Supermarkets

Safeway, SUPERVALU and Kroger once constituted the Big Three of supermarketing. But Kroger has left its erstwhile mates in the dust — even as Walmart zoomed past all three to become the nation’s largest seller of groceries.

Safeway was not very positive in its outlook for this year, warning that earnings might not meet expectations. This comes as the company nears the end of a seven-year campaign to remodel stores to the Lifestyle prototype (nearly $1 billion has been budgeted for store makeovers this year).

“We invested in lowering our prices on everyday items and we also continued to invest in transforming our store base,” chairman and CEO Steve Burd told investors earlier this year. “With 79 percent of our store base remodeled into Lifestyle stores, we believe we have the freshest asset base in the supermarket industry, and combined with our differentiated offering and lower pricing, we believe we are very well positioned for future growth.”

SUPERVALU bit off more than it could chew in acquiring Albertsons a couple of years ago and the indigestion is still manifesting itself. “The very challenging macroeconomic environment has been more troubling than I would have expected,” says Craig Herkert, the former Walmart executive who has been at the helm of SUPERVALU for just over a year. A number of its key markets — Detroit and Southern California most notably – have unemployment “well over the national norm of 10 percent. So consumers have had to change their shopping habits and that affects our business.”