Safeway Not Giving Up on Center Store, Says CMO

Safeway is committed to revitalizing the center store even as it places greater emphasis on perishable offerings, according to Brian Cornell, the company's chief marketing officer. Cornell, who joined Safeway in April 2004, made the remarks during a presentation last week at the Grocery Manufacturers of America's Merchandising, Sales & Marketing Conference. The supermarket operator is heavily invested in differentiating itself around the perimeter. It has rolled out a new "proof of concept" format emphasizing perimeter departments to 100-plus stores, and its current ad campaign touts fresh produce and a Signature private-label line of prepared sandwiches and soups. But "while driving our perishable quality is job one," Cornell said, "we are also focused on revitalizing the center of our store."One of the ways the chain will do that is through merchandising events that bring center-store items out to the perimeter. "We want to utilize affinity merchandising in our dairy departments, our meat departments, and around the perimeter," Cornell said, adding that Safeway is bringing in select CPG companies to develop cross-merchandising programs with proprietary products like the Signature line of fresh sandwiches.Overall, Cornell said, Safeway "wants to be known as a company that does a phenomenal job of maximizing front-page executional support" to create a consistent company-wide merchandising message -- particularly in store lobbies, which Cornell cited as a key merchandising area. "We want to make sure that when you walk into our stores ... whether it's Seattle or Dallas, there's a similar theme in that lobby each week." This increased commitment to execution is exemplified by a collaborative supply chain revamp recently undertaken by Safeway and Kraft Foods. Through the initiative, the partners were able to increase sales of Capri Sun (Safeway's top-selling Kraft SKU) by more than 160% and conduct the most successful Macaroni & Cheese sales event in the chain's history. The two now work so closely that an observer "wouldn't know who represented Kraft and who represented Safeway" during a meeting between the two, according to Linda Nordgren, vice president of supply chain for Safeway, who also spoke at the conference. Cornell said that Safeway is not abandoning its position as a high-low retailer, although it is looking to transition to a dead-net pricing model in select categories. "We are not moving to an EDLP platform, but we also recognize that it's important to be price-right on ... key reference point items," he said. Going forward, the chain will target promotional pricing toward small households -- a growing demographic group -- by focusing on smaller SKUs and balancing the "historical focus on multiples and 'buy one, get one' promotions with single-unit offerings." In addition, the chain will center promotional activity around pay periods rather than the end of the month.Among other insights delivered at the GMA show: Tim Rose, senior vice president of food, sundries and fresh foods for Costco, urged vendors to be open-minded when working with the warehouse club channel. "A lot of manufacturers assume ... that [a certain item] is not a club item," when in fact Costco is open to non-traditonal products. Jack Flanagan, executive vice president of business systems for grocer Giant Eagle, echoed the sentiment when he suggested vendors present his chain with the same programs they offer to retailers in other channels. "Let's just blow up this whole notion of channels," Flanagan said. "I want to know what items are meaningful for our customer ... not what works for supermarkets." Retailers and vendors need to develop an environment of trust to move the industry forward, said James Flannery, director of customer development for Procter & Gamble. "Everybody is talking about the need to collaborate ... but nobody wants to share the data," Flannery said. "Now more than ever, the industry needs to pull together." GMA's annual show was held Sept. 21-24 in Colorado Springs, CO.

Safeway Not Giving Up on Center Store, Says CMO

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