Dive Brief:

• On March 1, Safeway will officially transition four former Andronico’s Community Market stores in northern California to its Safeway Community Markets banner, according to The Shelby Report. Safeway purchased the Andronico’s stores last year for an undisclosed amount.
• During the transition, Safeway retained many of the specialty products that Andronico’s was known for, including signature items like the retailers’ dark chocolate and coffee “adult brownies.” Stores will feature more than 150 organic produce items, a full-service deli, an expanded wine department and, at one location, an acai bar.
• The stores will offer online ordering and delivery through Safeway’s chainwide platform, which offers one-hour delivery windows and a “Shop By History” tool.

Dive Insight:

Keeping a community store alive, albeit under a different name, is a feel-good story for Safeway. But there’s a strategic element to this new banner that’s far more interesting.

Safeway likely sees the former Andronico’s stores as a test lab for specialty products that have become increasingly popular in recent years. Shoppers in the San Francisco market tend to be ahead of the curve on flavor innovations and product trends, and the area is a breeding ground for emerging brands. Safeway will be able to regularly take the temperature of a very progressive market. It will also be able to test new offerings and store concepts with a foodie crowd that could help it gauge wider success across the chain.

Andronico’s opened in 1929 and developed a devoted following in the area. But it grew too fast and gained a reputation for high prices. When the company declared bankruptcy in 2011, it listed debts of $10 to $50 million, closed down three stores and was bought by private equity firm Renovo Capital.

Since taking over, Safeway has kept many of the products and services loyal Andronico’s patrons enjoy. The retailer has also swapped in more affordable choices in categories where it feels it can drive sales. Local news site Hoodline recently visited one of the stores, and noted that much of the locally sourced produce had been replaced by O Organics produce.   

“I’ve worked here for years, and now I can finally afford to shop here,” an employee told Hoodline.

It’ll be interesting to see if lower prices will bring customers back to the stores, or if they’ll see compromises in Safeway’s product assortment. Industry observers should also watch closely to see if the store's beloved “adult brownies” will be rolled out on a larger scale.