Safeway Puts its Brand on Ice in San Francisco For the Holidays

Branding on ice: The Safeway logo covers the middle of the ice rink above.


Private Brand Showcase

Pleasanton, California-based Safeway Stores, Inc. is extending its brand to an outdoor venue that defines fun, excitement and entertainment during the November -to- January holiday season.

That outdoor venue is the Safeway Holiday Ice Rink in San Francisco's Union Square.

The popular ice rink in Union Square, a shopping area in the heart of the city that's packed with huge department stores like Macy's, Neiman Marcus, Bloomingdale's and Saks Fifth Avenue, along with scores of other retail shops, boutiques, restaurants and cafes, opened November 9, and runs until January 16, 2001.

Safeway, which has a long history of business - it has 14 supermarkets in the city of nearly 900,000 which is located about 30 miles from the Pleasanton corporate headquarters - civic and public involvement in San Francisco, has sponsored the Union Square Ice Rink since 2007.

In addition to the supermarket chain's lead and named sponsorship, a number of other businesses, such as department store retailer Macy's and Ghirardelli Chocolate Company, which was founded in the city-by-the-bay, along with a number of radio and television stations, have signed on as co-sponsors of the Safeway Ice Rink in Union Square.

As part of its sponsorship, Safeway Stores, Inc. is helping to keep the cost of using the ice rink low - tickets cost just $10 for adults and $6 for kids eight years-old or younger. Ice skate and hockey skate rentals, for those who don't have their own, which is probably a fairly high number of people in San Francisco where it's know to get chilly - but not that chilly - are $5 pair

There are also specialty group rates, starting for parties of 15 or more persons.

A portion of ticket proceeds are being donated to the Boys and Girls Clubs of San Francisco and the San Francisco Recreation and Parks Department.

And to make the day or night on the ice last a bit longer, there's even a photo booth at the union square ice rink, which is open from 10 a.m-11:30 p.m daily, where skaters can have their photographs taken for $2 a pop. The photos are printed out on the spot. The photo machine will also send a digital version to your e-mail address.


The logo above is used in various places around the ice rink to reinforce the Safeway brand and the grocer's sponsorship.

The Safeway sponsored and branded Union Square Ice Rink is also holding a number of special events for the public this month and in December.

The first event was the opening of the ice rink last week. The opening ceremonies, which were held from 9 a.m-10 .a.m on November 9, was hosted by "The Ghost of Christmas Past," a member of the cast of San Francisco's internationally renown American Conservatory Theater's annual A Christmas Carol production.

Among other opening morning festivities on the ice was a performance by the popular Irish tenor Michael Londra, who is currently staring in Celtic Yuletide at the Marines’ Memorial Theatre in the city. Londra performed his hit song "Beyond A Star."

Skaters enjoy the Safeway Holiday Ice Rink over the weekend.

On November 25 the Safeway Ice Rink will be a part of San Francisco's annual Christmas Tree Lighting ceremony at Union Square, which is held each year the day after Thanksgiving.

But in typical San Francisco style - and flair - the two other events planned for the Safeway Ice Rink are a bit less traditional.

On December 1, the rink is hosting Speed Dating Skating, which is an on-the-ice version of speed dating. The singles, which there are many of in San Francisco, are being invited to wear their most unusual holiday-inspired sweater as a way to "break the ice" and get conversations started, which in-turn might lead to a future date - or even one later that night.

There's also an interesting freebie included as part of the event: The first 100 singles to arrive get a mistletoe headband, which should spark a little more than just conversation while on the ice.

The "singles night" event happens to share a "branding" angle with one of Safeway's stores in San Francisco - although we're not sure the ice rink's producers were aware of it or had it top-of-mind when planning the event.

Safeway's store in the city's Marina District - where former chairman and CEO Peter McGowan, who also led the ownership group that kept the San Francisco Giants from moving out of the city over a decade ago, has lived for many years - is known as the "Singles Safeway" because of the number of single people who first met in the aisles of the supermarket. Many of those meetings led to a first date - and often two, three or more and, in some cases, even marriage.

In June Safeway Stores, Inc. held this event - Safeway Has A Picnic in San Francisco Featuring the 'World's Longest Picnic Table' to Showcase its 'Open Nature' Natural Foods' Brand - on the Marina Green, which is across the street from the Marina Safeway store in San Francisco.

But the city's unique style and flair really comes out in full bloom on 8 (8-9:30 p.m) when the ice rinks promoter is presenting Drag Queens on Ice.

Willy Bietak Productions, the producer for the Safeway Ice Rink in Union Square, tells us it's giving Santa a break for the night and instead it's invited a number of the San Francisco Bay Area's most colorful professional drag performers to skate and perform at the rink.

The promoter says its also inviting the public to don their own wigs and outfits and skate alongside the Drag Queens during the evening.

Prediction: Not only will it be a colorful evening but you can also bet the photo booth at the ice rink will be getting a lot of use and bringing in plenty of cash during the event.

Sponsoring the holiday ice rink is smart marketing and provides a major branding-plus for Safeway Stores in the San Francisco Bay Area and corporately, in our analysis.

Why? It's the holidays, a time of joy and family, it's an ice rink in San Francisco, a once-a year-event (although this year the city has two such outdoor rinks for the holidays) and its fun.

Therefore as the sponsor of the ice rink in Union Square, Safeway gets its eponymous brand, which it also uses in various versions as a product brand - Safeway, Safeway Select, Safeway Kitchens, Safeway Farms - on food, grocery and general merchandise products in its stores, associated with holiday joy, individual and family fun, a unique, once-a-year experience, and fun and happiness.

All the characteristics noted above pretty much sum up a marketer's dream list when it comes to branding.

Many Bay Area television and radio stations are co-sponsors of the Safeway Holiday Ice Rink in Union Square. Each year since 2007 these and other local broadcast and print media outlets provide millions of dollars worth (if it were paid advertising) of free publicity for the event - and thus to Safeway Stores' as the sponsor.

