall and category-specific merchandising philosophy and program, product assortment, and additional elements of the grocer's identity and practice as a food retailer.

Natural~Specialty Foods Memo's Analysis is that Safeway has become not only a good food retailer but a supreme food marketer as well over the last decade. It's also become entrepreneurial, as well as a solid learning organization.

Under its Lifestyle format program, Safeway has upscaled its stores--going from what were basic supermarkets to attractive stores with soft but attractive color schemes inside, soft lighting, hardwood flooring in departments like produce, wine and gourmet foods, and much more attractive and modern lifestyle-looking store exteriors.

The chain's merchandising mix--especially its store brands like O' Organics, Eating Right, Signature Cafe fresh, prepared foods and others scream "Lifestyle." And that "Lifestyle is one of good foods bought at Safeway. The retailer has even redesigned its Safeway and Lucerne value-priced store brands in such a way as to make them look modern yet not upscale, which would befeat the purpose of a price-value store brand.

Today Safeway distributed a brief press release about a new line of Eating Right brand healthy foods for kids called "Eating Right Kids." The new line is part of a licensing agreement Safeway has inked with Warner Bros., in which the Eating Right brand food and grocery products targeted to kids will feature Warner Bros cartoon and related characters on them. Warner Bros. also will use its various venues to co-market the Safeway branded products to consumers.

All of the "Eating Right Kids" products will have a healthy focus, just as the regular Safeway Eating Right brand products do.

Ingredients for good press coverage

Before writing, and as we write this piece, the Natural~Specialty Foods Memo (NSFM) email box has been overflowing Safeway "Google Alerts" to publications of all kinds who are running stories on the Safeway/Warner Bros Eating Right Kids product introduction press release, which was just issued today by Safeway Stores, Inc and Warner Bros.

Online publications from CNN, Business Week and Forbes, to numerous newspapers and blogs of all sorts--from business and marketing-oriented blogs to motherhood an healthy foods-oriented publications--are already running pieces based on the news release.

Here's why: The ingredients for generating lots of positive coverage for a new product introduction in the food and grocery industry go something like this:

>Have a good story to tell

>Have a good angle

>keep the release brief

>Be topical

>Find a "hot button." In the food industry health is a hot button. Healthy foods for kids is an even "hotter" button. Cartoon characters to boot creates some sizzle.

>Tie the story in with an already popular brand.

>Be topical but on point.

>Tell how the new product introduction fits into what you do everyday.

>Tie-in the new product introduction release in with a wider social purpose.

The Safeway/Warner Bros introduction of the "Eating Right Kids" healthy foods line hits all the above hot buttons and a few others we won't mention for brevity sake.

Reprinted below in italics is today's Eating Right Kids new product introduction press release. As you read the release, we suggest you do so asking yourself how well it meets the nine criteria above. The Press Release:

Safeway Inc. (NYSE:SWY) and Warner Bros. Consumer Products announced a partnership today that will create a better-for-you line of food products for children, uniting flavor and nutrition. Through a licensing agreement with Safeway(R), the Warner Bros. animated Looney Tunes characters will be featured on the new Eating Right Kids(TM) line of food and beverages, to be sold at Safeway.

Eating Right Kids, an extension of the successful Eating Right(TM) adult line, will launch later this year with select products arriving on store shelves this summer. The line will initially be carried at over 1,700 Safeway locations throughout the United States and Canada. In early 2009, Eating Right Kids will also be available nationally via the Better Living Brands(TM) Alliance. Each product in the multi-category, competitively priced line will feature such world-renowned Looney Tunes characters as Bugs Bunny, Tweety, Taz, Sylvester, Wile E. Coyote, Roadrunner, Marvin the Martian and Daffy Duck.

Eating Right Kids is the first broad product line to feature entertainment characters and be dedicated solely to a healthier eating philosophy. Parents will now have an ally helping them show their kids that better-for-you foods can taste good and be fun at the same time.

"The Warner Bros. Consumer Products partnership will allow us to extend the Eating Right brand to a line of products that will appeal to children, and at the same time give parents the comfort that these products are healthier choices," said Mike Minasi, Safeway President, Marketing. "Integrating such well-recognized characters into our brand architecture will make the line more attractive to our target audience and augment the line's success."

