Safeway’s Current Sales and Blue Oceans

Current Ocean
Safeway and its grocery store brands (Dominick’s, Vons, Tom Thumb, and Safeway) identical-store sales have fallen in the past year.  However, Safeway’s profits rose 7.4% in the second quarter.  This offers an interesting paradigm that illustrates the impact and shift that supermarket shoppers have in their shopping choices.  For Safeway and its chains, customers are switching from national brands to lower-priced in-house brands such as O Organics and Safeway Select.  Due to the current, wide range of economic woes from gas prices to housing devaluation and foreclosures, supermarket shoppers are focusing on price and value.  All these facts are detailed in the Friday, July 18th, 2008, Wall Street Journal’s “Marketplace” section.  The reason this shift seems contradictory hinges on the fact that in-house brands have a wider profit margin for grocers than national brands.  Thus, the grocer is actually more profitable on a smaller amount of sales.

Finding the Blue Ocean for Safeway
A Blue Ocean is, in its most basic form, new marketspace. While Safeway is showing a profit in its current marketspace, it can grow even more by looking for a Blue Ocean. How? One way is to stop looking at its stores through traditional grocery industry lenses and start looking at ways to wrap services around products with a value orientation. Honda developed this Blue Ocean in the 80s with the Accord and its strong servicing disposition. The economic Saturn dealerships are another good example: they modeled this strategy by gearing up a customer-oriented service focus to go along with the sale of a value- and price-based commodity.  A similar focus and set of value-oriented services for Safeway customers, wrapped around its store brands, would provide a strong Blue Ocean based on a model successfully used in an entirely different industry.  An example of a possible service could involve a coupon directory of available discounted brands and products to match up with value shoppers’ grocery lists when they enter the store.  Another value added service would be to provide shopping consultants for customers on tight budgets. 

Food for Thought: Do you shop at Safeway or one of its brand stores? What can Safeway do for you to provide more service and value with its product lines?  What are some services that you would suggest to create more value for economically oriented shoppers?  Tell us in the comments . . .

I am willing to talk with blog participants live via phone for free consultations.  I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities.  For any of these request, E-mail me .  I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist – writing to inform, enlighten, and inspire.  Author of forth coming book, “Owning Marketspace”.  Available for consulting and speaking engagements.