It's all third-party endorsement publicity as well - television coverage of the skaters and special events at the rink, radio stations producing and airing live remotes from the venue, photographs and stories in the local papers -which is much more powerful from a marketing perspective than paid advertising is.

Putting its Safeway brand on ice in San Francisco, which is the "go to" city for residents of Northern California, where Safeway is the market share leader with about 250 supermarkets (the second highest U.S. division in gross sales after Vons' in Southern California), is not only a "cool" thing for Safeway Stores, Inc., to do, it's also good business - and smart branding.

Related Stories

October 26, 2011: Farms ... at Safeway? Grocer Launches its Newest Private Brand ... 'Safeway Farms'

June 19, 2011: Safeway Has A Picnic in San Francisco Featuring the 'World's Longest Picnic Table' to Showcase its 'Open Nature' Natural Foods' Brand

May 28, 2011: At The 'Brand Factory': Safeway Stores' Launches Newest Private Brand - 'Safeway Kitchens'

February 7, 2011: Getting There First...Plus, Are Tesco's Fresh & Easy and Safeway Traveling Down A Similar Private Brand Aisle?

January 5, 2011: Safeway Adds 'Open Nature' to its Natural-Organic-Healthy Foods' Private Brand Portfolio

April 8, 2011: The Branded 'Signature Cafe' in Safeway Stores' Soon to Open 'Social Safeway' in Washington D.C. Should Turn A Few Heads

July 21, 2010: 'Sipsational' & 'Quenchtastic': Safeway Introduces New 21-Flavor Line of Soft Drinks Under 'refreshe' Private Brand

Click on this link - Safeway Stores Inc. - to read additional stories about Safeway.

Click on this link - private brand showcase - to read past stories in our 'Private Brand Showcase' feature.

'The Insider' Offers Some Advice He Suggests the New Owners of Northern California's Andronico's Markets Should Take Post-Haste

All six of the stores still have signs saying Andronico's Market, like on the San Francisco store above, despite the fact the grocer changed the name to Andronico's Community Markets over a year ago. For 'The Insider' this is a blessing in disguise because he says the new ownership needs to bag the Andronico's Community Markets name and return to Andronico's Markets, with an emphasis on Andronico's, similar to how it's depicted on the sign above.

The Insider - Heard on the Street

In my October 18 column - May-to-October at 82-Year-Old Andronico's Markets: New Owner, 2 Stores Closed ... Now What? - I reported that an investment fund led by Renovo Capital and created by it and Rosewood Private Investments got the green light from the Oakland, California division of the U.S. Bankruptcy Court to acquire 82-year-old grocer Andronico's Markets, which has its headquarters next to and above its store in San Francisco and operates six stores in the Bay Area region, down from a high of 14 units less than a decade ago and two stores shy of the eight it operated until closing two units this year - one grocery market in Palo Alto, California, closed in July, and the store on University Avenue in Berkeley, closed yesterday.

Three of the existing Andronico's stores are in Berkeley - on Shattuck Avenue, Solano Avenue and Telegraph Avenue. The other two units are in Los Altos, in the South Bay Area, and San Anselmo, which is in Marin County in the North Bay.

On Friday, October 28, the day before the closing of the University Avenue store in Berkeley - the university city that's been home base for Andronico's since it was founded in 1929 by Greek Immigrant Frank Andronico - Renovo Capital partner Scott Lavie and Andronico's CEO, Bill Andronico, who is Frank's grandson and has been running the chain since the 1980's, publicly announced the closing of the deal and sale of Andronico's to the investment firms and their fund, following the approval by the bankruptcy court, as I reported on in my October 18 column.

The purchase price, as I noted on October 18, was $16 million.

Renovo Capital has already invested about $5 million in Andronico's in the form of secured debtor-in-possession financing, which was part of its strategy to keep Andronico's alive financially and operationally until it could complete the acquisition through the court proceedings, which began in August.

The closing of the University Avenue store in Berkeley was also a part of the deal worked out with the court.

The store's about 20 employees have been told by the new owners that they can apply for jobs at the remaining six Andronico's stores. However, that's more theoretical than a reality for all or most of the workers because the last thing the new ownership wants and needs to do is add to rather than reduce Andronico's labor costs, considering the small chain's debts of $10-$15 million are about equal to its assets, according to the Chapter 11 filing.

Renovo's Lavie and Bill Andronico, who is staying on for now to continue running the 82-year-old chain that bares his family's name, said Friday, as they've said previously, that the new ownership plans to invest cash to improve the stores and the small chain's operations.

Here's what Bill Andronico said on Friday: "I want to thank our loyal customers, our committed employees and our faithful vendors who have worked with us through this difficult chapter in the company's history. I am pleased that Renovo Capital's purchase will allow us to improve our standing in the market and build on the strong brand my family has built over three generations."

Bill Andronico is the third generation of the Andronico family to run the grocery chain, having taken over for his father John in the 1980's. John Andronico took over from his father, Frank Andronico, who in 1929 founded Andronico's with a small grocery store on Solano Avenue in Berkeley, the site of one of the three existing stores in the city.

Here's what Scott Lavie, a Renovo Capital partner who's been heading up the Andronico's deal said as part of the same announcement on Friday: "Andronico's will continue to operate six locations: three stores in Berkeley and markets in San Francisco, San Anselmo and Los Altos. Renovo is committed to investing into the store's physical infrastructure to update the facilities and ensure that the stores continue to improve the quality of service for which they have historically been known. As part of this effort, key members of Andronico's executive management team will be retained to manage the company and its operations."

Lavie added this in the announcement: "We are excited about the opportunity for improvement in Andronico's stores to better serve our customers." The acquisition of the Andronico's brand was based on its market cache, and in combination with Renovo's ability to invest in the stores and employees, we want to ensure that Andronico's continues its commitment to excellence and delivering value to our customers for generations to come."

According to the August bankruptcy filing, Andronico's was doing about $120-$130 million in annual sales at the time, which is considerably less than half the annual sales the chain was doing at its 14-store peak, based on sales figures I'm aware of from the early-to-mid 2000's.

In my October 18 column I offered some analysis and informed opinion on what I think the future might hold for Andronico's under the new ownership, if you care to take a look, here.

