What does the quality of service at your local supermarket have to do with wall street?
Everything, it seems.
A friend of mine has been complaining about long checkout lines and slow service at his neighborhood Safeway in Hawaii for a while.
This morning he called me after having a conversation with the store manager. According to this manager, individual stores are hamstrung by orders from up the corporate chain of command.
Here’s the background.
Private equity firm Cerberus Capital Management bought Safeway in a 2014 deal valued at more than $9 billion. At the time, there were mixed predictions about what would happen to the supermarket chain. Some thought it would bring new investment in stores and improved customer service, while others feared the chain would be sold off in pieces rather than operated as a supermarket chain.
Well, the next thing that happened was a merger with Albertson’s, another chain that had been taken over by Cerberus, and in the process dozens of stores were sold or closed.
And then came plans to take the new Albertson’s/Safeway combo public with an initial public offering of stock, presumably with Cerberus walking away with a hefty profit.
But stock market conditions took their toll, and the company put its IPO on hold, where it remains, for now.
And, according to my friend’s local Safeway manager, the reason for such poor service is that individual Safeway stores have been told to cut back the amount spent on checkout and floor services. Total spending has been capped, and managers have to figure out how to live within those caps.
The lines aren’t long, and the number of open registers small, because somebody didn’t show up for work, or some other short-term excuse, my friend now explains. It’s because of the private equity owners trying to squeeze a bit more profit out, probably so that the company can boast that tiny additional profit when its stock is finally sold off to investors.
As my friend said in his quaint way, “apparently it’s f*** the customers!”
I guess it’s an example of one of the little insults we experience, where people are expected to yield to the machinery of Wall Street profits. Just the kind of thing that has spawned the anger we’re seeing expressed in this year’s presidential campaign.
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I quit shopping at Safeway several years ago. Even then, service had deteriorated, in my opinion.
Like all other segments in a healthy, competitive marketplace, lack of satisfactory customer service will eventually drive consumers to patronize other businesses. Whole Foods, Foodland, and Times are all viable alternatives. Decreased customer foot traffic leads to decreased store receipts. Decreased store receipts lead to decreased profitability reports for the chain, which will draw the attention of the highest muck-a-mucks in the corporate boardrooms. Thing is, once you lose your regular customers due to service deficiencies (real or perceived), it can be tough as heck to lure them back. If Safeway is thinking that their future lies with attracting clientele who are looking for rock-bottom prices and care not a whit for customer service, then I wish them all the luck in trying to compete against the likes of Walmart and Costco. They’re gonna need it.
I’ll bet the food shoppers in socialist Argentina and Venezuela would be thrilled to stand in line at the checkout counter — if there was actually food on the shelves for them to buy. Send Boynee Sandahs down there; maybe he can fix it.
The truly irritating thing about this is that at least at the Kapahulu Safeway, they have a big banner announcing that they will open another register if lines are longer than three people long, because they ‘care so much about their customers’ time.’ Now that’s an insult.
Thanks for publishing this Ian. It is the Manoa Safeway that is referenced and until their new manager Brian finally gave me an honest answer two days ago, I had been given ever excuse imaginable for the lines that sometimes went out the door to the sidewalk. The district manager is George Gluckfeld and his phone is 524-4554 for others who would like to express their “appreciation” . Good luck trying to reach anyone in the district office. Their phone service is designed to only connect you if you know a precise extension. Foodland where there are ” no lines” and Whole Foods here I come!
I think one can tell a similar tale about the downward slide of Longs since CVS took control.
I think it depends on the store manager. Here in Hilo we have an excellent manager in Warren Lee, and he and his staff do a good job, even on Fridays when the store is mobbed by people wanting the $5 Friday specials. There are always dissatisfied customers, of course, but I don’t see many in the Hilo store.
Vote with your feet! Dont shop at Safeway!