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Saturday, May 18, 2024
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Vons Reinventing Itself With Remodeled Stores

BY MATT MYERHOFF

Middlebrow Vons is the latest supermarket chain to be spruced up in an effort to take a bite out of the business being generated by specialty grocers such as Whole Foods Market Inc.

Parent company Safeway Inc. is making over Vons into what it is calling “lifestyle” stores, with woodsy d & #233;cor, higher levels of service and a wider selection of natural or niche products.

The makeover, which is costing more than $2 million per store and will take two years to complete, has drawn some skepticism from the industry, as the Pleasanton, Calif., company begins departing from the low-priced market position it cultivated for decades.

“You can’t turn people off like a light switch,” said Bert Hambleton, president of Hambleton Resources Inc., a Seattle-based retail marketing strategy firm. “They’ve got this tremendously large tanker, and they’re turning it one degree to the side, and guess what, they’re turning away from low price toward the upscale.”

The move reflects the struggles of mainstream supermarkets that have seen flat sales while feeling growing pressure from both high-end chains and low-cost retailers such as Costco Wholesale Corp. and Wal-Mart Stores Inc. Albertsons Inc. responded to this pressure last year by acquiring Bristol Farms, the high-end Southern California chain.

The Vons “lifestyle” format goes beyond a coat of new paint, though faux-wood flooring and subdued lighting are a key part of creating a more appealing ambience.

The core of the upgrade, however, is an expanded food offering. That includes organic produce, natural foods, full-service florists and bakeries, full-service meat and fish counters, hundreds of imported cheeses, olives and cured meats and delis offering deluxe sandwiches and sushi all of which can now be found at stores such as Whole Foods.


Sales Up

Safeway officials discount their critics, saying the idea is to have Vons combine the best of what their competitors offer while still providing shoppers with the traditional and lower-cost items they are accustomed to.

The company has reported sales up 10 percent in their remodeled stores.

“We want to be a one-stop shop,” said Safeway spokeswoman Teena Massengil. “The purpose of the redesign is going to be not so much to capture a certain type of (upscale) customer, but bringing in more customers who might go to specialty retailers for specialty foods.”

Vons, like Albertsons and Kroger Co.’s Ralphs, has struggled to bring back customers lost during the 4 & #733;-month labor dispute. Last year, Safeway sales were basically flat from a year earlier, although last week the company reported a 12 percent increase in first-quarter same-store sales the biggest revenue increase since 2000. Meanwhile, Whole Foods saw its 2004 sales climb 23 percent to $3.9 billion.

The Safeway upgrades are extending to all the company’s chains, including the higher-end Pavilions in Southern California. Pavilions will continue to carry more specialty items, maintaining the brand distinction between the two stores.


Nearly 100 Done

Safeway has already remodeled 94 Vons and Pavilions stores nationwide and built 33 from the ground up in the new format. The chain plans to have another 457 completed by the end of this year. In Southern California, 32 of 315 Vons have been upgraded.

Safeway also is launching a $100 million national ad campaign this month in support of the upgrade program, dubbed “Ingredients for Life.”

Safeway maintains that while Whole Foods and Bristol Farms Inc. stores offer similar products, they don’t have a wide variety of regular “middle aisle” products, such as name-brand shaving cream or household goods.

“There’s a tremendous amount of focus on reinventing the supermarket. It sounds like they’re going further and faster than most other big chains,” said Bill Bishop, president of retail consulting firm Willard Bishop Consulting in Barrington, Ill.

But it may be difficult to change Vons’ image without losing core customers who want value, not French goat cheese.

“Safeway has spent its entire history as a chain advertising low prices,” said Lloyd Greif, an investment banker who represented Oaktree Capital Management LLC in its sale of Bristol Farms to competitor Albertsons. “Old customers won’t put up with high prices, and new customers won’t find it high-end enough in the quality of food and service.”


Matt Meyerhoff writes for the

Los Angeles Business Journal.

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