Safeway In Discussions About Potential Sale

By Anna Rose Welch, Editorial & Community Director, Advancing RNA

Company sees some improvement in fourth quarter, but sale could strengthen survival in competitive market

Safeway is currently engaging in discussions about a possible sale of the company. In its fourth quarter financial report released last week, the company has acknowledged it is considering its options, but says that there is no guarantee these negotiations “would lead to an agreement or completed transaction.”

Rumors of a potential sale began in October when reports showed that private equity firm Cerberus Capital Management, which operates Albertsons and Shaw’s supermarkets, was considering purchasing all or a portion of Safeway. It’s unclear if Cerberus is still a potential suitor. However, if it is, analysts believe their combined supermarkets would be a dominant force. This union could also help improve grocery stores’ chances of survival in a market where consumers are increasingly turning to Walmart and Target for groceries.

The company has been encountering some financial difficulties because of increasing completion. Last year, the company left the Chicago market, closing all of its 72 Dominick’s stores in the city. It also sold its operations in Canada, which included over 200 Safeway grocery stores, as well as several liquor stores, manufacturing facilities, and four distribution centers. Last week, Safeway released its fourth quarter sales results, which showed a very slight increase in sales from $11.2 billion to $11.3 billion. Its same-store sales, excluding fuel, also increased by 1.6 percent, which CEO Robert Edwards says is the best same-store sales growth the company has seen in five years.

Regardless, as the market becomes more crowded, Safeway has been facing pressures from investors to improve its financial standing and create an innovative shopping experience for its customers. The launch of the Just for U loyalty program back in 2012 was very encouraging for the company, which began seeing positive results shortly after it was launched. According to a Loyalty360 article from last spring, the grocer expected enrollment in the loyalty program to hit 6 million members by the end of 2013. Not only were same-store sales boosted following the launch, but the program — less than a year old at the time — accounted for 45 percent of Safeway’s sales. For those enrolled, the program provides personalized offers based on the customer’s past purchases. There was even talk of the company being able to discontinue print ads in the U.S. As more and more people become digital shoppers, the company hopes to keep making key changes to its promotional strategies to remain relevant to the twenty-first century shopper.  

Meeting The Consumer Where They Want To Buy

Want to publish your opinion?
Contact us to become part of our Editorial Community.