Carrs/Safeway: life after a merger; initially, times were tough, but now growth is encouraging.

• Author: Friedenauer, Margaret
• Position: ALASKA BUSINESS MONTHLY'S 2007 CORPORATE 100

It's been nearly eight years since the Carrs Gottstein grocery chain in Alaska was bought out by Safeway. Executives, like Safeway's CEO Steven Burd, admitted last year that the company had weathered three difficult years. But, he said, by retooling strategy, and conducting consumer research, the company in 2006 began experiencing a renaissance and seeing the fruits of its labor.

That could be seen as a literal statement considering one of the biggest boosts to Safeway stores nationwide, and especially Carrs/Safeway in Alaska, has been the introduction of a proprietary brand of organic foods. From frozen fruits and veggies to tortilla chips and yogurt, the O Organics line has bursted onto the scene in Carrs/Safeway stores, said Glenn Peterson, district manager for the grocery.

'TAKING OFF LIKE GANGBUSTERS'

"Our organic line is taking off like gangbusters," Peterson said.

The line came about a year ago and boasts nearly 200 products. In late February, the company introduced O Baby line of organic baby and infant foods. Peterson said the customer response to the line has been "phenomenal."

"It's just truly outpacing most other sectors in the grocery channel," he said.

Peterson said the response to the organic line wasn't necessarily surprising; he said he figures many Alaskans were receptive to organic and natural food lines, but in previous years found the products costly or lacking in variety. But as stores, like Carrs/Safeway introduce more products in those areas, the price becomes more affordable.

"Now, with us having our dedicated production facilities, we've managed to get the price down," Peterson said.

Helping with the push of the O line, Peterson said, is the store's decision to place the products alongside conventional products on the shelves, rather than in a designated section of the store.

"Sales improved when people can see it there, side-by-side," he said.

Still, most Carrs/Safeway stores also have a designated natural food section. Peterson said the holdover of the natural food boutique section is from the merger. Carrs had the designated section of natural foods, while Safeway mostly integrated their natural and organic foods. Peterson said the use of both methods after the merger works to reach more customers.

"Customers see both a natural food section and O brand on the shelves next to conventional products and it's the best way to expand movement," he said. "Part of this is also an education. Some customers may not...