We reported yesterday about an editorial in the Houston Business Journal that attacked Safeway for mismanaging the Randalls brand there since it acquired that chain in 1998.
The Journal said that Randalls has seen its market share cut in half because 1) the Randalls shopping experience has become more homogenous and less differentiated; 2) its popular President’s Choice private label was replaced by the less distinctive Safeway private label; 3) Safeway never put a premium on innovation, which was a hallmark of the Randalls approach; 4) lost its personality, which used to be personified by Randall Onstead, son of the company founder; and 5) depended on price as a point of difference, which was an unsupportable approach and flew in the face of customer preferences – Randalls shoppers actually were willing to pay more for better products and a better experience.
We suggested in our commentary that this is not a Safeway issue, but a broader industry problem:
Think about many or even most of the supermarket chains operating in this country. How many are guilty of the same sorts of mistakes and missteps?
Think about it.
A homogenous rather than differentiated shopping experience.
Private label that doesn’t build brand equity.
A lack of innovation. (Every company should have a team of people charged with figuring out how to put it out of business…and then using those conclusions to revolutionize the company structure and shopping experience. But few do.)
Lack of personality.
An unsupportable focus on price.
These aren’t Safeway problems. (In fact, you could argue that with its new focus on Lifestyle stores and health/nutrition marketing, Safeway is trying to change its stripes.) These are the problems of an industry that is sometimes perilously close to irrelevance.
MNB user David Livingston wrote:
The problems the newspaper listed for Randall's apply to a lot of other supermarket companies as well. But you have to admit, Safeway did do an extremely poor job in Houston. That's what happens when you have accountants making marketing decisions. Wal-Mart and HEB did do a number on Safeway. Those two will do a number on just about any competitor in Texas with perhaps the exception being Whole Foods. Wait until the "Lifestyles" stores open.
My guess is it will take them about 6 months before they look like a Safeway again. Randall's had already opened a version of a "lifestyles" store years ago called Randall's Flagship. Those were great stores until Safeway turned them into Safeway type stores.
The sales volumes of Randall's are so low now, I really thing they are beyond repair. I think their best bet is to sell the real estate to HEB, Kroger, Fiesta, and Wal-Mart Neighborhood Market. My advice to Safeway would be don't waste your time, reel in your ego, and move on. You don't have enough stores, you don't have enough market share, you don't have the sales per sq. ft, and you are totally out classed by the competition.
One MNB user responded:
It is not the industry, it is the combined and maybe sole leadership of Safeway that created this demise at Randalls. Often leaving well-run companies alone and learning from them is not a bad thing-even though the shareholder's return isn't up to expectations - now look at what you are faced with. Could you imagine if these individuals got hold of Wegmans or Marsh.....when will they learn?
The customer is king and unfortunately these jesters are a bunch of jokes. It is such a simple business and somehow they forgot how to get the food to the end of the fork and the Randall customers ...well they left it on the plate.
MNB user Jim Farina wrote:
You could write that same story and substitute the word "Genuardi's" for "Randall's" and the outcome would be the same. Safeway bought Genuardi's, a high-end, high-service level store that had a fanatically loyal customer base. And ruined it following the same five-step formula.
Another MNB user wrote:
What's shocking to me is that big companies (like Safeway) acquire excellent regional supermarkets and rather than capitalize on the things that have made them successful they immediately start to change everything in order to fit their mold. Why not take full advantage of the operational expertise these chains have clearly demonstrated and export the insights gained back to corporate?
I worked for Genuardi's Family Markets in Philadelphia and watched helplessly as they dismantled and crippled one of the best supermarket chains in the country. To this day the damage continues to be done. Genuardi's is now just another mediocre player in the game.
FYI, it was never our intention to take Safeway off the hook. Just to make a larger point – that Safeway should not be looked at as an isolated case.
Regarding the possibility that Tesco could take an ownership position with Meijer, MNB user Thomas Murphy wrote:
Don't you think that several of the reasons why Tesco has been successful against Wal-Mart in the UK don't exist in the US, specifically with Meijer? I don't mean to imply that Tesco isn't a great operator and merchandiser, only that the following points of leverage don't exist:
1) Tesco has the best locations in a market that is property starved.