"This partnership with Safeway allows us to utilize the Looney Tunes characters' enduring popularity with kids and teens to promote a lifestyle choice that's healthier for them," said Barry Meyer, Chairman & CEO, Warner Bros. "Using our iconic characters as ambassadors of health and fitness, the Eating Right Kids program helps simplify good nutrition for parents and their children."

The broad product line will feature more than 100 items across 30 categories including breakfast foods, portable meals, dairy, snacks, and beverages. Products are formulated based on the most recent dietary recommendations and regulations from several federal and state agencies, including Department of Health and Human Services (DHHS), the Department of Agriculture (USDA), the Alliance for a Healthier Generation, and the California School Nutritional Guidelines SB12.

The product packaging will retain the Eating Right design architecture while taking full advantage of the personalities associated with the beloved Looney Tunes characters. The Looney Tunes characters will serve as 'Mother's Helper,' making it easy for moms to spot better-for-you food and beverage items for their kids that taste great. The characters will also be integrated into the Eating Right "Spot Your Needs(TM)" easy-reference system, which helps customers quickly identify the nutritional benefits of each product. "

As our nation continues to struggle with the issue of childhood obesity, Safeway has taken a leadership role in providing parents and consumers with food products that are healthier for children, and we believe in this philosophy," said Brad Globe, President, Warner Bros. Worldwide Consumer Products. "Not only will the Eating Right Kids line provide a healthier eating solution for kids and their parents, but we've taken the additional step across the entire Looney Tunes product line in North America to ensure that the majority of food products featuring the characters meet this better-for-you standard and will be exclusively available through the Eating Right Kids line."

Today's announcement is the latest component in a larger, ongoing Safeway initiative focused on providing health and wellness solutions to its customers. The Eating Right line launched in April 2007 with products produced primarily for adults and now has nearly 200 items in more than 30 categories. The philosophy behind the brand is to offer healthier eating solutions across multiple categories with a "Spot Your Needs" easy reference system so consumers can easily identify foods that meet their individual requirements. Safeway also developed FoodFlex, an innovative online nutrition tool that provides personalized information about food, nutrition and alternative grocery options. Last year, Safeway launched its Good to Know program, an in-store and online guide to food nutrition. Good to Know signs are posted throughout stores and on www.safeway.com showing the health benefits of certain products, including the cancer-fighting benefits. For example, the Good to Know product signs on broccoli and tomato sauce note that these foods may help reduce the risk of certain types of cancer, including breast cancer.

We don't normally run press releases in NSFM, except for illustrative purposes like this one.

As you can observe from reading it, the release offers lots of information. However, all of it exists around a central them: healthy eating and lifestyle; which is what Safeway's positioning is as a food retailer. The announcement also ties-in the new product line with the bigger social problem of childhood obesity. Pretty tight media marketing in our analysis.

The Safeway/Warner Bros. Eating Right For Kids" new product line announcement news release just hit media email boxes today, June 4, as mentioned above. We didn't see it until afternoon. Here's a list of the media coverage the healthy foods product line announcement has gotten as of 9pm tonight. Remember, the news release was just issued today.

As we said, pretty good ingredients for media marketing success....as in "Life."

Small-Format Food Retailing Memo: Breaking News: Safeway Negotiating For Second 'The Market' Location in San Jose, California

Safeway Stores, Inc. is negotiating with the developer of the 88, a new 22-story high-rise condominium tower in downtown San Jose in Northern California's San Francisco Bay Area (pictured at left), to put on of its new "The Market" small-format grocery stores on the ground floor of the urban residential tower, Natural~Specialty Foods Memo (NSFM) has learned.

NSFM received an email last week from a regular reader who lives in San Jose. The reader said in the email he was recently touring the new high-rise as he's considering buying a condo in the building. While touring the new residential tower, the reader said the property leasing agent told him Safeway would be putting an "upscale mini-Safeway" on the building's ground floor.

The 88 high-rise residential tower, located on San Fernando Street in downtown San Jose, is being developed by a partnership of San Francisco-based Wilson, Meaning Sullivan Group and CIM Group. The residential tower will open this month.