The "key members" of Andronico's executive management team that Scott Lavie says in the quote above will be retained by the new ownership potentially include, in addition to Bill Andronico: Steve Epidendio, Justin Jackson and Anthony Gilmore.

Last year Bill Andronico brought the three men, all former Whole Foods Market guys, along with another Whole Foods' alum, John Clougher, into the then family-owned chain to help him raise financial capital and turn the chain around.

Claughter, who has been the president and COO of Andronico's since then, reporting to Bill Andronico, is leaving to become the CEO of A.G. Ferrari Foods, a small specialty grocery chain that Renovo Capital and Rosewood also recently bought out of bankruptcy. (See my October 18 column for details).

Claughter, who is leaving to head A.G. Ferrari Foods as noted above is the former president of Whole Foods Market's Pacific Northwest Region, which includes Oregon and Washington State.

Jackson, who's held the title of executive vice president at Andronico's since last year, was the first Whole Foods Market alum Bill Andronico recruited last year. Most recently prior to that he was vice president of purchasing for Whole Foods' Pacific Northwest division.

Epidenio, who managed one of the Andronico's stores for about nine years, from the 1980's-to-early 1990's, later went on to become vice president of retail operations for Whole Foods Market's Northern California division. His position at Andronico's since last year has been as the grocer's vice president of operations.

Lastly, Anthony Gilmore, who was president of Whole Foods' Northern California region from 2004-2007 and worked for the natural-organic foods' chain from 1996-2007 before leaving in 2007 to take a job titled vice president of corporate lifestyle, new concept development and corporate perishables, at Pleasanton, California-based Safeway Stores, Inc., has since last year been Andronico's chief strategist and chief administrative officer.

From 2007-2010 at Safeway Stores' headquarters in the San Francisco Bay Area city of Pleasanton, Gilmore worked on, among other projects, the development of the grocer's "The Market" small-format fresh food and grocery chain.

Safeway opened its first "The Market" store in Long Beach, California in 2008, followed by a second unit in San Jose in 2009.

Safeway's CEO, Steve Burd, decided not to go forward with the small-format stores, which are very similar in format to Tesco's Fresh & Easy Neighborhood Market, as Fresh & Easy Buzz has reported. Not long after that decision by Burd, Gilmore, who worked for Safeway as a retail clerk and store manager for 19 years before joining Whole Foods Market, left the Pleasanton-based chain to join his fellow Whole Foods' alums at Andronico's.

There are additional details about the industry backgrounds of the former Whole Foods Market alums in my May 30, 2011 column about Andronico's  - 82-Year-Old Grocer Andronico's Needs A Sugar Daddy of Sorts: 'The Insider' Suggest Tesco and its Fresh & Easy Neighborhood Market Might Fit the Bill - if you're interested.

The executive management team - Bill Andronico, Epidenio, Jackson and Gilmore - is deep with experience in food and grocery retailing, including in Northern California's San Francisco Bay Area. But it also might be a bit to collectively expensive for the new ownership and for Andronico's balance sheet, even though there will be some savings on the expense side with John Claughter's move over to nine-store A.G. Ferrari Foods, which Renove bought out of bankruptcy for less than $2 million dollars.

Assuming all or most of the executive team is retained, based on the extensive experience and individual talents of each of the members, they have a shot at turning Andronico's around, assuming they do some out of the box thinking and implementation - no wholesale Whole Foods Market format cloning, for example - and are able to strike a fine balance between creating a strategic blueprint for going forward that combines the best elements of Andronico's successful food and grocery retailing history with much needed changes in how the chain has been operating for the last decade.

Andronico's knows merchandising - and executes it extremely well. As an example, take a look at the produce department merchandising pictured in the photographs above and below. The photos were taken November 27, 2009, at one of the six remaining stores. [Photo credit: Willo O'Brien.]

I'm not the foremost expert on Andronico's, if such a thing exists. But I've been a close observer of the grocer and the markets it operates its stores in for nearly three decades.

Therefore, I'm going to offer a list of five key action steps the new ownership needs to have the executive team start and focus on post-haste (immediately), as in beginning on Tuesday. On Monday they all need to go out in the stores, interact with shoppers, and give away free treats to kids in the stores for Halloween - along with an action timeline, if its serious about saving the six-store chain - and eventually growing it.

There are additional things to focus on - but this is a list to get busy on starting Tuesday morning.

Here goes:

1. Dump the Andronico's Community Markets name and go back to Andronico's Markets, which has been the grocer's name since it changed it from Andronico's Park & Shop in the 1980's.

Adding "Community" to the name of the stores add zero-value to Andronico's, its marketing position or operations, in my analysis. In fact, it's a determent. I see it as added word baggage and meaningless semantic clutter.

Customers and residents of the San Francisco Bay Area call the chain "Andronico's," and have done so for decades. Even before the family changed the name of the stores from Andronico's Park & Shop to Andronico'sAndronico's." In fact, that's one reason the grocer dropped "Park & Shop" from the name.

The name "Andronico's" (not Andronico's Community Markets) has brand equity with shoppers in the Bay Area, which is one reason Renovo says they bought the grocer out of bankruptcy. Why mess that up?

Further, the exterior signs on the six stores still say Andronico's Markets. Dropping "Community" from the name will not only fit with what shoppers already call the stores, it will save a ton of cash because it will eliminate the need to buy and install new store signage, which is an expensive proposition, particularly for a fledgling small grocery chain. It's money that should be put to better and higher uses by the new ownership.

Conversely, keeping the Andronico's Community Markets name but keeping the Andronico's Markets signs on the stores, which has been the case for over a year since the name change, creates brand dissonance among consumers. It's also extremely poor marketing and branding.

Additionally, if these two reasons aren't enough - and they are - dumping the Andronico's Community Markets name, which the new executive team created and changed the name of the company and stores to last year, apparently in an attempt to tell shoppers that the grocery chain that's been family-owned and community-based for 82-years was now really community-based, gives the new ownership a great press release headline story.

