Safeway Essay

The third-largest supermarket chain in North America, Safeway, Inc., is also the 10th largest retailer in the United States. It had, as of January 3, 2009, some 1,739 stores in the United States and Canada. The company was formed by Sam Seelig in April 1912, and was initially a grocery store on the corner of Pico and Figueroa Streets in Los Angeles; within 10 years, it was operating 71 stores. In 1924 Seelig left the company to establish a real estate business. The company, in 1925, held a competition that resulted in its change of name to Safeway.

Charles Merrill, of Merrill Lynch, managed to organize a merger on July 1, 1926, of Safeway with 673 stores owned by Skaggs United Stores of Idaho and the Skaggs Cash Stores of California. Marion Barton Skaggs, originally from Missouri, had started the chain in 1915 after buying a grocery store in American Falls, Idaho, from his father, Samuel M. Skaggs, for $1,089. This resulted in the creation of the largest chain of grocery stores in the western states, with Marion Skaggs becoming the chief executive officer of the merged entity, remaining on the board of directors until his retirement in 1941. At that time, Safeway had its headquarters in Reno, Nevada, but three years later, it moved to Oakland, California, and it moved again to a nearby former creamery building, and later to Pleasanton.

Expansion

Financed by Merrill Lynch, Safeway expanded through buying up rival businesses or individual stores. This included many Piggly Wiggly stores, and by 1931, Safeway had 3,527 stores, gradually closing down smaller stores and replacing them with supermarkets.

The company had also begun to expand internationally, and in 1929, it bought nine stores in Canada, which became Canada Safeway. (Most of Safeway’s expansion overseas was from the 1960s.) In 1934 it sold its business interests in Hawaii, and expanded those on the mainland United States until 1947, when it posted its first sales figure of more than $1 billion. Four years later, it had achieved sales of $1.5 billion, and in the following year, it adopted the “S” logo, which, with alterations, it has kept to the present day.

Buoyed by increasing sales figures, in 1959, Safeway opened a store in Alaska, its first in that state, and in 1962, Safeway bought 11 stores in Britain that had been run by John Gardner Limited, and these became Safeway (UK). In 1963 the company reentered the Hawaiian market, and in the same year when some of its representatives were in Australia searching for a source for apples, it decided to investigate supermarkets there. It soon purchased three Pratt Supermarkets in Australia; it expanded into Queensland, in the north of the country, when it bought the chain Jack the Slasher, which had 31 branches. It also bought two Big Bar Basat (“Big Bear”) stores in Germany, and in 1981, it bought a 49 percent share in Casa Ley, the Mexican retailing business. It sold Safeway Australia in 1985 to Woolworths Limited, and in August 2008, Woolworths announced that it was ending its use of the name Safeway.

During the 1980s, there were a number of takeover bids with Herbert Haft and his son Robert Haft, well-known U.S. corporate raiders, attempting a hostile takeover in 1986. Safeway was helped by the private equity firm Kohlberg Kravis Roberts (KKR), and it went private, but had to assume large debts. To pay these off, the parent company sold the British and West German divisions of the company, as well as many branches in the United States, pulling out of Los Angeles. In 1990 the company went public again, and began to expand. It currently employs about 201,000 people and has revenue of $42.3 billion. As well as the main retail grocery business, it is also involved in manufacturing, processing, and packaging food for these stores and others.

Bibliography:

  1. Institute of Grocery Distribution, Safeway Plc: Account Watch (Institute of Grocery Distribution, 2001);
  2. Bill Pratt, My Safeway Story: Making It Happen (Brolga, 2006);
  3. Andrew Seth, The Grocers: The Rise & Rise of the Supermarket Chains (Kogan Page, 2000);
  4. Ari Sharp, “Retailer’s Melbourne Story Started With a Little Help From the King,” The Age (August 23, 2008).

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