Safeway reduces spending, plans to cut costs in 2009
PLEASANTON Safeway Inc. announced Thursday that it plans to drastically eliminate excess spending in 2009 and has set a goal of lowering its debt from $5.4 billion at the end of 2008 to $4.5 to $4.7 billion by the end of next year.
“These results will be supported by an aggressive cost reduction effort, coupled with price reductions, to further the company’s effort to lower everyday pricing,” said Safeway in a statement.
The company plans include focusing on its brands and promotions, reducing capital investments and eventually reducing its energy spending as well. Cash expenditures will drop to $1.2 billion, $400 million less than in 2008, a move that should just about double its free cash flow.
Analysts polled by Thomson Reuters expect Safeway to earn $2.39 per share next year, and the company predicts between $2.34 and $2.44.
Spartan partners with SofTechnics to initiate computer-automated ordering system
AKRON, Ohio SofTechnics, a provider of integrated retail enterprise software solutions, on Tuesday announced that Spartan Stores is rolling out Perpetual Inventory and Computer Automated Ordering. The solution is comprised of Online Ordering and Perpetual Inventory applications developed by SofTechnics, which is integrated with a field-proven Demand Forecasting and Inventory On-Hand Optimization application from SAF-AG, a Swiss software firm.
“Spartan Stores is very pleased with the results from our solution partnership with SofTechnics and the Perpetual Inventory and Computer Automated Order applications,” stated Dave Couch, Spartan Stores vice president information technology. “[We] will move in an exciting new direction as the result of the CAO / PI project. Our objective is to implement a CAO system that provides forecasted orders that are optimal and accurate.”
“In the current economic environment, retailers need increased focus on their key corporate metrics,” said Guy Dille, global business unit leader, retail software and integration for Mettler-Toledo. “Whether it’s reducing out-of-stocks, improving inventory levels, or controlling slow moving items, all these are improved with the SofTechnics/SAF solution.”
The Grand Rapids, Michigan-based grocery wholesale distributor and retail operator is utilizing Perpetual Inventory and Computer Automated Ordering for improved management of product selection, reduction of out-of-stocks, better forecasting, profitability at SKU level, and reduction of costs. Results from the pilot have been very positive.
DrSN holds 10th Annual Industry Issues Summit
NEW YORK Key executives from several leading retailers and suppliers convened Tuesday for Drug Store News’ 10th Annual Industry Issues Summit to discuss the critical issues shaping today’s retail pharmacy industry. The panel discussions were held across from Central Park at the New York Athletic Club.
Kicking off the event was an industry overview by Jay Forbes, who is retiring Dec. 19 after a 45-year career with Lebhar-Friedman, the parent company of Drug Store News. Capping off the afternoon was the 6th Annual Diabetes Roundtable (see related story by Alaric DeArment).
“It’s great to take a day away from the everyday give and take of selling and buying and talk about more strategic ways of doing business. What made the event so valuable, was that retailers and vendors made clear how each can help the other build their brands and to deliver value to the customer at the same time,” said John Kenlon, group publisher of Drug Store News.
Retail participants for the Industry Issues Summit roundtable discussion on the front end included Mike Cirilli, vice president of merchandising for Duane Reade; Dan Funk, vice president of GM/HHB for center store for Supervalu; Joe Grady, vice president of DMM personal care and beauty merchandising for Wal-Mart; Jerry Kuske, executive vice president of merchandising for Katz Group; Bryan Shirtliff, senior vice president of category management for Rite Aid; and David Kuncl, divisional vice president of merchandising, drug store for Sears Holdings/Kmart.
Supplier participants included Joel Carden, executive vice president of Pacific World; Joe Mueller, vice president of sales for health and wellness at Kellogg’s; Mike Voaden, director of sales for Alberto-Culver; and Matt Bireley, director of drug channel for Wrigley.
A second panel discussion, centered on healthcare, included retailers Charlie Burnett, senior vice president for Costco; Chuck Fehlig, vice president of DMM/OTC merchandising for Wal-Mart; Craig Norman, senior vice president of pharmacy for HEB; and Dewayne Rabon, vice president of general merchandising for Winn-Dixie. Supplier panelists included Mike Ebert, vice president, drug for Catalina Marketing; David Howenstine, vice president of shopper category insights for Wyeth Consumer Healthcare; Mike Miller associate brand manager for Pharmavite; and Dianne Pfahl, director of consumer health for Cardinal Health.
Throughout the panel discussions, retailers and suppliers alike stressed the importance of providing consumers with value, innovation and information—especially in light of today’s economic challenges. When asked about the best opportunities facing front-end categories in 2009, Grady of Wal-Mart, for example, was quick to note further opportunities in selling higher end value products as more and more customers are likely move to mass retailers to save money. Echoing that sentiment was Carden of Pacific World, who said that now is the time to place an even greater focus on bringing class to mass.
SKU rationalization was also a topic of discussion. Most panelists agreed that, while retailers and suppliers must tread carefully when reducing SKUs, it can prove beneficial if done properly as consumers may find the shopping experience to be less confusing. Providing shoppers with new products that are innovative, and not just another “me too” item, is also essential. During the discussion on healthcare, providing consumers with additional information and education on products and services was top of mind for many panelists, as was the important role that retail-based clinics will play in the industry going forward.
“We see this [retail-based clinics] as here to stay. That nurse practitioner has so much power and potential,” said Miller of Pharmavite, who noted that he sees opportunities to provide NPs with informational tools to use in store.