2) Tesco has "pioneer advantage"...they already had the high ground, the brand awareness and the hearts of the UK consumer BEFORE Wal-Mart came to town.
3) The practice of buying huge quantities of groceries/goods monthly or even weekly, is not common in the UK.
Meijer is a good operator, but remember, they went through a huge cost cutting initiative several years ago...and are probably still in it.
This implies to me that the problem is less merchandising and more the disadvantage of a smaller scale...something that being private has brought about. An investment by Tesco, in my opinion, will only be valuable in the war against Wal-Mart if Meijer uses it to expand...dramatically.
In a story yesterday about Massachusetts Blue Laws preventing supermarkets from opening there on Thanksgiving, we suggested that it was time to take those laws – originally drawn up centuries ago - off the books.
MNB user Geoff Harper offered some perspective:
Your comment was that it may be time to rethink the Puritan Blue Laws. This is a decades-long and ongoing pitched battle. The industry generally wants to be open when customers want it to be.
But there are very powerful forces resisting any change. Some progress was made over the past twenty years, but very slowly and with trade-offs. For example, Sundays and most holidays are time and a half pay and work is voluntary. The Boston Globe incorrectly reported that there are three days per year that stores must close; it is accurate that Thanksgiving and Christmas are must-close days, but New Year's Day is not.
Columbus Day and Veterans' Day require a permit from the local police chief to open before noon and 1:00 PM respectively; most give it as a matter of course, but there is at least one town (Weymouth) that will not allow stores to open before 1:00 PM.
It will take a long time before the Blue Laws go away.
Most people who wrote in, however, were critical of our position.
One MNB user wrote:
While your sitting home (or dining out, I guess) on Thanksgiving, consider the poor supermarket clerk who has to be away from his family to pack out onions. Let's give them a break. Thanksgiving is a National holiday. Only essential personnel (Fire, Police, EMS etc) should be required to work. No one needs a supermarket or any retail outlet to be open on a holiday. Stay home and enjoy the day. Let them too!!!
Another MNB user wrote:
Stores can not open on holidays without employees having to work in them. The blue laws give employees the opportunity to spend at least one day relaxing with family and friends, even if that was not the law’s original intent.
Another member of the MNB community wrote:
I applaud Massachusetts! I work in grocery retail and think it is too bad we all don’t have blue laws.
MNB user Amanda Coussoule wrote:
As a new resident of Massachusetts, I personally think it's refreshing that there are still blue laws on holidays here. Yes, it's a bit inconvenient for those of us who may forget the cranberry sauce AGAIN this year, but without such laws, there are retail workers who are forced to spend their holiday hours away from family and friends and behind a register or on the floor. Call me what you will, but I prefer to think of myself as "retro" on this issue.
Another MNB user wrote:
It seems that some people will do anything for the almighty DOLLAR, unless pressed to do otherwise. It was the Puritan and Christian Ideals that founded this country and attracted others. Look at what has happen since getting away from those ideals. We need more Blue Laws, if just to force some families to spend at least one day together and not running around.
Still another MNB user wrote:
As a logical alternative to "Blue Laws", I think state laws that prevent employers from requiring their employees to work on holidays such as Thanksgiving serve a legitimate government interest. I doubt that the top executives of these companies are working that day (or the day after for that matter). If these stores can get sufficient true volunteers (perhaps by offering double time) to work on Thanksgiving, let them stay open.
MNB user David Metz offered some perspective:
The year I was born in Long Island, NY was 1953, the year I left and went into the Service 1972. it was during this time that I can remember the Blue Law. I felt it kept the families together. It did not make a difference what religion you were, we all benefited from the down time. It was a time when our grandparents would come to Long Island from the city and visit with their sons, daughters and grand children and other relatives. The only businesses that were open were diners, fancy restaurants and a few gas stations, No mechanics were on duty, just a gas station attendant. Grocery stores were closed by 6:00 PM on Saturday.
