Inside Safeway’s New EDLP Program

Readers of our latest newsletter will have likely seen the story concerning Safeway’s new EDLP program, which it has launched in anticipation of the continued roll-out of Wal-mart Supercentres in Western Canada.

The execution in store has been quite good with clear price stickers on shelf showing the savings from the new prices, in-store POP and prominent placement in both its weekly flyer, in-store radio and also in television advertising (see photos below).

The program has its roots in an initiative launched in 2009 in the United States. The Safeway 2009 Annual Report dedicated a whole page to the program which was launched because “In today’s economy, consumers don’t simply want outstanding value, they demand it.”

I decided to test drive the program in Canada with price checks on some high volume items to see just how much value Safeway is delivering to its shoppers. The full results can be found here.

In general, it seems that Safeway has made a significant price investment and this will make them more competitive in Western Canada. However, if this survey is any indication, shoppers will still save on average 13% by shopping for the same basket of goods at Wal-mart.

In fact, of the 22 SKUs surveyed only one had a new EDLP at Safeway that was lower than the EDLP at Wal-mart Supercentre.

Now, Safeway does deliver a higher level of service and a qualitative environment in its Lifestyle stores vs. Wal-mart. Safeway also wins on proximity with a strong real estate position in most urban markets in Western Canada, whereas shoppers must make a special trip to a Walmart Supercentre in most cases. Some premium between the two is definitely justified.

It will be interesting to watch ACV results in Q2 for Western Canada and to see what the reaction of other Hi-Low retailers such as Sobey’s and Calgary Co-op will be to Safeway’s new EDLP program.


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