Despite the residential housing bust hitting most parts of the U.S., downtown San Jose is experienced a boom, with about 1,000 new residential units coming on line in the last year. There are about 4,000 more in various stages of development for the downtown.

Safeway isn't confirming the negotiations with the high-rise condominium developer. However, NSFM has checked with two commercial real estate industry sources in the region--one was the one who gave us the initial tip about Safeway looking for locations in the San Jose area for a small-format grocery store concept which we published in a piece in December, 2007--and both confirmed Safeway and the developer of the 88 urban residential tower in downtown San Jose are negotiating over Safeway's putting a "The Market" small-format grocery store on the building's ground floor to serve as the retail anchor of the project.

As we reported last year, Safeway Stores, Inc. hired the Cornish & Carey commercial real estate firm to find the grocery chain up to an initial five locations in the South Bay Area region for its "The Market" format stores. It looks like the new 88 condominium high-rise residential tower in downtown San Jose will become one of those five sites, based on the information our sources have provided.

Unlike Trader Joe's and Tesco's Fresh & Easy Neighborhood Market small-format grocery stores, both which sell nearly 100% pre-packaged produce, Safeway's "the Market by Vons" merchandises most of its produce in bulk, except for some common packaged items and value-added ones like salad mixes. Also notice the store has high-profile shelving rather than warehouse-style shelves like Trader Joe's and Fresh & Easy both have. Each gondola end-cap also has a dark-stained wood end-cap fixure as you can see in the photograph above. (Photo: Courtesy Los Angeles Times.)

As we reported here from the store's grand opening, Safeway opened its first small-format "The Market" format store in Long Beach in Southern California on May 15. That 15,000 square foot store, called "the market by Vons" because Vons is the banner Safeway operates in Southern California, is located in a former Vons supermarket building which the grocer decided not to convert to its Lifestyle supermarket format--which it's doing to all of its supermarkets in the U.S.

Tesco's Fresh & Easy Neighborhood Market plans to open 18 of its small-format, combination grocery and fresh foods grocery markets in the San Francisco Bay Area beginning either at the end of this year or more likely in early 2009. The leases for the 18 stores are inked, and the stores are being either built or empty buildings the retailer acquired for the stores are in the process of being renovated for the Fresh & Easy format.

Four of the 18 Bay Area Fresh & Easy stores will be in the South Bay region: two in San Jose, one in nearby Sunnyvale, and one in Mountain view.

Any wonder Safeway is opening four -to- five of its small-format grocery stores in the same region. [Read these previous NSFM pieces for some analysis.]

Inside "the Market by Vons" in Long Beach, California. The 15,000 square foot store opened on May 15. Some are calling it a "mini Whole Foods." It's a logical small-format extension or version of Safeway's Lifestyle format though.

During the grand opening of "the Market by Vons" in Long Beach on May 15, Safeway Stores' Rojan Hasker, president of Lifestyle stores and new concepts for the grocery chain, said the retailer is currently looking at an initial 25 locations to start for its small-format "The Market" format grocery stores. Not all those locations will be in California. Some also will be in the food retailer's other market regions such as Arizona, the Pacific Northwest, Colorado and elsewhere where it has supermarkets operating under various banners like Dominicks, Genardi's and Carrs.

The way "The Market" format stores will work is they get their full name based on the banner Safeway operates in a particular market, hence "the Market by Vons" in Southern California. In Northern California, as well as in the Pacific Northwest, Colorado, Arizona and the Washington D.C./Maryland/Virgina region, all markets where Safeway operates under the "Safeway" banner, the small-format stores, which average about 15,000 -to- 20,000 square feet, will be called "the Market by Safeway." In Chicago they will be "the Market by Dominick's;" in Alaska "the Market by Carrs," and so on.

The Long Beach "the Market by Vons" is getting a generally positive but also somewhat mixed reaction by customers. Most store shoppers we've spoken with say they like the format, it's design, feel and ambiance. Most also said they liked the product selection: a combination of basic store brand and national brand grocery items, specialty, natural and organic foods, fresh produce and meats, cheeses, wines and some non-foods items. "The Market" format also has a cafe called the "Signature Cafe," which is the name of Safeway's upscale store branded fresh, prepared foods items. The cafe features fresh, prepared foods for take out.