I worked for BOHACK back then. It was a time when you had to buy your bear on Saturday because on Sunday in some parts of the country you could not by alcohol on Sunday what a concept. It was a time when the boys of the block chose up sides and played a game of base ball at on the school grounds, at the sand lot or played stick ball on the street. We did not have all these fancy computerized games that they have today that kept us inside. Our Mothers told us to go outside and play with the others kids on the block of whom I still meet with each year in Vegas and have a great time reminiscing of days gone by. There is something to be said for what was.
There’s a lot to be said, and many of us have similar memories.
But wishing that the world were more like it was in the 1950s won’t make it so.
Another MNB user wrote:
I will agree with you that the “blue laws” in MA need to be revisited. But what is wrong with workers being able to be home during the holiday?? With the frenzy that comes in the days proceeding the holiday, the associates working in the stores DESERVE to be home with their families! That is what it is all about – not making another buck!!! Your comment goes against your recent articles about cooking and eating at home.
We actually weren’t arguing that all stores should be open on Thanksgiving and all workers forced to work. Just that legal impediments ought to be removed.
Speaking of eating at home, one MNB user offered the following thought:
While I understand that 10% of the population does not wish, for whatever reasons, to cook a dinner at home, it saddens me. In our extended family we have a chef. His life is not his own, nor does he ever have the experience of being with his family on a holiday. (At best, he comes home late after a grueling day to prepare food for his family.) He is not happy doing other things (which he has tried). His skills are used to enhance the holidays for people he does not know or care about. He is not well paid for his skills. I know "it's his job" but it certainly is not good.
Love is spoken to family through food preparation and fellowship is built through eating a great repast together in a home. It is NOT the same thing in a restaurant at all. I am the family matriarch, but my son and his wife share hosting opportunities on holidays with us by taking turns. We also entertain others at meals in our home and often find that people are very reluctant to leave when the meal is over. This is not the case if we meet in a restaurant. The home atmosphere cannot be replaced.
If the custom of family holiday meals in homes changes, it will be a very sad ending to an era and the family bonding it creates will be lost in the change.
The Journal said that Randalls has seen its market share cut in half because 1) the Randalls shopping experience has become more homogenous and less differentiated; 2) its popular President’s Choice private label was replaced by the less distinctive Safeway private label; 3) Safeway never put a premium on innovation, which was a hallmark of the Randalls approach; 4) lost its personality, which used to be personified by Randall Onstead, son of the company founder; and 5) depended on price as a point of difference, which was an unsupportable approach and flew in the face of customer preferences – Randalls shoppers actually were willing to pay more for better products and a better experience.
We suggested in our commentary that this is not a Safeway issue, but a broader industry problem:
Think about many or even most of the supermarket chains operating in this country. How many are guilty of the same sorts of mistakes and missteps?
Think about it.
A homogenous rather than differentiated shopping experience.
Private label that doesn’t build brand equity.
A lack of innovation. (Every company should have a team of people charged with figuring out how to put it out of business…and then using those conclusions to revolutionize the company structure and shopping experience. But few do.)
Lack of personality.
An unsupportable focus on price.
These aren’t Safeway problems. (In fact, you could argue that with its new focus on Lifestyle stores and health/nutrition marketing, Safeway is trying to change its stripes.) These are the problems of an industry that is sometimes perilously close to irrelevance.
MNB user David Livingston wrote:
The problems the newspaper listed for Randall's apply to a lot of other supermarket companies as well. But you have to admit, Safeway did do an extremely poor job in Houston. That's what happens when you have accountants making marketing decisions. Wal-Mart and HEB did do a number on Safeway. Those two will do a number on just about any competitor in Texas with perhaps the exception being Whole Foods. Wait until the "Lifestyles" stores open.
My guess is it will take them about 6 months before they look like a Safeway again. Randall's had already opened a version of a "lifestyles" store years ago called Randall's Flagship. Those were great stores until Safeway turned them into Safeway type stores.