My press release story headline would read something like this: "Back to the future at Andronico's: New owner takes back the Andronico's Markets' name because it's meant 'community grocer' for eight decades."

Timeline: Launch by Friday, November 4.

2. Evaluate each of the stores ... using a metaphorical microscope.

The San Francisco store (Inner Sunset District) is an excellent location. The new owners need to nurture it.

The Shattuck Avenue Andronico's unit in Berkeley is a good location. The store on Solano Avenue (Berkeley) is decent-to-fair. The Telegraph Avenue (Berkeley) unit is mediocre - but has potential to improve.

The benefit in Berkeley is the three stores give Andronico's brand, advertising and promotional synergy and reach. But the stores have to perform on their own, and do so against major and increasing competition, in order to justify keeping all three open.

Regarding the stores in San Anselmo and Los Altos, unless they're performing better than I'm told (neither has ever been a sales barn-burner by the way), I would put them under the microscope closely. I would be asking 'Would closing one or both of these stores and using the savings to grow business at the remaining stores (and possibly adding a new location) be a better alternative than keeping them open?'

Were I crafting the strategy for Andronico's, there's a scenario I would look at closely.

Here it is: There's a potentially good location available to Andronico's in San Francisco, which is the vacant Delano's IGA Market store (about 15,000 square-feet) in the city's Richmond District. The store, at 6333 Geary Boulevard (at 27th Avenue), has been has been vacant since last year, when owner Harley Delano closed it, along with four other units, because of financial struggles. (see here for details.)

Tesco opened one of its Fresh & Easy markets not far away (at 32nd and Clement) in June of this year. That store has been doing fairly well since opening four months ago.

However, in my analysis the highly populated Richmond District could support a grocery store in the former Delano's building, particularly one that offers a strong mix of everyday grocery items, along with specialty and fresh foods offerings.

One problem with the Fresh & Easy stores is they only offer about $5,500 SKUs in the 10,000 square-feet of selling space. About 65% of those items are the chain's private brands. And of the remaining 35%, about half the items are nationally branded packaged food and grocery items. As a result, most shoppers can't get all they desire at a Fresh & Easy store, particularly when it comes to their favorite national grocery brands.

The former Richmond District Delano's location is just across Golden Gate Park from Andronico's supermarket in the Inner Sunset District. But the distance is such that few if any residents who live in the Richmond District cross the park to shop at the Andronico's, instead shopping at a Safeway supermarket in the neighborhood, along with another unit not far away on La Playa at Ocean Beach, and at the now-opened Fresh & Easy store.

What I would seriously look at would be potentially closing one of both of the two worse-performing (taking into consideration the future performance potential the stores have) Andronico's stores (which could easily be the San Anselmo and Los Altos units or the Telegraph store in Berkeley as I've noted previously) and then putting a new store in the vacant Richmond District Delano's building, assuming the costs of doing so were within reason. A decent monthly lease and the like. (I have no affiliation with the landlord of the building.)

Doing so would give the new ownership five or six stores - three units in Berkeley and two in San Francisco, under the two-store closing scenario, with one additional unit (total of six) under the one-store closing scenario.

Depending on relative performance, keeping the San Anselmo store in Marin County (the one-store closing strategy), which is much closer to San Francisco and Berkeley geographically than the Los Altos store is, would make the best sense from a synergy perspective because the six units would all be located in fairly close geographical proximity.

Berkeley, San Francisco and San Anselmo are all clustered fairly close together. Los Altos is farther out in the South Bay Area, next door to Palo Alto where Andronico's closed the store in July.

The type of store I envision for Andronico's in the former Delano's building is a smaller version (with some differences) of its Inner Sunset-San Francisco supermarket, which is nearly 30,000 square-feet.

The Richmond District-San Francisco Andronico's would carry at least 20,000 SKUs, with a mix of basic groceries, specialty-natural-organic products and fresh prepared foods.

Mollie Stone's Markets, which took over one of the former five Delano's stores, the unit in San Francisco's Castro District, offers that many SKUs in the store, which only has 9,000 square-feet of selling space. The former Delano's in the Richmond District has at least 12,000 square-feet of selling space, based on my estimate.

I would go stronger proportionately on the basic grocery category and item mix (essentials) in the hypothetical Richmond District Andronico's store than Mollie Stone's has done with its store in the Castro District (which has a good mix for the neighborhood) because the Richmond isn't as strong demographically for specialty-natural organic and fresh-prepared foods, a specialty of both Mollie Stone's and Andronico's, as the Castro District neighborhood is.

Were I directing strategy at Andronico's I would use the Castro Mollie Stone's store, along with an edited version of the Inner Sunset Andronico's supermarket, as the basis of my blueprint for the Richmond District Andronico's new unit. The Richmond District neighborhood also has a substantial Asian-American population (primarily Chinese but also others), so I would make sure to focus on the Asian foods category across all of the store's departments, particularly dry grocery, produce and fresh meat.

The hypothetical Richmond District Andronico's in my plan would be very much a basic grocery store - rather than a specialty grocery store with a selection of everyday products - with a major focus on fresh produce and meats, a lot of everyday food and grocery essentials, and a decent selection of specialty-natural-organic items, along with a small but very comprehensive ready-to-eat and ready-to-heat fresh-prepared foods offering, which historically is a category Andronico's has been a pioneer of in the Bay Area and even nationally in the U.S.

Timeline: Start the analysis now. Make a decision fast.

3. Conduct the category and pricing reviews next week. Make changes rapidly.

The new ownership needs to focus more than Andronico's has in the recent past on customizing the store's product mix to location. For example, with the opening last year of the Whole Foods Market store nearby in the Haigh-Ashbury District, Andronico's should beef-up its everyday grocery product offerings at its store in San Francisco's Inner Sunset District. Whole Foods doesn't carry everyday groceries - Tide, Charmin, Kelloggs, Coke and the like - and doing so is a competitive advantage Andronico's should better capitalize on in the store, which is its best-performing unit out of the six grocery markets.

The new ownership needs to look at each of the six stores in this way. Localize, localize, localize, when it comes to product categories and merchandise mix.

