Goodbye centralization. Sayonara to excessive process. Adios to poor communication. March 4 proved to be a day of reckoning for Safeway’s eastern division as members of the company’s leadership team told a packed house at Martin’s Crosswinds in Greenbelt, MD that Safeway’s previous bureaucratic go-to-market-model is a thing of the past.
Led by New Albertsons, Inc. (NAI) COO Jim Perkins and new Safeway eastern division president Steve Burnham, the new management team emphasized the importance of quickly converting to a decentralized operating system for Safeway’s 127 stores in Maryland, Virginia, Washington, DC and Delaware.
Perkins, who was recently promoted to oversee NAI (Safeway eastern, Acme, Jewel and Shaw’s/Star) told the audience he sees a quicker turnaround for Safeway’s business than the one needed at Acme when he was named president in March 2013, following the purchase of 877 stores by Cerberus/AB Acquisition from Supervalu.
“Frankly, Safeway’s properties are in superior shape than Acme’s were and current sales are also better. We can turn this thing around more quickly but we need your (vendors) help,” Perkins noted.
Much like he did at Acme in the spring of 2013, the self-proclaimed “Hillbilly from Philly” implored the vendors to bring Safeway new ideas designed to sell more product. He added that, as a privately-held company, seeking margin was less important than driving sales and he asked the supplier community to “Make it happen, lay the wood on it – we want to make you heroes.”
Steve Burnham, who became eastern division president in September after serving Safeway in a number of roles for the past 26 years (including corporate VP-produce, floral and bakery and VP-retail market execution for Vons), simplified the new organization’s focus: “Sales, sales and sales.”
“We want to be the best local supermarket. We’re evolving quickly from a centralized company to a decentralized one; from national to local. We will become nimble and not as complex.
We are focused on being a real competitor in this market,” he said. Safeway’s eastern division is the first of 14 Safeway divisions to undertake the conversion to a decentralized model.
Cerberus/AB Acquisition’s $9.2 billion purchase of Safeway became final on January 30, but some preparation was done late last year in anticipation of the FTC’s approval of the deal.
Included in that pre-planning was a store “clean up” of the division’s top 21 units.
“This wasn’t a big investment,” Burnham explained. “We literally scrubbed our best stores to give them a fresh look. Each store took 3-5 days to clean. From that initial clean up we have already seen a solid sales increase in the stores we’ve completed.”
He added that several other changes contributed to the early success.
“Our store directors are more empowered than they’ve ever been. They are truly the CEOs of their stores and they’re really enjoying the freedom and flexibility.”
Tom Lofland, Safeway eastern division’s new VP of marketing and merchandising, who joined the company’s Jewel-Osco division last year after a stint at K-VA-T (Food City) in Abingdon, VA (he was also an Albertson alumnus), told the vendors “We can’t win without you. Please challenge us.”
Like Burnham he said the company’s goals are “Sales, sales and sales. We have the best consulting group in the industry – our 10,700 associates. They are passionate and engaged and they will prove to be difference makers as we continue to grow.”
Concerning some timing issues, Lofland stated that as of March 1, everything will run through Lanham, MD (“we own it”) but the division will continue to implement already agreed upon Safeway programs through June and all schematics (plan-o-grams) will remain in place through August.
In detailing the division’s merchandising expectations, Lofland disclosed, “We will work from the stores back. We will follow a team concept. We will act with integrity. We view this as a fight. There will be winners and losers and we’re determined to win.”
He referred to the six “Ps” as being of vital importance: product, placement, price, promotion, people and protecting the brand.
“We have a proven business model, but we can’t do it without you, our vendor partners,” he affirmed.
Some changes from the previous Safeway marketing model include a monthly “big book” of promotions designed to produce additional marketing funds and faster product movement and a more aggressive response to competitive openings in the Baltimore-Washington market.
Merchandising-wise, Lofland said that Safeway eastern wants to “Simplify everything – sales message, displays and product allocation. Be all in! One size does not fit all. Bring us stuff that sells products. Go big – think shippers and pallets.”