An interesting article appeared in Supermarket News recently. "Can Safeway Become a Lab for Other Retailers?" discusses the food retailer's decision to expand distribution of its O Organics private label line and Safeway Select, Eating Right health and wellness line to other food retailers.


Apparently Safeway's subsidiary, Lucerne Foods, will make these brands available to food stores around the country. These initiatives have met with great success, so why not share the wealth? Why not add more category offerings from dairy to frozen to grocery selections? And why not roll out "a wide-ranging advertising campaign" to support it?
This is an interesting, noteworthy concept in my view. Here we have private label lines with successful track records being offered to other food retailers–even competitors of Safeway. There is no doubt that organic and natural foods, as well as health-related food issues continue to be top of mind with consumers and that these categories represent significant and real growth opportunities where mainstream food categories have really flat-lined in the past few years.
I'd add to these thoughts the fact that the sheer purchasing power of a Safeway as it expands its organic and natural offerings to other retailers, will enable the chain to hopefully offer attractive pricing on these products, which can be passed all the way down the line to consumers. That would lead to a perception of great value among consumers, no doubt.
Research shows that in this economic downturn, consumers are not necessarily merely seeking lower prices on basic goods, but more value for their dollar, as well. Value in terms of being able to purchase healthier foods at competitive prices ought to resonate with the consumer, in my opinion.
As far as other food retailers go, as well as Safeway competitors, I'm wondering whether there will be reluctance on their part to market Safeway private label brands. . .or whether their track records and consumer acceptance will tip the scales in favor of adding proven winners to their assortments? Safeway itself claims that its private label brands are "lab tested" among consumers and it has a core following, making it an ideal investment for other food retailers.
Questions:
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What do you think of Safeway's strategy to market its own private label organics and natural foods to other retailers?
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Do you think it has upside potential? Or do you think this venture will meet with limited success, or even cause problems for Safeway?
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What do you think of the idea of retailers or other businesses offering their products to competitors?
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Or selling their expertise to competitors?
I'd love to hear from you.