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Safeway’s Interesting History

May 14, 2012

For some reason Safeway Inc. traces its history to the Skaggs family from American Falls, Idaho. S.M. Skaggs opened a grocery store there to serve the grain farmers.  In 1915 his son M.B. Skaggs who was 27 bought the unprofitable store. He had better skills as an entrepreneur having a chain of grocery stores in California and the Pacific Northwest that totaled 428 in 1926.

Sam Seelig also founded a store chain in 1914 which eventually total 240 stores. This business was now majority owned by his main wholesale supplier James Weldon who named it Safeway. In 1926 Charles Merrill of Merrill Lynch fame purchased Safeway, Inc. Weldon advised him that M.B. Skaggs should run the business. This led to Skaggs being persuaded to merge his own store chain and lead the company while retaining control of his own stores.  The Safeway name was used for the surviving entity.

Perhaps Skaggs’ long and significant leadership is the reason why Safeway considers its origin with the founding of his side of the grocery chain. Skaggs continued to grow the chain and had 2,020 stores in 1928 and the company was floated that same year at the New York Stock Exchange.

Safeway merged with the MacMarr Stores from the Pacific Northwest resulting in Safeway having 3,257 stores, the highest number of stores in its history. Safeway weathered the Great Depression and made several innovations including providing scales for customers to buy fruit and vegetables by the pound instead of by piece. The store also allowed customers to service themselves, cutting on overhead cost.

In 1980 state-of-the-art technology was pushed to improve the company as well as more aggressive marketing and incentive programs for employees.  By this time the company was already operating overseas. This was also the time of the leveraged buyout era and Safeway, Inc. became a target. The company ended up in the hands of Kohlberg, Kravis, Roberts & Company (KKK) becoming a private entity.

Safeway was saddled with so much debt that it had to sell assets and streamline operations.  This made it a leaner and meaner company extracting more profits from existing assets.  The company became public again in 1990 through an IPO.  It has managed to lower debt to acceptable levels. Today it’s one of the largest food and drug retailers in North America with 1,675 stores.

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