The "Signature Cafe" inside the Long Beach, California "the Market by Vons" store.

A number of customers of "the Market by Vons" weren't too pleased with the pricing however, saying it is much higher than Trader Joe's or Tesco's Fresh & Easy in their analysis. A few even mentioned they thought the pricing higher than a traditional Vons supermarket in Southern California.

We compared the prices on some items from "the Market by Vons" with those at a Trader Joe's outlet and a Tesco Fresh & Easy store not to far away from the Long Beach store. The prices on "the Market by Vons" items were higher; about 13% higher than the comparable items at Trader Joe's and about 15% higher than those comparable items at Fresh & Easy.

However, "The Market" format is much more upscale than either Trader Joe's or Fresh & Easy. It's a small-format extension of Safeway's evolving Lifestyle format, which is looking more like a Whole Foods Market store with each new Lifestyle format store the retailer opens. Therefore, we aren't sure of Safeway is too concerned that their prices are 15% or so higher than the two small-format food and grocery retailers mentioned above. While we were in the store, a number of shoppers referred to it as a "mini Whole Foods market."

In fact, Safeway's communications vice president Brain Dowling told us the positioning of "The Market" small-format stores is as secondary, "fill-in" shopping venues rather than as primary ones like Tesco wants its Fresh & Easy small-format grocery stores to be, or as specialty and natural foods category-killer store like Trader Joe's markets are.

And of course, the first store, "the Market by Vons" in Long Beach, has only been open about two weeks, which gives Safeway plenty of time to play around with its retail pricing scheme, as well as the format's merchandising selection.

Retail Marketing Memo: Safeway Uses Mother's Day Holiday to Launch its New 'mom to mom' Store Brand Baby Products Line in its Stores

Safeway Stores, Inc. is adding a brand new store brand to its already impressive line-up of food, grocery and non-foods store branded product lines.

Joining such Safeway store brands as its upscale Safeway Select and O 'Organics food and grocery brands, it's value-priced Safeway brand, its Signature Cafe prepared foods' store brand and Eating Right health and wellness brand, is mom to mom, a branded baby products' line of over 80 items, including disposable diapers, infant formula, baby wipes, toiletries and more.

Safeway Stores developed the mom to mom baby line with the help of real moms, according to James White, the supermarket chain's senior vice president for consumer brands.

White tells Natural~Specialty Foods Memo Safeway developed the 80-plus item baby products' line based on extensive research and conversations with moms about their babies, their lives and motherhood.

In the research and conversations with the real world moms, White says the concepts of "gentleness" and "ease-of-use" were the two key variables or take-aways from that process.

"The mom to mom line reflects the truth of the adage 'Mother Knows Best," White says in explaining how Safeway created the products based on the input and feedback from the mothers who participated in the brand's development.

As an example of what Safeway learned about the importance of ease-of-use from the moms, White says the mom to mom brand baby wipes for example are hypoallergenic and come in a flip top package with an extra-wide dispenser, making them easy to access with one hand by mom when she's feeding or changing her child's diaper. This design attribute came directly from the research with the real word moms, White says.

Safeway has chosen Sunday, May 11, to introduce the mom to mom store brand in its 1,740 supermarkets in the United States and Canada. We like the timing.

The real world moms, who's input was used extensively in designing the over 80-item baby products' line, also will have their say in Safeway's in-store merchandising of the brand.

The retailer will use parenting tips from experienced mothers on its mom to mom brand in- store point-of-purchase displays. Shelf talkers featuring these parenting tips also will be used for each of the items shelved throughout the store.

Among the tips provided by real world mothers for the displays and shelf talkers include this one: "Read to your little one everyday. It's great bonding time, and it will help prepare her for school."

The baby products line will be sold exclusively in Safeway-owned stores. There are currently no plans to sell the items to other retailers like Safeway recently announced it will do with its O' Organics and Eating Right brands. [Read our recent piece on that development here.] Not yet at least.

We say not yet because we believe it's Safeway's strategy to eventually do the same with the mom to mom brand if it's successful in the grocer's 1,740 supermarkets.

