Albertson's is buying Safeway to create the second largest grocery store chain behind Kroger. Of course Safeway already was the second largest grocery store chain - so now Albertson's is. Or is it their sister brand Jewel - a Chicago-based chain of grocery stores. Of course you can see the efficiencies that a larger company would have, and the value of the real estate - all the reasons why companies will merge. What I really want to know is the marketing stuff. What's the resulting brand name going to be? Will the logo change? How will the store interiors evolve?
Safeway already operates multiple brands - including "Safeway", "Vons", "Pavillions", "Tom Thumb" "Randall's", "Genuardi's" and until recently, "Dominick's".
Depending on where you live in the country, these names may mean a great deal to you. It's where you go when you run out of milk, or where you drop large chunks of cash to feed your family. It might even be the site of your first job bagging groceries or stocking the shelves.
While the "banner" of the store may not have changed through Safeway's expansion years, if you peek "under the covers" you'll find many of Safeway's private label brands in each of the stores - including "Safeway Select" - which always struck me as odd when I was in a Dominick's to be buying the store brand from another "chain".
I've heard that those local market names were kept in order to maintain customer loyalty - rather than risk becoming something new and having customers flee to a competitor, it was worth the extra time and expense for Safeway to maintain all the different banners. I once did a direct mail piece that was going to Safeway's loyalty card shoppers - or to be more precise, shoppers from the loyalty cards of each of the banners. It was the same creative except the logo had to be swapped out - this added cost to the project as you had to have multiple proofs as well as added design time to deal with all the layouts. It felt like a lot of work.
Now, Albertson's is bringing Jewel-Osco to the party. That's a lot of brand name soup to sort through.
How important is that branding? Does it really matter to local shoppers that they are going to Tom Thumb when the merchandise, even down to the private label brands, are the same as they are at a Safeway or a Randall's?
Yes, we are by nature, creatures of habit, we love the familiar and change can be scary. But would we really cross the road to a chain we opted not to shop at in the first place just to avoid our exact same store having a new brand name?
Usually when companies merge one of the brands disappears into history, only to be recalled fondly by hardcore fans who have somehow romanticized the brand now gone. If you want proof of that, simply visit the airline enthusiast websites and look at how people wax nostalgic for brands as old as Braniff and as recently departed as Continental.
In retailing, Macy's is the most recent example of a merger where the acquired brand name disappeared. That brand was May Company. Based in St. Louis, it was well-known and loved, much like it's more famous corporate sibling, Marshall Field, which also went the way of the dodo bird thanks to Macy's acquisition.
While the transition to being all Macy's branded wasn't without gaffes - people didn't like to see the discounts disappear (foreshadowing to an even bigger problem when JCPenney tried the same move several years later) and customers weren't used to the different private label lines, the sophistication of the stores differed wildly depending on where you were in the market or in the country. As that dust settled however, in the end consumers were more likely to stop shopping the department store due to the great recession than because they didn't like the brand name and now, everyone thinks of it as Macy's.
Now, as Cerebrus Capital Management, owners of this jambalaya of retailer names, begins to move forward and gain the advantages of greater buying power and national reach - will they clean up the morass of brand names? And which one will come out on top? And does it truly matter?
At least with Macy's you can still get Frango chocolates!
Tell us, do you care what the brand name is of your grocery store? And which of these grocery store brands should come out on top?