Timeline: Begin next week. Implement before year-end.

4. Go back to a weekly advertising circular. Add substance back.

One of the major cutbacks Andronico's made was to reduce its once very substantial weekly advertising circular to one that's a fraction of the former flyer. Its also reduced the promotional frequency of the circular from weekly to about one every three weeks. That won't cut it in the very competitive Bay Area markets where its stores are located.

Therefore, one of the first things I would do is bring back the substantial, weekly circular. However, I would put an equal focus on distributing digital, non-paper versions of the weekly ad - company website, Facebook, ect. - as I would paper versions, which are generally direct-mailed to households our included in Tuesday or Wednesday editions of local newspapers.

Timeline: Break the new, expanded ad for the Thanksgiving holiday sales week. That's about two weeks from today.

5. Hold a "Thanksgiving" community celebration at each store, thanking shoppers for sticking with Andronico's through tough times - and letting them know better days are coming soon.

Timeline: A week before the Thanksgiving Holiday. It is a "thanksgiving" celebration, after all.

This is just a start. But the five action items are good ones for the new ownership to put on the "to do" list, to be tackled starting Tuesday morning. I'll take a look at Andronico's, and my list, again before the end of the year.

Note: In my first column about Andronico's financial difficulties, on May 30, 2011, I strongly suggested to president Bill Andronico and his senior management team that they start using social media, particularly Facebook and Twitter, post-haste, as a low-cost, potentially high-impact way to talk to customers and shoppers specifically about what's going on with the company and generally as a way to communicate about and promote the stores.

Three weeks later, on June 20, Andronico's became active with a Facebook page, and over the last few weeks has been posting a variety of information on it on a regular basis - and doing a good job of it.

Additionally, on July 29 Andronico's set up and account on Twitter - @andronicos1 -  and has benn regularly posting tweets as a way to talk to customers and promote the stores.

I haven't (intentionally) has any direct communication with the members of the Andronico's senior management team, but the timing of the launch on Facebook and Twitter is definitely interesting, based on the playbook I've been suggesting for the grocer.

It's also something the senior management team should have been doing a long time ago. But, as a wise man (or it could have been women) once said ... Better to be late to the party than to have never attended. Social media offers a lot of potential for Andronico's if used regularly and in a creative way.

Related Stories

October 18, 2011: Look for Fresh & Easy Neighborhood Market to Grab Closing University Avenue Andronico's Supermarket in Berkeley CA ... If it Can

October 18, 2011: May-to-October at 82-Year-Old Andronico's Markets: New Owner, 2 Stores Closed ... Now What?

May 30, 2011: 82-Year-Old Grocer Andronico's Needs A Sugar Daddy of Sorts: 'The Insider' Suggest Tesco and its Fresh & Easy Neighborhood Market Might Fit the Bill

>Also see the following links - Mollie Stone's Markets, DeLano's IGA Markets - for additional related stories.

>You can read all of our 'The Insider' columns at this link -  The Insider - along with all past coverage about Andronico's here.

Safeway Shelving 'The Market' Small Store Format; Won't Be Part of its Strategy Going Forward

Breaking Buzz - News & Analysis

Smaller format stores, except its soon to be shelved 'marketside by Walmart,' may be in at Walmart but Pleasanton, California-based Safeway Stores, Inc. is sticking with a single-format strategy - its"Lifestyle"format supermarkets, which average 43,000-55,000 square-feet, with some exceptions - and saying no to further development of its two-store small-format 'The Market' fresh food and grocery venture.

Safeway Stores' CEO Steve Burd confirmed yesterday what we've been saying in Fresh & Easy Buzz for well over a year - which is that Safeway's 'The Market' will not be a part of the grocer's retail format strategy going forward.

In a conference call yesterday as part of Safeway's reporting of its third quarter 2010 results, Burd said the grocery chain does not plan to build the two-store (Long Beach and San Jose, California) "The Market" into a chain of small-format stores.

Here's what the Safeway chief said:

"The good news is that we’re batting a thousand. We built two ['The Market'] stores and they both make money. I think there is no one else that’s created a store that small that can boast that kind of a batting average. At the same time when we went into the small store format we said that we weren't going to make it a big piece of our strategy unless we thought it represented a very significant opportunity. I would tell you that if you can’t build 300 of these for a company like us, then it’s not meaningful, say, over a five-year period.

"So, we think that we learned a lot from the smaller store and some of those concepts we are applying to our main fleet of stores. I think we might have communicated at the last Investor Conference or maybe in one of these earnings calls, we don’t see creating 300 small stores as a basic part of our strategy. Will we occasionally build a store that might be 20,000 square feet, I would say occasionally in some pretty unique circumstances, but we learned enough to conclude that for us it was not a new format that we were going to try to grow and make a big piece of our offering."

The San Jose, California 'The Market' format store - 'The Market by Safeway' - which opened in 2009 - is 21,000-24,000 square-feet. The Long Beach store - 'The Market by Vons' - which is in a building that previously was a standard Vons supermarket, is about 15,000 square-feet. It opened in May 2008.

While Burd didn't say at the most recent Safeway Investor conference earlier this year that "The Market" would not be a part of a multi-format strategy for the grocery chain going forward, he hinted at it at the conference, as he has in the past, at least for those of us who watch Safeway closely.

In fact, Burd spelled out the metrics required from the format in order for Safeway to go forward with it as early as the end of 2008

In December 2008 at that year's annual investor's meeting, eight months after the first "The Market" store in Long Beach, California opened, Burd said the results to date were less than thrilling, as we reported in this story - December 12, 2008: Competitor News: Safeway CEO Steve Burd Says Small-Format 'The Market' Is 'Good' So Far But Not 'Great;' But Must Be 'Great' in Order To Expand. His then assessment on the performance of the first small-format 'The Market' store eight months on was that it's: "good, not great."

At the 2008 meeting he said Safeway planned to open at least two more of the small-format 'The Market' stores in 2009.