The sales volumes of Randall's are so low now, I really thing they are beyond repair. I think their best bet is to sell the real estate to HEB, Kroger, Fiesta, and Wal-Mart Neighborhood Market. My advice to Safeway would be don't waste your time, reel in your ego, and move on. You don't have enough stores, you don't have enough market share, you don't have the sales per sq. ft, and you are totally out classed by the competition.
One MNB user responded:
It is not the industry, it is the combined and maybe sole leadership of Safeway that created this demise at Randalls. Often leaving well-run companies alone and learning from them is not a bad thing-even though the shareholder's return isn't up to expectations - now look at what you are faced with. Could you imagine if these individuals got hold of Wegmans or Marsh.....when will they learn?
The customer is king and unfortunately these jesters are a bunch of jokes. It is such a simple business and somehow they forgot how to get the food to the end of the fork and the Randall customers ...well they left it on the plate.
MNB user Jim Farina wrote:
You could write that same story and substitute the word "Genuardi's" for "Randall's" and the outcome would be the same. Safeway bought Genuardi's, a high-end, high-service level store that had a fanatically loyal customer base. And ruined it following the same five-step formula.
Another MNB user wrote:
What's shocking to me is that big companies (like Safeway) acquire excellent regional supermarkets and rather than capitalize on the things that have made them successful they immediately start to change everything in order to fit their mold. Why not take full advantage of the operational expertise these chains have clearly demonstrated and export the insights gained back to corporate?
I worked for Genuardi's Family Markets in Philadelphia and watched helplessly as they dismantled and crippled one of the best supermarket chains in the country. To this day the damage continues to be done. Genuardi's is now just another mediocre player in the game.
FYI, it was never our intention to take Safeway off the hook. Just to make a larger point – that Safeway should not be looked at as an isolated case.
Regarding the possibility that Tesco could take an ownership position with Meijer, MNB user Thomas Murphy wrote:
Don't you think that several of the reasons why Tesco has been successful against Wal-Mart in the UK don't exist in the US, specifically with Meijer? I don't mean to imply that Tesco isn't a great operator and merchandiser, only that the following points of leverage don't exist:
1) Tesco has the best locations in a market that is property starved.
2) Tesco has "pioneer advantage"...they already had the high ground, the brand awareness and the hearts of the UK consumer BEFORE Wal-Mart came to town.
3) The practice of buying huge quantities of groceries/goods monthly or even weekly, is not common in the UK.
Meijer is a good operator, but remember, they went through a huge cost cutting initiative several years ago...and are probably still in it.
This implies to me that the problem is less merchandising and more the disadvantage of a smaller scale...something that being private has brought about. An investment by Tesco, in my opinion, will only be valuable in the war against Wal-Mart if Meijer uses it to expand...dramatically.
In a story yesterday about Massachusetts Blue Laws preventing supermarkets from opening there on Thanksgiving, we suggested that it was time to take those laws – originally drawn up centuries ago - off the books.
MNB user Geoff Harper offered some perspective:
Your comment was that it may be time to rethink the Puritan Blue Laws. This is a decades-long and ongoing pitched battle. The industry generally wants to be open when customers want it to be.
But there are very powerful forces resisting any change. Some progress was made over the past twenty years, but very slowly and with trade-offs. For example, Sundays and most holidays are time and a half pay and work is voluntary. The Boston Globe incorrectly reported that there are three days per year that stores must close; it is accurate that Thanksgiving and Christmas are must-close days, but New Year's Day is not.
Columbus Day and Veterans' Day require a permit from the local police chief to open before noon and 1:00 PM respectively; most give it as a matter of course, but there is at least one town (Weymouth) that will not allow stores to open before 1:00 PM.
It will take a long time before the Blue Laws go away.
Most people who wrote in, however, were critical of our position.
One MNB user wrote:
While your sitting home (or dining out, I guess) on Thanksgiving, consider the poor supermarket clerk who has to be away from his family to pack out onions. Let's give them a break. Thanksgiving is a National holiday. Only essential personnel (Fire, Police, EMS etc) should be required to work. No one needs a supermarket or any retail outlet to be open on a holiday. Stay home and enjoy the day. Let them too!!!
