Pleasanton, California-based grocer Safeway presented it’s plans for 2013 at its annual investors conference this past Wednesday March 6, 2013. The plans focused heavily on the evolution of the store and the Safeway retail brand and of course the Private Brand Portfolio. Executive’s participating included: Melissa C. Plaisance – Senior Vice President of Finance & Investor Relations. Steven A. Burd – Executive Chairman, Chief Executive Officer and Chairman of Executive Committee, Robert A. Gordon – Chief Governance Officer, Senior Vice President, Secretary and General Counsel, Diane M. Dietz – Chief Marketing Officer and Executive Vice President, William Y. Tauscher – Independent Director and Member of Executive Committee and Robert L. Edwards – President
Steven Burd CEO of Safeway laid out this vision: “Today, we’re a supermarket company. We’re a grocer, if you will, selling wellness services and wellness products. I think in 10 years’ time, we [indiscernible] part of more of a wellness company selling food…This should be the highest growth piece of our business for the next 10 years, and I think Safeway can own the wellness space.”
Chief Marketing Officer Diane Dietz spoke to attendees about strategy, Private Brands and differentiation:
“I want to touch on our strategy and how that guides all of the work that we do within this organization. At the end of the day, it’s about building loyalty. It’s about creating unique brands that have our shoppers want to come to our store because they can’t get the brand anywhere else. And so we are very focused on innovation. And I guess the key point I wanted to make as I kind of list off the strategies, many times, you think about private label and I remember thinking of this when I worked at P&G is that retailers are just going to knock off the brand that we launched. That’s not what Safeway is about. We are about true innovation versus replication. We actually look at trends. We try to meet our consumers’ needs in a unique way, and we are not about replicating the national brand.”
And she even got to the core advantage that a retailer has over CPG’s the ability to build a brand that solves customer problems, crosses multiple categories and is not restricted by manufacturing capabilities
“We try to build lifestyle brands. You’ve heard this term before. What does it mean, a lifestyle brand? A lifestyle brand is a brand that it’s such big idea, it can go across multiple categories. And I’ll talk a little bit about that. And that’s again a unique competitive advantage. Many of the CPGs, they’re in a brand world and a brand silo. They’re not thinking about how they take that brand across multiple categories because often, they are just — they have their brand lens on.
Health and wellness is growing. It’s an important segment. As Steve talked about it, it’s a cornerstone of what Safeway is about, and our private-label business innovates and focuses on health and wellness. We have also spent a lot of time focused on our quality. One of the things again from my background as we use to call it, a moment of truth when your consumer tried your product. It may look great on the shelf, it may have beautiful packaging, but at the end of the day, it’s when that consumer experiences your product. When the mom uses the diaper that you made, when the consumer tasted the new cereal that you launched doesn’t live up to the quality standards that they expect. If it doesn’t, you won’t get them back, they won’t be loyal. And it’s our brand with our name, so that quality has to rise to the level that delights our shoppers.”
Not to mention differentiation:
“Today, I want to talk a little bit about where we’re focused on differentiated offering. Obviously, we’re focused on high-growth segments: Health and wellness, organics, open nature, eating right fits into that. We have efforts underway on Hispanic.”
And the Culinary Center (I would love to visit this)
“So what defines the success? Why do we feel good about what we’re doing? I thought it might be interesting for you to see kind of how we believe we have driven this success, and the first thing I would say is for those of you who attended the culinary center, hopefully, you are impressed, and you weren’t necessarily impressed just by the facility. For me, it’s about the people that are in the facility. It’s not about the kitchen. This group of chefs has over 125 years of restaurant experience. They were trained by chefs like Wolfgang Puck, Julia Child. Pretty amazing. They’re not over there just taste-testing, they’re actually developing new products. They know the trends in food. So again, this is a competitive advantage.”
As well as leveraging and managing a portfolio of BRANDS that speak to different target customers and consumer needs.
“We have a very balanced portfolio. This may surprise many folks, but we appeal across all income. We’ve got a very strong business and a high household penetration with folks making below $30,000, and we have a high penetration with folks making above $100,000. And often, what we hear is many of the brands are not even perceived as Private Label. Open Nature, for example, most people think it’s a national brand that’s out there, again, based on the innovation we brought. We focused on kind of core consumer needs: convenience, nutrition, value and experiential.
We have lifestyle brands that range from value brands and really target towards the value shopper. We’ve got premium brands. We have brands that go against specific target shoppers like Mom to Mom. So again, we’ve built a house of brands that appeal to very diverse and different consumer targets.
Health and wellness continues to be an important area for us. These are kind of our 3 big brands in that space. They appeal to different target shoppers. In the U.S., over 70% of consumers are buying organic, either food or beverage, within the last year. It’s a growing business. It’s a growing brand. I’ll touch on Open Nature and the success we’ve had there. And then I’ll talk a little bit about how we’re repositioning the Eating Right brand. But in 2012, these 3 businesses represented over $750 million in sales.”
And she ended her section revealing the upcoming evolution of Eating Right to simplify the shopping experience for customers with specific health and eating mindsets (gluten free, calorie counters); the name shift of Primo Taglio to Primo and the repositioning and redesign of Safeway brands to elevate Safeway within the packaging and dramatically improve appetite appeal.
Source: Seeking Alpha