However, the grocer opened just one additional store in 2009, the unit in downtown San Jose, California, and hasn't opened any additional stores in the format since then. We wrote about what was the then planned third store in this July 25, 2008 story: Breaking Competitor News: Safeway Stores, Inc. Plans to Open A Small-Format 'the market by Vons' Grocery Store in Downtown Los Angeles.

In December 2008 the Safeway CEO said once the additional two 'The Market' format stores are open, "Unless the results go from 'good to great' and we feel we can open 30 -to- 50 of these per year, it won't make enough difference for these stores to be more than an experiment."

As Burd said yesterday, Safeway may occasionally build a store in the 20,000 square-foot range. But providing his own question and answer in a sentence he qualified that rather clearly, saying: "Will we occasionally build a store that might be 20,000 square feet? I would say occasionally in some pretty unique circumstances."

'The Market" as a multi-store second format for Safeway Stores, Inc. is history.

We're told there are no plans at present to close either the San Jose or Long Beach stores though. As Burd said, they are making (some) money. In the case of the two, we can tell you this: The San Jose store is doing much better than the Long Beach unit.

In early 2008 Safeway had the Cornish & Carey commercial real estate team help it find five or six locations in the San Francisco Bay Area - the downtown San Jose site was one of the locations - for its "The Market" format, which it had only recently finished developing at the time. The firm and Safeway located the sites but the downtown San Jose location is the only one to be built and opened.

A key reason Safeway souoght out the locations was because in January 2008 Tesco announced its plans to open an initial 37 Fresh & Easy Neighborhood Market fresh food and grocery stores in Northern California - 19 in the Sacramento region and 18 in the Bay Area.

Safeway had first-hand experience with Tesco. United Kingdom-based Tesco was the first major chain in the world to establish a food and grocery e-commerce site and combine the online ordering element with home delivery. In the 1990's, when Safeway was interested in doing the same, it partnered with Tesco in Groceryworks, which was Safeway Stores' initial online/home delivery grocery service. The partnership didn't last long. The two chains parted ways and Safeway took the business in-house, which is where it remains today.

As a result of this first hand experience, along with the fact Tesco is a very respected global retailer, Safeway, which already had been considering a small-format of its own, ratched up the development process, creating 'The Market,' and sought out the various store locations in its home-turf San Francisco Bay Area, where it's headquartered, in part as a defensive move against Tesco, which was supposed to open the first Fresh & Easy stores in the region in early 2009. That never happened. Tesco now plans to open the first batch of its Fresh & Easy Neighborhood Market stores in the Bay Area in early 2011.

In the nearly three years since the first Fresh & Easy stores opened - there are currently 168 units; soon to be 155 after Tesco closes 13 stores by November 2, 2010 - Tesco has struggled with Fresh & Easy, losing hundreds of millions of dollars and is closing in on a billion dollar loss. The retailer says it will become profitable in its 2013 fiscal year, at which time it says it plans to have 400 of the 10,000 square-foot Fresh & Easy markets open and operating. But since its projecting a loss in the $250 million range for its fiscal 2010/11 year which ends in February 2011, that's going to be a tall order to achieve. [See: 13 Closing Fresh & Easy Stores List.]

Tesco's struggle with Fresh & Easy has no doubt played some part in Safeway's decision to drop 'The Market' from its future strategic plans, in our analysis, although Burd clearly laid out the metrics back in December 2008. It was a test - in fact a by-the-book test - and as is the case with tests, a decision has now been made.

Additionally, Safeway Stores' CEO Steve Burd is on the record as early as March 2008, saying at the time, as we reported in this story - March 12, 2008: Safeway CEO Steve Burd: 'I'm Not Particularly Worried About Tesco's Fresh & Easy Grocery Stores in California' - that Tesco's Fresh & Easy venture doesn't worry him much as a competitor.

The bottom line is Safeway doesn't really need a dedicated 15,000 square-foot store format in order to sell fresh-prepared foods; it does it just fine in its supermarkets. And if a particular urban location requires a smaller store, it can do a 20,000 square-foot version of its "Lifestyle" format, which "The Market" is essentially a smaller version of anyway.

In a series of stories so far this year we've offered a roadmap to where Safeway Stores, Inc. is going in terms of its format strategy: 43,000-55,000 square-foot "Lifestyle" format stores with expansive fresh food departments and a combination of price/value focused and more upscale food and grocery merchandising elements.

For example, read these three recent pieces from the blog:

>July 25, 2010: Safeway to Start Construction on New Pleasanton, California Flagship Store Soon; Thanksgiving 2011 Target Opening

>August 2, 2010: Safeway Unveils Plans For New 'Lifestyle' Format Store Designed to Fit Today's Berkeley, California Lifestyle

>April 8, 2010: The Branded 'Signature Cafe' in Safeway Stores' Soon to Open 'Social Safeway' in Washington D.C. Should Turn A Few Heads

Like Safeway with its 'The Market' fresh food and grocery store concept, Walmart is preparing to put an end to its 'marketside by Walmart' combination fresh food and grocery format, as it begins to launch a new generation of smaller format stores. [See - September 23, 2010: Revisting 'marketside by Walmart': Format As We Know it On the Way Out But Some or All Of the Four Stores Could Be Converted and October 13, 2010: Simon Says: Walmart U.S. CEO Outlines Smaller Store Strategy and Plans; Walmart to Offer Groceries Online in USA.

Safeway's 'The Market,' Walmart's 'marketside by walmart' and Tesco's 'Fresh & Easy Neighborhood Market' are all three very similar formats - all three are small-format stores that focus on fresh foods with limited assortments of groceries and perishables, for example - and all were launched at about the same time - late 2007 for Fresh & Easy, and mid-2008 for Safeway and Walmart's small-store ventures.

Time will tell if it's a positive development for Tesco to have its Fresh & Easy Neighborhood Market small-format fresh food and grocery chain as the remaining one of the three similar formats. But unlike Safeway and Walmart, Tesco doesn't currently have any other formats to fall back on in the U.S. should that development be a negative and not a positive one.

