Safeway Invades New York

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Second-largest grocery chain in volume of business, Safeway Stores came out of the West last week, took first steps toward acquiring the Daniel Reeves chain of New York. Reeves's 498 units (215 in New York City) will bring Safeway up to 3,016. Gargantuan A. & P. has over 9,000 stores in the U.S., only 152 in New York City.

Four days after President James Reeves announced the deal, Chairman Marion Barton Skaggs of Safeway resigned in San Francisco. This was no comment by Safeway's founder on the Manhattan adventure, for Skaggs has been in virtual retirement since he sold controlling interest in 1931 to Wall Street's Charlie Merrill (Merrill Lynch, E. A. Pierce & Cassatt).

Broker Merrill is himself no amateur at grocering, calls himself "a merchant at heart." Close watcher over operations, he has been known to pop into a Safeway store, make purchases and come out with a new operating policy, such as the company rule that its private brands must not be pushed too hard over others.

In 1928 Merrill picked a small, smart

Virginian named Lingan Alan Warren to put his ideas into practice. They set up the MacMarr chain in the Pacific Northwest, merged it with Safeway, later acquired Sanitary Stores in the South. Last year the Merrill-Warren chains grossed $399,322,000, earned $4,768,000.

In New York City Safeway will face A. & P. competition for the first time. No imitators, Merrill and Warren have kept their stores different. Unlike A. & P., they have eschewed the trend to supermarkets, which they think make the housewife travel too far, serve her no better. They always shunned loss leaders, once an A. & P. specialty. Safeway once broke up a Los Angeles rival combine by urging women to buy the come-ons, resell them to Safeway at standard prices.

Like A. & P., Safeway roasts its own coffee, etc., but is more earnest in its effort to give nationally advertised brands an even break. And Safeway's profit margins are apt to be more nearly uniform than A. & P.'s. Warren's principle: "When you get wide spreads you are vulnerable. That is why Safeway does not believe in making too much profit on any one thing."

For Manhattan housewives the Safeway invasion means more self-service stores, more butcher shops. (Many Reeves stores now lack meat counters, undoubtedly will get them.) Biggest single item in the Safeway turnover: beef. It will be sold by well-shaven, well-breakfasted clerks without mustaches. So Safeway's Employes' Manual decrees.