The O' Organics brand proved successful in the stores over a one year period. The brand is less than two years old and Safeway is already planning to license it to other retailers and wholesalers internationally, as we reported here on April 28.

Further, the Eating Right health and wellness brand is barely a year old, if that, and it's been so successful according to CEO Steve Burd, Safeway decided to include it along with O' Organics in its new brand marketing venture.

We suspect the retailer to look at the mom to mom baby products' brand after about a year and evaluate whether or not it too should go into the brand marketing partnership its created to market, license and sell O' Organics and Eating Right in the U.S. and internationally.

As we've discussed on Natural~Specialty Foods Memo before, Safeway Stores, Inc. is evolving from being a retailer only to being a brand marketer in general, as well as a marketing-driven food and grocery retailer.

In addition to its new brand marketing venture described above, the company also has build its Blackhawk gift card business into a substantial entity.

Additionally, Safeway has created a small division in which it will assist other companies in saving money on their health care costs by using some of the innovative market-based measures its created to keep its own corporate health care costs from rising as high as most other U.S. supermarket chains and corporations in general have

Safeway had among the lowest increases in corporate health care costs among U.S. corporations in the last two years thanks to a number of innovations the company has made in how it offers and handles employee health care and insurance.

Safeway also continues to improve its online/home grocery delivery division. It's the leader in home grocery deliver via Internet ordering in most of the markets where it offers the service.

The San Francisco Bay Area-based brand marketing-driven grocery retailer also continues to brand all of its in-store prepared foods offerings.

For example, it's private label deli meats now carry the Primo Taglio brand, its in-store prepared foods offerings sport the Signature Cafe brand, it's fresh beef is branded as Ranchers Reserve brand, and its most upscale and premium fresh bakery items and other specialty products have been branded Safeway Select Artisan.

Safeway also has extended its O' Organics brand into fresh produce and fresh poultry, and its Eating Right brand into the fresh produce, refrigerated and prepared foods categories.

The grocery chain also is expanding the variety and quantity as well as upgrading the look of its value brands, such as its Safeway brand for grocery and non-foods products and its Lucerne brand for dairy goods.

Safeway also recently created a "branded generic" grocery and non-foods brand called Basic Red. The minimalist-looking yet attractive package, which appears on basic items like toilet paper, paper towels, napkins, facial tissues and other grocery and non-foods items, has a simple red, round circle on the package with the words "Basic Red" in white against the background.

The supermarket chain has been promoting Basic Red brand items like 4-roll white toilet paper and 50-ct packages of white napkins for 10 items for $10, or $1 a package. This is part of the value package offering Safeway said it would start doing this year in its Lifestyle stores as it begins to close in on its goal of converting 100% of its supermarket format stores in Lifestyle format markets. The company says it's about 70% finished with that massive project to date.

The increased emphasis on the store value brands, while at the same time creating and positioning more upscale brands, also has much to do with the state of the economy in the U.S. as well as the soaring food price inflation currently occuring in the nation, Safeway CEO Steve Burd told Natural~Specialty Foods Memo earlier this year.

Burd says consumers are trading down and buying far more store brands in Safeway's stores than they are national brands. He says Safeway is enhancing its value brand offering to stay competitive with the big box discounters like Costco and Wal-Mart, while at the same time offering shoppers its upscale and organic brands for lower prices than comparable national and regional brands.

With its growing brand marketing emphasis, coupled with its evolving Lifestyle retail format, Safeway's positioning could be summed up as the store is the brand, and the brands are the store, in our analysis and observation.

Resources:

>Safeway has created a seperate webpage on its corporate website for the mom to mom brand baby product's line. You can view that webpage here.

>You can learn more about Safeway's market-based healthcare reforms by viewing a video of a presentation CEO Steve Burd gave at the recent annual Food Marketing Insitute (FMI) convention held this year in Las Vegas, Nevada. There's a link to the video here.

>If you want to take a look at some of Safeway's store brands mentioned in our piece above, you can take a look at the grocery chain's weekly advertisement here.

>Safeway donates about $154 million a year to various charities throughout the U.S. and Canada through its Safeway Cares charitable organization. You can learn more about the organization and its charitable giving here. Many of the retailer's donations go to organizations helping mothers and their children.