Related Stories:

March 5, 2008: New Details and Analysis About Safeway's Small-Format Summer SF Bay Area Surprise for Tesco's Fresh & Easy Neighborhood Market

March 12, 2008: Safeway CEO Steve Burd: 'I'm Not Particularly Worried About Tesco's Fresh & Easy Grocery Stores in California'

May 15, 2008: Breaking News: Safeway Opens its First Small-Format 'The Market' Grocery Store Today in Long Beach, California

June 5, 2008: Breaking News: Safeway Stores, Inc. Nearing Negotiation End-Game For its Second Small-Format 'The Market' Store Site; This One in San Jose, California

July 8, 2008: Southern California Market Report: Safeway Stores,'the market by Vons' Mass-Mails First Advertising and Promotional Flyer to Vons Club Card Members

June 6, 2008: More on Safeway's 'The Market' Format: 20-Year Food Retailing Industry Vet Offers Observations and Analysis on 'the Market by Vons,' Long Beach, CA

July 25, 2008: Breaking Competitor News: Safeway Stores, Inc. Plans to Open A Small-Format 'the market by Vons' Grocery Store in Downtown Los Angeles

January 30, 2009: Competitor News: Safeway Stores, Inc. Confirms Second Small-Format 'The Market' Unit to Be in San Jose, CA; Fresh & Easy Buzz Nailed it in June, 2008

Competitor News: Safeway CEO Steve Burd Says Small-Format 'The Market' Is 'Good' So Far But Not 'Great;' But Must Be 'Great' in Order To Expand

Safeway Stores, Inc. chairman, president and CEO Steve Burd (pictured above) offered an approximate eight month assessment of the chain's small-format store test, "the market by Vons", in Long Beach, California, which opened in May of this year, last Thursday during a meeting with analysts at Safeway headquarters in Pleasanton, California (San Francisco Bay Area.)

Burd's assessment thus far of the single test store of the grocer's "The market" format: "good, not great," Burd said on Thursday.

He said the Long Beach store is doing well but isn't setting the house of Safeway on fire, essentially.

Burd says Safeway will open at least two more of the small-format "The Market" stores next year. One of those two stores will be in a converted retail building, the other will be a built from the ground-up store, Burd said.

We believe the new construction store will be at this location in San Jose, California or this one in downtown Los Angeles, or both. which we broke the news on and wrote about earlier this year.

Burd said at the meeting that once the additional two "The Market" format stores are open, "unless the results go from 'good to great' and we feel we can open 30 to 50 of these per year, it won't make enough difference for these stores to be more than an experiment."

Burd's saying this about "The Market" shouldn't come as a shock to anybody, especially regular readers of Fresh & Easy Buzz. We've been writing all along since first reporting last year on Safeway's small-format development that it's an experiment and a test for the supermarket chain, which operates about 1,750 supermarkets under various banners in the U.S. and Canada, and is now ranked as the number four retailer of food and groceries in the U.S., after Wal-Mart, Kroger Co. and Costco.

Safeway's food and grocery retailing focus will continue to be on its Lifestyle format supermarkets. Burd said the company has nearly completed converting all of its supermarkets into its Lifestyle format, which combines discount retailing with a more upscale flair. The supermarkets are customized (we call it mass customization), ranging for being fairly mainstream to being super upscale, depending on the demographics and other criteria of the particular community and neighborhood the store goes into.

Burd also said at the analysts meeting that Safeway will further step-up its value proposition beginning early next year when it will make additional price cuts across all categories on numerous items in its supermarkets.

He also said the aggressive promotional programs, which even include the fresh, prepared and specialty foods categories in the stores, will continue and probably intensify beginning early next year.

Burd said Safeway "will survive" the recession in better shape than some of the price operators who are thriving now. "Recessions are temporary, and strong companies weather the downturns better than weaker companies," he told analysts.

"Some people on Wall Street have questioned whether we have the right strategy for a recession. But we believe you build a strategy to create long-term shareholder value, not to deal with a recession," Burd said.

So far he appears to be correct as Safeway has been doing fairly well despite the recession, thanks though in large part to the fact the grocer recognized the economic downturn early in 2008 and rapidly began expanding its value proposition.

CEO Burd told analysts that Safeway projects 2009 earnings per share of $2.34 to $2.44 and non-fuel ID sales growth of 2% to 3%.

"We believe that, despite all the price investments we plan, we will still be able to expand operating margins," Burd commented.

Reader Resource

Links to some past stories on Safeway's "The Market" from Fresh & Easy Buzz:

May 15, 2008: Breaking News: Safeway Opens its First Small-Format 'The Market' Grocery Store Today in Long Beach, California... June 5, 2008: Breaking News: Safeway Stores, Inc. Nearing Negotiation End-Game For its Second Small-Format 'The Market' Store Site; This One in San Jose, California... July 25, 2008: Breaking Competitor News: Safeway Stores, Inc. Plans to Open A Small-Format 'the market by Vons' Grocery Store in Downtown Los Angeles...

July 8, 2008: Southern California Market Report: Safeway Stores,'the market by Vons' Mass-Mails First Advertising and Promotional Flyer to Vons Club Card Members...July 16, 2008: Former NBA Great Earvin 'Magic' Johnson is Working His Business Magic in Urban, Inner City Neighborhoods; We Offer An Idea For Tesco's Fresh & Easy... June 6, 2008: More on Safeway's 'The Market' Format: 20-Year Food Retailing Industry Vet Offers Observations and Analysis on 'the Market by Vons,' Long Beach, CA

Competitor News: Safeway Stores, Inc. launches its Own Commercial Real Estate Development Division; CEO Burd Says Bad Times Offer Opportunity

Pleasanton, California (San Francisco Bay Area)-based Safeway Stores, Inc., which operates about 1,750 supermarkets under various banners in the U.S. and Canada, including over 500 supermarkets under the Safeway and Vons banners in California, Nevada and Arizona where Tesco's Fresh & Easy Neighborhood Market has its stores, has created a new real estate development division and business that has so far reviewed 36 projects for possible development and is working actively on a handful of the projects, company CEO Steve Burd (picture at top) told analysts during an investor conference last Thursday at Safeway headquarters.