Another MNB user wrote:
Stores can not open on holidays without employees having to work in them. The blue laws give employees the opportunity to spend at least one day relaxing with family and friends, even if that was not the law’s original intent.
Another member of the MNB community wrote:
I applaud Massachusetts! I work in grocery retail and think it is too bad we all don’t have blue laws.
MNB user Amanda Coussoule wrote:
As a new resident of Massachusetts, I personally think it's refreshing that there are still blue laws on holidays here. Yes, it's a bit inconvenient for those of us who may forget the cranberry sauce AGAIN this year, but without such laws, there are retail workers who are forced to spend their holiday hours away from family and friends and behind a register or on the floor. Call me what you will, but I prefer to think of myself as "retro" on this issue.
Another MNB user wrote:
It seems that some people will do anything for the almighty DOLLAR, unless pressed to do otherwise. It was the Puritan and Christian Ideals that founded this country and attracted others. Look at what has happen since getting away from those ideals. We need more Blue Laws, if just to force some families to spend at least one day together and not running around.
Still another MNB user wrote:
As a logical alternative to "Blue Laws", I think state laws that prevent employers from requiring their employees to work on holidays such as Thanksgiving serve a legitimate government interest. I doubt that the top executives of these companies are working that day (or the day after for that matter). If these stores can get sufficient true volunteers (perhaps by offering double time) to work on Thanksgiving, let them stay open.
MNB user David Metz offered some perspective:
The year I was born in Long Island, NY was 1953, the year I left and went into the Service 1972. it was during this time that I can remember the Blue Law. I felt it kept the families together. It did not make a difference what religion you were, we all benefited from the down time. It was a time when our grandparents would come to Long Island from the city and visit with their sons, daughters and grand children and other relatives. The only businesses that were open were diners, fancy restaurants and a few gas stations, No mechanics were on duty, just a gas station attendant. Grocery stores were closed by 6:00 PM on Saturday.
I worked for BOHACK back then. It was a time when you had to buy your bear on Saturday because on Sunday in some parts of the country you could not by alcohol on Sunday what a concept. It was a time when the boys of the block chose up sides and played a game of base ball at on the school grounds, at the sand lot or played stick ball on the street. We did not have all these fancy computerized games that they have today that kept us inside. Our Mothers told us to go outside and play with the others kids on the block of whom I still meet with each year in Vegas and have a great time reminiscing of days gone by. There is something to be said for what was.
There’s a lot to be said, and many of us have similar memories.
But wishing that the world were more like it was in the 1950s won’t make it so.
Another MNB user wrote:
I will agree with you that the “blue laws” in MA need to be revisited. But what is wrong with workers being able to be home during the holiday?? With the frenzy that comes in the days proceeding the holiday, the associates working in the stores DESERVE to be home with their families! That is what it is all about – not making another buck!!! Your comment goes against your recent articles about cooking and eating at home.
We actually weren’t arguing that all stores should be open on Thanksgiving and all workers forced to work. Just that legal impediments ought to be removed.
Speaking of eating at home, one MNB user offered the following thought:
While I understand that 10% of the population does not wish, for whatever reasons, to cook a dinner at home, it saddens me. In our extended family we have a chef. His life is not his own, nor does he ever have the experience of being with his family on a holiday. (At best, he comes home late after a grueling day to prepare food for his family.) He is not happy doing other things (which he has tried). His skills are used to enhance the holidays for people he does not know or care about. He is not well paid for his skills. I know "it's his job" but it certainly is not good.
Love is spoken to family through food preparation and fellowship is built through eating a great repast together in a home. It is NOT the same thing in a restaurant at all. I am the family matriarch, but my son and his wife share hosting opportunities on holidays with us by taking turns. We also entertain others at meals in our home and often find that people are very reluctant to leave when the meal is over. This is not the case if we meet in a restaurant. The home atmosphere cannot be replaced.
If the custom of family holiday meals in homes changes, it will be a very sad ending to an era and the family bonding it creates will be lost in the change.
- KC's View:
