January 3, 2013
Safeway’s CEO Announces Plan to Step Down
Steve Burd has made for good copy since joining Safeway as its president in 1992. He has had his share of admirers and critics over the years and his legacy will be felt long after he steps down as the company’s chairman and CEO in May.
On the plus side, Mr. Burd has been credited with bringing fiscal discipline to the chain. He has overseen a major store expansion during his tenure that included Safeway as well as the acquisition of market leading chains such as Dominick’s in Chicago and Randalls in Houston.
Mr. Burd also expanded the company’s profit making ability outside of stores with the creation of the Blackhawk Network gift card business and the sale of private label lines to other retailers through its Lucerne Foods division.
While not always seen as the most employee friendly executive at retail, Mr. Burd has rightfully received recognition for an employee healthcare plan that provides access to workers while keeping costs under control. According to the grocer, Safeway averaged two percent annual growth in healthcare costs between 2005 and 2011 while the national average for the U.S. was eight percent.
Safeway has recently made strides with the introduction of its new "just for U" loyalty marketing program that personalizes prices and offers to individual shoppers.
Critics of Mr. Burd have argued over the years that Safeway has homogenized chains it has acquired, turning them from exciting to dull shopping environments. In fact, it wasn’t until the development of the "lifestyle" format back in 2004 that industry watchers began to give Safeway credit for its merchandising chops.
In announcing his plans to step down, Mr. Burd said in a statement: "I feel this is the right time to move forward with a transition plan. The company is gaining market share with each passing quarter. We have developed the most sophisticated digital marketing platform in retail, we are implementing the most comprehensive and personalized fuel loyalty program, and we will be rolling out a wellness initiative that has the potential to transform the company."
"While I still have the high level of energy and enthusiasm I brought to the company 20 years ago," Mr. Burd added, "I need more personal time and, given my extensive work in health care, I want to pursue that interest further."
BrainTrust
Recent Discussions
Discussion Questions
What do you think are the most significant contributions Steve Burd made to Safeway during his 20+ years with the company? What type of leader do you think Safeway will need to build on the gains achieved under Mr. Burd?
Poll
Steve Burd’s greatest contribution was surviving Safeway. When he came upon the scene times were changing but Safeway wasn’t. He may have been droll and unexciting at times but he was quite disciplined and fiscally sound. The latter asset led to repositioning Safeway, which is in fairly good shape today.
The future of Safeway will be in the hands and mind of an imaginative, innovated and invented retailer who is yet to be found. May he/she exist and be given the reins.
It appears his most significant contribution is making Safeway the 12th highest short position on the NYSE right behind Supervalu. Most likely the next leader Safeway will get will be a turn around specialist, similar to what Supervalu did.
Under Burd’s leadership the two things that stand out are capital investment and organic private label.
When Burd took over management, he understood the stores were in sad shape. There had been many years of little or no investment in the stores. By making the major much needed investment the sales decline was reversed. Developing the “O” private label line of products showed new thinking and achieved such success that many have copied.
Steven Burd did a lot of things right at Safeway, but in my mind, there’s two big ones:
The renovation of his entire fleet of stores would be #1. Every traditional grocer has been caught in the proverbial middle between Walmart and Whole Foods (and their imitators) for decades now, but Burd decided a long time ago to make the lean towards a better experience while his competition dallied. That move alone has been paying off for SWY for years now.
The other thing was the creation of some of the best private label goods in the industry, especially the “O” organics brand. The PL moves by Safeway created a landslide of activity by all traditional grocers that continues today (see Kroger’s Simple Truth brand just released), only not at the same level.
So, to me, the guy was decisive AND an innovator…a great combo matched by only a few (Jobs comes to mind). He will be missed.
I always look forward to the grocery articles, since we usually get a dose of David’s acerbic wit combined with his industry knowledge…and he didn’t disappoint today.
But I’m not sure the same can be said for Mr. Burd. How can a sane person laud the Dominick’s acquisition, probably one of the most botched takeovers in recent history (not Albertsons level bad of course, but that doesn’t say much)? Then again, at least Safeway is still around, and while that wouldn’t have seemed remarkable years ago, nowadays even small victories should be celebrated. I wish him well in his future endeavors.
Burd may have his detractors, but overall he has been a positive force for the Safeway brand, which was languishing when he took the helm. While their zeal for centralization has hurt many of their acquired properties, (Dominick’s and Randalls for sure), the financial discipline that Burd brought to the party has kept Safeway relevant and growing.
I would count the Blackhawk Gift Card business as certainly one major accomplishment under his tenure, with another being a fairly well executed “Ingredients for Life” campaign supported a fresher and more service-oriented customer offering. While the “Just for U” program is getting some accolades in the press, I think it too early to consider that program a game-changer for Safeway.
Feel-good organic private label, feel-good health care, company softball team, checks written to local yokel charities, Just For You program, Lifestyle stores, etc. all added up to pretty much zero gain in stock price. Hopefully the next CEO will be a real S.O.B who will ditch the feel-good programs for those that enhance stock price.
Safeway continues to have a sales per square foot performance well below market average, except on their home field. It’s time to focus completely on shareholder ROI and stop trying to be a socially responsible company.
I think Burd made a lot more achievements in the 90s and early 00s than during the 00s.
The private label program got much better as he rolled new brands out like Select and tons of improvements to the existing house brands at the time, but at the same time streamlined (they did close a lot of corporate manufacturing plants down during that period and now you see they only make about 14% of their house brand goods; that figure was once much higher). But they used this program to their disadvantage during the mid-early 00’s by pushing their brand in the acquired stores and discontinuing national brands much to the upset of customers. Today, you have a Safeway that continues to force its own brands on customers but at the same time these products are priced much higher than house brand goods at other retailers (like Kroger) and it appears to me there are some movement problems.
The service program was a major investment and seemed to build them a lot of loyalty among customers. This never seemed to translate well into the acquired stores at all. Today, most of Safeway’s Stores are significantly understaffed. Once in a while I go into a store where I still see a lot of genuinely friendly employees who go out of their way to help customers, but that is rare. It used to be standard procedure at Safeway to, if someone asked about an item, rip the package open and give them a taste. This was a great way to drive sales on fresh departments or on private label. That just doesn’t happen anymore. Another thing was if they were out of stock on a sale item, they would automatically offer a substitute of a different size or brand. In recent experiences with Safeway and out of stocks, I’ve had difficulty getting a raincheck (they tell me I can come back tomorrow…) let alone a substitution.
Burd also did well on promotions to drive sales and make Safeway appear to have better pricing than it did in the early 90’s and better pricing than competitors in certain markets, such as Albertsons or various of the chains now owned by Kroger. Coupon books, buy one get one frees, you name it, they had it. High low pricing at its best. Today, you have a Safeway that has taken these things too far. Must buy 4 for sale price, $10 minimum purchase to get other sale prices, various mix/match item promotions that are not across the store, Just4You Program that confuses customers and employees alike, and the highest regular retail pricing in the industry which is the pricing seen by the 85% of customers who don’t look at or care about ads, Just4You, or coupons. Those folks just go to Wal Mart and get prices lower than most of Safeway’s complicated promotional offerings today.
Burd also did well with perimeter. Quality was improved across the board. But USDA Select Beef and Primo Taglio Lunchmeat only go so far. Today, again, I find competitors are again doing this better. Whole Foods on the high end, even Kroger in certain regions and locations with all USDA Choice Beef, Boar’s Head in the Deli, nicer looking produce departments… I also find Safeway’s perimeter departments to frequently “cut corners” due to the stores not being staffed properly. One store I dealt with in Bishop, CA last summer was only doing bagels/rolls every third day due to labor. It is not unusual to see stores only make this stuff every other day, but every third day? Cakes that were decorated in store and better than competition have been moved to a thaw and serve program in many cases and quality fell to a level similar to the competition.
But, where would Safeway be without Burd? Probably a subsidiary of someone else…
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Steve Burd’s greatest contribution was surviving Safeway. When he came upon the scene times were changing but Safeway wasn’t. He may have been droll and unexciting at times but he was quite disciplined and fiscally sound. The latter asset led to repositioning Safeway, which is in fairly good shape today.
The future of Safeway will be in the hands and mind of an imaginative, innovated and invented retailer who is yet to be found. May he/she exist and be given the reins.
It appears his most significant contribution is making Safeway the 12th highest short position on the NYSE right behind Supervalu. Most likely the next leader Safeway will get will be a turn around specialist, similar to what Supervalu did.
Under Burd’s leadership the two things that stand out are capital investment and organic private label.
When Burd took over management, he understood the stores were in sad shape. There had been many years of little or no investment in the stores. By making the major much needed investment the sales decline was reversed. Developing the “O” private label line of products showed new thinking and achieved such success that many have copied.
Steven Burd did a lot of things right at Safeway, but in my mind, there’s two big ones:
The renovation of his entire fleet of stores would be #1. Every traditional grocer has been caught in the proverbial middle between Walmart and Whole Foods (and their imitators) for decades now, but Burd decided a long time ago to make the lean towards a better experience while his competition dallied. That move alone has been paying off for SWY for years now.
