Safeway 2005 Annual Report Download - page 25

SAFEWAY INC. AND SUBSIDIARIES
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merchandise and that generally include one or more specialty departments. These stores remain an important part of the
Company's store network in smaller communities and certain other locations where larger stores may not be feasible
because of space limitations and/or community needs or restrictions.
The following table summarizes Safeway's stores by size at year-end 2005:
Square footage
Number
of stores
Percent of
total
Less than 30,000 265 15%
30,000 to 50,000 764 43
More than 50,000 746 42
Total stores 1,775 100%
Store Ownership At year-end 2005, Safeway owned approximately 38% of its stores and leased its remaining stores. The
Company prefers ownership because it provides control and flexibility with respect to remodeling, expansions, closures and
financing terms.
Merchandising Safeway’s operating strategy is to provide value to its customers by maintaining high store standards and a
wide selection of high quality products at competitive prices. To provide one-stop shopping for today’s busy shoppers, the
Company emphasizes high quality produce and meat, and offers many specialty items through its various specialty
departments.
Safeway is focused on differentiating its offering with high quality perishables. The Company believes it is developing a
reputation for having the best produce in the market, through high quality specifications and precise handling procedures,
and for having the most tender and flavorful meat, through the Company’s Rancher’s Reserve Tender Beef offering. In
addition, Safeway has developed a variety of new items in the deli/food service department, including Signature sandwiches,
soups and salads that provide meal solutions to today’s busy shoppers.
To showcase its commitment to quality, particularly in the perishables departments, Safeway has developed a store concept
called the “Lifestyle” store. The Lifestyle store has an earth-toned décor package, subdued lighting, custom flooring, unique
display fixtures and other special features that impart a warm ambience that the Company believes significantly enhances the
shopping experience.
Safeway has continued to develop its premium line of corporate brand products. Hundreds of items have been developed
since 1993 under the “Safeway SELECT” banner. The award-winning Safeway SELECT line is designed to offer premium
quality products that the Company believes are equal or superior in quality to comparable best-selling, nationally advertised
brands, or are unique to the category and not available from national brand manufacturers.
The Safeway SELECT line of products includes: unique salsas; bagged salads; whole bean coffees; the Indulgence line of
cookies and other sweets; the Verdi line of frozen pizzas, fresh and frozen pastas, pasta sauces and olive oils; and Artisan
fresh-baked breads. The Safeway SELECT line also includes an extensive array of ice creams, frozen yogurts and sorbets;
cereals and low-fat cereal bars; and Gourmet Club frozen entrees and hors d'oeuvres.
Safeway also offers Milena’s take & bake pizzas, the Primo Taglio line of meats, cheeses and sandwiches, and Signature
brand soups, sandwiches and salads.
New to Safeway is the line of O Organics food and beverage products sold exclusively at Safeway.
Manufacturing and Wholesale The principal function of manufacturing operations is to purchase, manufacture and
process private label merchandise sold in stores operated by Safeway. As measured by sales dollars, approximately 23% of
Safeway’s private label merchandise is manufactured in Company-owned plants, and the remainder is purchased from third