MERCHANDISING AND STRATEGY CHANGES

A glance at retailers that are restrategizing

Posted May 2005

Safeway, the nation's fifth largest grocer, is attempting to differentiate itself with a $100 million ad campaign that promotes its 1,817 stores as offering "Ingredients for Life." The campaign complements a redesign of more than 300 stores during 2005, with a new lifestyle format that places a premium on its produce, bakery and deli sections. The format change promises higher average weekly sales and subdued lighting in the fruit section. Other changes include narrower carts for wider aisles, an enhanced selection of organic foods and a new emphasis on privately branded foods. Some stores will get sushi and olive bars, while others will get murals or improved amenities.

While Safeway has sold organic food for four years, the new "Ingredients for Life" campaign will emphasize new offerings. To make room for fruits and veggies, the grocer reduced the number of some non-food items. For example, two different packages of paper towels might be offered instead of four. These changes allowed Safeway to offer 2,000 more items. Floor coverings in the new Natural Food Market will be upgraded to hardwoods. Music from the 1930s and 1940s will help complete the ambience. Store pricing is not affected by the conversions.

Conversion will come at a rate of one per week in Safeway's Northwest region, composed of Washington, Alaska, Montana and Idaho. All stores in the U.S. and Canada will see lifestyle improvements within the next five years.

Local travelers looking to take advantage of the budget airlines that have long been available to jet set East Coast residents will have options from two airlines new to Sea-Tac Airport. Song, the low-fare arm of Delta Airlines, and Independence Air will serve the Emerald City by July. Song's Boeing 757 fleet will initially serve New York's John F. Kennedy International Airport out of Seattle. Independence Air, which began service on May 1, will operate non-stop flights to and from Washington's Dulles International Airport.

Much like JetBlue and Southwest, the carriers rely on razor-thin margins and creating an in-air experience that passengers prefer or at least want to try out. Song has carried the concept far with a host of entertainment options and food that sets the bar high. The airline offers passengers a choice of 1,600 titles of digital music, live television and video games, which they can play in real time along with fellow travelers. Flight attendants are clad in Kate Spade uniforms and serve fancy cocktails. Celebrity gym owner David Barton designed an exercise routine that can be performed in the leather seats that Song offers to everyone, whether window or aisle.

Independence Air specializes in surprisingly low airfares. Regular cross-country specials are offered for under $100, while flights on the same side of the Mississippi River are priced under $50. Independence Air, formerly Atlantic Coast Airlines, spun off from United Airlines in 2002 during that carrier's bankruptcy.

In related news, Korean Air began flying to Asia on June 2 from Sea-Tac. The service, which uses Boeing 777s, lands at the Seoul-Incheon Airport, Korean Air's hub to much of Asia.