The other thing was the creation of some of the best private label goods in the industry, especially the “O” organics brand. The PL moves by Safeway created a landslide of activity by all traditional grocers that continues today (see Kroger’s Simple Truth brand just released), only not at the same level.
So, to me, the guy was decisive AND an innovator…a great combo matched by only a few (Jobs comes to mind). He will be missed.
I always look forward to the grocery articles, since we usually get a dose of David’s acerbic wit combined with his industry knowledge…and he didn’t disappoint today.
But I’m not sure the same can be said for Mr. Burd. How can a sane person laud the Dominick’s acquisition, probably one of the most botched takeovers in recent history (not Albertsons level bad of course, but that doesn’t say much)? Then again, at least Safeway is still around, and while that wouldn’t have seemed remarkable years ago, nowadays even small victories should be celebrated. I wish him well in his future endeavors.
Burd may have his detractors, but overall he has been a positive force for the Safeway brand, which was languishing when he took the helm. While their zeal for centralization has hurt many of their acquired properties, (Dominick’s and Randalls for sure), the financial discipline that Burd brought to the party has kept Safeway relevant and growing.
I would count the Blackhawk Gift Card business as certainly one major accomplishment under his tenure, with another being a fairly well executed “Ingredients for Life” campaign supported a fresher and more service-oriented customer offering. While the “Just for U” program is getting some accolades in the press, I think it too early to consider that program a game-changer for Safeway.
Feel-good organic private label, feel-good health care, company softball team, checks written to local yokel charities, Just For You program, Lifestyle stores, etc. all added up to pretty much zero gain in stock price. Hopefully the next CEO will be a real S.O.B who will ditch the feel-good programs for those that enhance stock price.
Safeway continues to have a sales per square foot performance well below market average, except on their home field. It’s time to focus completely on shareholder ROI and stop trying to be a socially responsible company.
I think Burd made a lot more achievements in the 90s and early 00s than during the 00s.
The private label program got much better as he rolled new brands out like Select and tons of improvements to the existing house brands at the time, but at the same time streamlined (they did close a lot of corporate manufacturing plants down during that period and now you see they only make about 14% of their house brand goods; that figure was once much higher). But they used this program to their disadvantage during the mid-early 00’s by pushing their brand in the acquired stores and discontinuing national brands much to the upset of customers. Today, you have a Safeway that continues to force its own brands on customers but at the same time these products are priced much higher than house brand goods at other retailers (like Kroger) and it appears to me there are some movement problems.
The service program was a major investment and seemed to build them a lot of loyalty among customers. This never seemed to translate well into the acquired stores at all. Today, most of Safeway’s Stores are significantly understaffed. Once in a while I go into a store where I still see a lot of genuinely friendly employees who go out of their way to help customers, but that is rare. It used to be standard procedure at Safeway to, if someone asked about an item, rip the package open and give them a taste. This was a great way to drive sales on fresh departments or on private label. That just doesn’t happen anymore. Another thing was if they were out of stock on a sale item, they would automatically offer a substitute of a different size or brand. In recent experiences with Safeway and out of stocks, I’ve had difficulty getting a raincheck (they tell me I can come back tomorrow…) let alone a substitution.
Burd also did well on promotions to drive sales and make Safeway appear to have better pricing than it did in the early 90’s and better pricing than competitors in certain markets, such as Albertsons or various of the chains now owned by Kroger. Coupon books, buy one get one frees, you name it, they had it. High low pricing at its best. Today, you have a Safeway that has taken these things too far. Must buy 4 for sale price, $10 minimum purchase to get other sale prices, various mix/match item promotions that are not across the store, Just4You Program that confuses customers and employees alike, and the highest regular retail pricing in the industry which is the pricing seen by the 85% of customers who don’t look at or care about ads, Just4You, or coupons. Those folks just go to Wal Mart and get prices lower than most of Safeway’s complicated promotional offerings today.
Burd also did well with perimeter. Quality was improved across the board. But USDA Select Beef and Primo Taglio Lunchmeat only go so far. Today, again, I find competitors are again doing this better. Whole Foods on the high end, even Kroger in certain regions and locations with all USDA Choice Beef, Boar’s Head in the Deli, nicer looking produce departments… I also find Safeway’s perimeter departments to frequently “cut corners” due to the stores not being staffed properly. One store I dealt with in Bishop, CA last summer was only doing bagels/rolls every third day due to labor. It is not unusual to see stores only make this stuff every other day, but every third day? Cakes that were decorated in store and better than competition have been moved to a thaw and serve program in many cases and quality fell to a level similar to the competition.
But, where would Safeway be without Burd? Probably a subsidiary of someone else…