"The opportunities [to develop undervalued real estate] are pretty extraordinary right now for people who can step up to the table", Burd said at the meeting. In other words, Safeway sees the current economic downtown as an opportunity in the commercial real estate space for the company.

The Safeway CEO offered an example of the type of projects Safeway is reviewing. For example, one project "might be" Safeway developing a shopping center where it operates a grocery store, and leasing or selling the retail space surrounding the store. Safeway Stores, Inc. would retain ownership of its grocery store in that center, according to Burd.

The new commercial real estate development business is part of Safeway's expansion beyond its core food and grocery retailing business under Burd's leadership as CEO.

For example, the company created its Blackhawk gift-card business, which started as a small in-house gift card marketing business, selling Safeway store and third-party gift cards in the chain's supermarkets. Blackhawk has now grown into one of the largest gift-card marketing companies in the U.S., marketing and selling third-party gift cards to retail chains nationally as well as via the Internet.

Additionally, earlier this year Safeway created a brand marketing and distribution arm in which it is marketing its O' Organics and Eating Right store brand food and grocery products to other retailers and grocery wholesalers in the U.S., as well as globally.

O' Organics has sales in Safeway supermarkets in the U.S. and Canada of about $500 million. Eating Right is approaching that same sales volume. To put that in scale compared to Tesco's Fresh & Easy in the Western U.S., sales at the grocery chain's about 103 grocery markets are currently in the $400 million range, which is about $100 million less than the 2008 sales of Safeway's O' Organics store brand in its supermarkets. That's not a knock on Fresh & Easy -- it's a start up venture. Rather its merely a comparison in scale to on of the big chains it is competing directly against.

France's Carrefour chain, the number two global retailer after Wal-Mart (Tesco is number three globally) already is selling many of the O' Organics branded items in its stores in Asia. Safeway will soon announce additional retailers outside the U.S., along with some in the U.S., that will offer the brand, along with the Eating Right brand, in their stores.

This summer Safeway created a corporate health care subsidiary based on the programs the retailer has implemented within the company that have resulted in substantial health care cost savings for Safeway, which offers health care plans to all of its employees.

Add the commercial real estate division to this fast-growing non core retailing aspect of Safeway Stores, Inc.

Safeway owns lots of real estate, especially in California and elsewhere in the Western USA. The grocery chain also develops lots of real estate by virtue of the fact its supermarkets generally serve as retail anchors in shopping centers. As a result, it makes logical sense for the company to get into the commercial real estate business since the synergies with its core supermarket retailing business are obvious.

As Burd mentioned at the analysts meeting last Thursday, part of the motivation for getting Safeway into the commercial real estate business has to do with the numerous undervalued properties available at present, with the financial crisis and economic recession in full bloom. Additionally, the residential foreclosure crisis has spread significantly into the commercial sector, particularly in the Western U.S., which means there currently are numerous properties on the market at deep discounts.

Big supermarket chains like Safeway, Tesco, and others are at an advantage because the business generates lots of cash flow compared to other types of businesses, as well as compared to other forms of retailing. Therefore this cash flow makes it easier for the big chains to have cash available to invest in areas like commercial property development.

Further, having its own commercial real estate arm offers some real cost savings for Safeway in terms of developing new retail store sites and now in creating new shopping centers in which it can anchor with its supermarkets.

Safeway CEO Steve Burd: 'I'm Not Particularly Worried About Tesco's Fresh & Easy Grocery Stores in California'

Safeway Stores, Inc. CEO Steve Burd, speaking at the Bank of America 2008 Consumer conference today in New York, said he is not "particularly worried' about Tesco plc.'s California invasion with its small-format Fresh & Easy Neighborhood Market grocery stores.

California is Safeway's home turf. The grocery chain has its corporate headquarters in the San Francisco Bay Area city of Pleasanton and operates about 750 stores in California and Arizona, under the Safeway, Vons, Pavillions and Pak N' Save banners. California and Arizona are Tesco's two primary market regions for its Fresh & Easy grocery markets.

Burd said that according to Safeway's research, each one of the 10,000 square foot -to- 13,000 square foot Fresh & Easy grocery stores that open within 1.5 miles of a Safeway supermarket has only 10% of the impact of the opening of a standard sized supermarket.

Just in case though, Safeway plans to open the first four or five of its own small format (15,000 -to- 20,000 square feet) convenience-oriented grocery stores this summer in the San Jose region in the Bay Area. [Read our recent March 5 piece about Safeway's new, small-format store development here.]

Tesco, the third-largest retailer in the world, has thus far opened 58 of its small-format, convenience-oriented Fresh & Easy grocery markets in Southern California, Arizona and the Metropolitan Las Vegas, Nevada region. The stores feature a limited-assortment of Fresh & Easy store brand and national brand everyday grocery items, along with specialty, natural and organic groceries. The grocery markets also sell an extensive selection of prepared foods, merchandise fresh produce and meats, wines and craft beers, fresh flowers, and a limited assortment of non-foods items.

The United Kingdom-based grocer also has signed leases for an initial 18 Fresh & Easy stores in the San Francisco Bay Area, along with inking deals for 19 of the grocery stores in the Sacramento region. The Northern California stores are expected to start opening perhaps as early as the end of this year but more likely beginning in early 2009.

At today's Bank of America conference, Safeway's Burd also said the grocery chain, which operates 1743 stores in the U.S. and Canada, will start to focus more on "everyday value pricing" rather than its current focus on "high-low" or promotional pricing.

That's fairly big news for the retailer. Burd said promotional pricing can and does drive people into the stores. However, he reminded conference attendees that in 2005 he said creating lower everyday pricing on a wide variety of items was the chain's goal since launching its "Lifestyle" format and store remodeling program in 2005.

The Lifestyle format has proven successful for Safeway. In fact, last year Burd announced the grocery chain would remodel all of its supermarket banner stores to fit the format. In January, Burd said the chain had about 65% of its stores now converted to the Lifestyle format.

Today, Burd said a series of ongoing cost reduction measures and improved business processes will make it possible for Safeway to this year start its focus on the "better everyday value" pricing program.