Albertsons is becoming more like Safeway - but it's good for Boise

  • In this story...
    • New filings show Albertsons even more committed to the Treasure Valley
    • Longtime Albertsons execs are in charge, but Safeway's systems are slowly taking over
    • More stores could soon be part of the company

By Don L. Day
BoiseDev.com

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BOISE - Boise-based Albertsons is slowing morphing into a completely different company - and in many ways, it is morphing into Safeway - the California-based grocer it purchased early last year.

While the big blue "A" on the outside of the stores is unlikely to change, many of the processes and offerings on the inside are coming from the Safeway side of the business.

Just this week, as the Idaho Press Tribune reports, the company is rolling out two new initiatives in the Boise market - rewards program "just for U" and a gas discount program.

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This a U-turn of sorts in strategy for the Boise stores - which eliminated a Preferred Card program in 2013 - saying in a blog post "Once upon a time, a shopper card set customers aside...  The card isn’t so special anymore. Everyone has one. So we want to take the special step of not requiring one anymore."

The change in strategy means if you want special savings - you'll now have to download the company's app to receive coupons and deals (and provide your phone number at checkout). In a related move, gas rewards will now be available at Chevron and Texaco outlets around the Valley - with points earned in much way they previously were with Sinclair and Albertsons Express outlets.

These initiatives follow my earlier exclusive reporting of the return online shopping to the Boise-area through Albertsons.com.

And you also may have noticed a new private label program at your local Albertsons - with brands like Signature Select and O Organics replacing Essential Everyday and Wild Harvest.

What do all of these changes have in common? They originate from the Safeway side of the business.

With so many programs and strategy bubbling up from Safeway, what does that mean for Albertsons and its future in Boise?

In the company's amended SEC filings late last month ahead of a much-delayed initial public offering, it more forcefully commits to its Boise headquarters, after initially being non-commital on where the company would ultimately call home:

Our corporate headquarters are located in Boise, Idaho. We own our headquarters. The premises is approximately 250,000 square feet in size. In addition to our corporate headquarters, we have corporate offices in Pleasanton, California and Phoenix, Arizona. We are in the process of consolidating our corporate campuses and division offices to increase efficiency.

When the company announced it would merge with Safeway, it was vague on where it would primarily be based, noting Boise, Pleasonto, CA & Phoenix, AZ equally. At the time, former Safeway CEO Bob Edwards was named to the same post at Albertsons - but after just a few short months, he was swept aside and replaced with another Bob - Bob Miller. Miller is a longtime Albertsons hand, and industry analysts say he is key to the culture of the combined company, according to trade publication Supermarket News:

He’s kept the Albertsons culture alive and well, observers pointed out, and they said they believe Albertsons will be able to sustain that approach even if Miller decides to step aside.
Bob Miller appears at the news conference announcing the rebranding of Bronco Stadium with the Albertsons name. Photo courtesy Boise State.

Bob Miller appears at the news conference announcing the rebranding of Bronco Stadium with the Albertsons name. Photo courtesy Boise State.

The Safeway merger essentially gave Albertsons LLC  a set of back office functions it lacked, and the ability to unwind from Albertsons' former parent company Supervalu.  IT, technology and the systems that keep the stores running  are transitioning to Safeway's systems - but under the guise - and control - of Albertsons loyalists. Albertsons is slowly moving away from Supervalu, a process expected to continue into 2018.

A few other factors that portend well for the Treasure Valley:

  • Albertsons is remodeling its Boise headquarters in stages, BoiseDev.com can report.  It is freshening areas of the building, remodeling the executive suite, even adding a television studio for in-house productions.
  • Earlier this year, BoiseDev.com exclusively reported the company would move its "set store" up from California to a location in southeast Boise. 
  • The company has built a new hanger for its private planes at the Boise Airport.
  • The previously reported Broadway Albertsons revamp will include a "significant" food service and in-store dining program - a first for the chain, a company insider tells me. It will bring together a variety of concepts from throughout Safeway & Albertsons under one roof.

After nearly leaving the town where Joe Albertsons' supermarket was first founded - the company is poised for a long stay in the City of Trees.

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EXCLUSIVE: Albertsons on the prowl for more stores

In its updated S-1 filing with the SEC last month ahead of an IPO, Albertsons laid out its financial and operational condition. A thorough reading brought a key revelation to light: Albertsons wants to snap up more stores - and is in the process of evaluating chains to buy as we speak.

One of the items that changed in the latest update to that S-1 filing, is the addition of this phrase to a section on future acquisitions:

“(W)e are currently participating in processes regarding several potential acquisition opportunities, including ones that would be significant to us. “

The filing goes on to say that none of the possible acquisitions is currently “probable,” but warns potential investors that a big purchase of stores could happen as soon as the shares are officially put up for sale.

The company touts its operational playbook - and plan for the first 100 days after it owns a store as key factors in its ability to acquire stores.

A graph shows how stores previously owned by Supervalu were actually shrinking in terms of revenue - but after they were bought up by the new Albertsons company, quickly started showing growth (click to enlarge):


Albertsons & Safeway: a timeline

BoiseDev.com research

1915 -  Skaggs Cash Store in American Falls, Idaho by MB Skaggs

1926 - Skaggs, Safeway merge - combined company  takes Safeway name 

1939 - Albertsons founded in Boise by Joe Albertson, a former Safeway manager - in partnership with LS Skaggs, MB's brother

1969 - Albertsons & Skaggs Drug Centers (started by LS Skaggs) form joint venture for grocery/drug store concept

1977 -  Albertsons & Skaggs Drug Centers part ways amicably

1978 - Skaggs & American Stores merge, taking the American Stores name

1999 - Albertsons buys American Stores, and briefly becomes nation's largest grocer

2001 - Larry Johnston hired as Albertsons CEO after career at GE. Immediately cuts staff by 20%, closes hundreds of stores and pulls out of markets like Houston & New Orleans

2006 - After Johnston's efforts fail, a diminished Albertsons is split in three pieces and sold off: Standalone drug stores went to CVS, most grocery stores sold to Supervalu, and a small group of so-called "underperforming" stores sold to Cerberus Capital Mgmt.

2013 - After sputtering, Supervalu sells most of its stores to the Cerberus group

2015 - Newly reunited Albertsons chain completes purchase of the larger Safeway - making it the nation's second-largest grocer

 

 

 

By Don Day

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