Safeway vs. Costco

Safeway’s stock has been hammered since announcing yesterday that it was going to miss expectations for the quarter. Same store sales are declining in the current quarters. The company blamed several factors including the economy, an overly ambitious centralization of purchasing, and too much emphasis on store managers to reduce “shrink”.

From my observation (we either shop at Safeway or Costco), here in the San Francisco Bay Area Costco is just chugging along — the stores are always busy and crowded, they continue innovating with new merchandise, they’ve significantly expanded their food section — including fresh produce, seafood, etc.

Meanwhile, Safeway’s trying to launch and their online/home delivery offering. Must be costing them some money to get that service off the ground. We used Webvan pretty frequently when it was alive — but haven’t yet tried Safeway’s home delivery. I wonder why?

Safeway’s problems are certainly multiple in nature — but here in the region of the company’s headquarters, Costco has to be causing them pain. Maybe in Texas they’re feeling Wal-Mart but not here. And the obviousness softness of the local economy can’t be helping Safeway either.

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