What's Next for Safeway?

The Lempert Report
April 15, 2014

A few ideas we think could raise Safeway’s image with current and potential new customers.

Now private equity giant Cerberus Capital Management has purchased Safeway in a $9 billion takeover deal, the speculation has begun on what might be done. Will they break it up, spruce it up, merge it with Albertsons, or find ways to make stores more productive?

In our opinion, Cerberus could get more value from Safeway if it assesses each store’s potential to tie in with some of Cerberus’s former and current businesses. For example, 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 be successful in meshing Safeway with consumers’ evolving lifestyles. First, supermarkets are neighborhood hubs with many parking spaces. If Safeway devoted some spaces for car rental,  or even car sharing - like the Zipcar model, they’d appeal to the many who don't own, but need wheels to reach the places they seek.  As an added plus, when people reserve their cars online, they could also reserve prepared food  and food baskets for a day trip. 

Second, Safeway stores could benefit from Cerberus’s involvement in showbiz.  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.

These are just a few ideas we think could raise Safeway’s image with current and potential new customers, but we look forward to seeing what comes of this new merger.