Safeway, here’s one for the road

March 28, 2014

Imminent new parent Cerberus could boost Safeway with its car rental and film industries expertise.

Industry watchers speculate heavily about what Cerberus might do with Safeway once the $9 billion deal concludes – break it up, spruce it up, merge it with Albertsons, or find ways to make stores more productive.

The Lempert Report thinks Cerberus could derive more value from Safeway if it assesses each store’s potential to tie in with some of Cerberus’s former and current businesses. Specifically, we see opportunities to partner car rentals with food (Cerberus knows this business because it used to own Alamo and National), and to create special Hollywood entertainment events and contests for shoppers (Cerberus currently owns Spyglass Entertainment Group).

Both could further sync Safeway with consumers’ evolving lifestyles – though differently than the concerted health-wellness push by the chain’s former CEO Steven Burd.

First, supermarkets are neighborhood hubs with many parking spaces. If Safeway (or other chains) devoted some to cars on hand for rental (like Hertz Local) or sharing (zipcar), they’d appeal to Millennials who do shy from car ownership but spend willingly on experiences, and need wheels to reach the places they seek.  As an added plus, when people reserve their cars online, they could also reserve prepared food baskets at a specific pickup time for their jaunts.  Stores could also develop deals for car use, just as they do now for shoppers’ gasoline purchases.

Second, Safeway stores – especially in and around southern California - could benefit from Cerberus’s involvement in the movie industry.  The company could engage star-struck shoppers who are film fans with contests and promotions where prizes and rewards include tickets for screenings and other special events, where they might enjoy a memorable celebrity brush. 

Both ideas could raise Safeway’s usefulness and image with current and potential new customers.