Jul 12, 2007

Is Safeway a Retailer or Manufacturer?

"SafeWay signed up as premium supplier for D&S"

Sourcing a few private label items to round out a line or category has been a part of 'Retailing 101' for quite a long time. But taking on a vast retailer-owned branded manufacturing system starts to beg the question: just what business are some of these dominant mega-retailers in?

The headaches and risks of running a 'generics' program seem quaint compared to the fundamental 'bet the company' moves some dominant retailers are making today.
...Safeway has shifted its private label approach from reactionary to innovative, aligning its private label effort with its overall strategy of building its offerings around consumers. O Organics plays a major role in Safeway's strategy to be the health and wellness advocate for its shoppers. The O Organics line is currently comprised of nearly 200 products across the store, including beverages, bakery goods, cereals, canned and frozen foods, dairy products, and snack items."We created O Organics as a consumer packaged goods style brand within Safeway. We brought the same kind of passion, research, and rigor in developing this brand as you'd find among leading consumer packaged goods companies...said James D. White, Safeway Senior Vice President, Consumer Brands(http://www.pbdsf.com/press/pbd_press2007_0123.html)
When did the job of running a running a retail business rest on manufacturing programs rather than innovating the consumer experience in the stores? Should Safeway shareholders be thrilled or concerned with the latest news that private label king Loblaws has pulled out of D&S (Chile) and that Safeway is moving in to supply products?

D&S replaces Loblaw with Safeway for private labels Safeway is to arrive in Chile via an agreement with D&S. The US-based group has been signed up to replace Canadian Loblaw's private range President's Choice. Late last year, Loblaw informed D&S that it would no longer be sending its products to serve as premium products in Chile due to a business reorganisation. (http://www.planetretail.net/default.asp?PageID=EAlert& Article=56753&Date=2007-07-12)
Safeway shareholders might wish the leadership of the retailer would re-allocate back to basic retail competitiveness all the time and resources that will inevitably go towards managing the global supply risks of running a manufacturing (really "sourcing") business. More and more there's evidence it takes more than a clever procurement system to manage a massive product business.

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