Pondering Albertsons/Safeway Florida Expansion
Most of us probably expected the new Safeway leadership would look to expand the company’s reach into neighborhoods which are not currently being served by the California-based chain, so the news that Albertsons in Florida will be converted to Safeway stores comes as no surprise.
However, it would seem to make better “business-sense” for Safeway to sell its handful of Albertsons stores in Florida. Having entered the Florida market in 1984, Safeway has never been able to successfully dominate or compete well with the Sunshine State’s home-grown market leader, Publix. While both companies are top-tier large operators, Publix clearly is a customer favorite in the entire state of Florida and has catered to the local communities there since founder George Jenkins opened up shop back in 1930.
Safeway has experienced successful expansions in less-competitive regions throughout its history. The Washington, D.C., region has proven to be a solid foothold for the company, which currently maintains a solid No. 2 spot in market share in the nation's capital.
Expansion in the Maryland region has been stagnant, however, as the chain has not done enough to differentiate itself from its competitors who continue to grow. Many grocery shoppers still do not identify Safeway as having a particular niche. As many supermarket chains have proven, in order to survive in today’s grocery industry, each retailer must identify and excel at a specific niche, be it price, quality, service, selection, or something else. Once the niche is established, the retailer must promote and market it effectively to customers.
A large part of the grocery shopping experience is psychological and emotion-based. Safeway has attempted to enter into fiercely competitive regions with the mindset that its size and buying power will prevail. That theory has not always worked well for the Pleasanton, Calif., chain. Back in 2001, Safeway moved into expansion mode in the Delaware Valley region with the purchase of the now defunct Norristown, Pa.-based 40-unit Genuardi’s Family Markets chain. In addition to paying a premium purchase price of $600 million for the stalwart family-held grocer, Safeway instituted many changes at Genuardi’s, which caused a drastic decrease in local market share.
Today, the regionally-known and recognized name, Genuardi’s, is all but a dream and nowhere to be found. Instead of leaving proven procedures in place, Safeway tends to beat to their own drummer rather than to tailor each store’s selection and offerings according to the neighborhoods that are served.
As recent as 2013, Safeway has exited the highly competitive Chicago region with its sale of the Dominick’s stores, along with ceasing its Canada division with a large sale transaction to Sobeys. Safeway has succeeded and continues to be a leading competitor in the Western region of the country, where it's operated and dominated the marketplace for decades.
But grocery retailing throughout the East Coast region is much different. From consumer buying habits and dietary concerns, to specific merchandising, price and service, regional and national grocers must identify their niches, and become proficient at local merchandising, competitive pricing and impeccable service.
Retail food competition is growing by the day. Who would have thought, 30 years ago, that drug stores, dollar stores, and mass-merchandisers like Wal-Mart and Target would be competing for the same grocery dollar, against traditional supermarket chains, while selling similar products and services?
In Florida, the Publix name is synonymous with an overall pleasant and enjoyable shopping experience. Rightfully so, they have solidified their presence as the No. 1 traditional grocer in Florida. With such a saturated and competitive grocery retail climate in the Sunshine State, it will be interesting to watch Safeway implement a growth strategy (again) in the Florida region.