Grocery WarsGrocery Wars

The Fight for SalesThe Fight for SalesHoward Gerelick, Safeway Inc.Howard Gerelick, Safeway Inc.

November 12, 2004November 12, 200410th Annual Rocky Mountain Commercial Real Estate Expo - 10th Annual Rocky Mountain Commercial Real Estate Expo -

DU Fall ForecastDU Fall Forecast

PastPastChanges in the competitive battlefieldChanges in the competitive battlefield

Changes in store size & additional departmentsChanges in store size & additional departments

PresentPresentReviewing the competitive battlefieldReviewing the competitive battlefield

Who’s winning the war?Who’s winning the war?

FutureFutureWho will win?Who will win?How the winners will change the way we shopHow the winners will change the way we shopHow this will impact shopping center developmentHow this will impact shopping center development

Changes In The Competitive BattlefieldChanges In The Competitive BattlefieldDenverDenver

SMSA PopulationSMSA Population# Store’s# Store’s

KS, Swy, ALBKS, Swy, ALB# People per # People per

StoreStore

19891989 1,675,4001,675,400 115115 14,56914,569

20002000 2,027,5002,027,500 137137 14,79914,799

20042004 2,291,4002,291,400 163163 14,10014,100

Changes In The Competitive BattlefieldChanges In The Competitive Battlefield

% Change - Population% Change - Population

1989 to 2000 21%

2000 to 2004 13%

1989 to 2004 37%

% Change - # Stores

19%

19%

42%

Changes In Store CountChanges In Store Count

KSKS SWYSWY ALBALB TOTALTOTAL

19891989

20002000

20042004

4949 4343 2323 115115

5858 4848 3131 137137

7272 5656 3535 163163

% Change% Change1989 - 20041989 - 2004 47%47% 30%30% 52%52% 42%42%

Changes in SizeChanges in Size

KSKS SWYSWY ALBALB

Pre 1990Pre 1990 48,000 SF48,000 SF 35,000 SF35,000 SF 30,000 SF30,000 SF

1990 - 20001990 - 2000 60,000 SF60,000 SF 55,000 SF55,000 SF 50,000 SF50,000 SF

Post 2000Post 2000 72,000 -72,000 -100,000 SF100,000 SF

58,000 SF58,000 SF 55,000 SF55,000 SF

Specialty DepartmentsSpecialty Departments

FloralFloralBanksBanksFuelFuel

Natural FoodsNatural FoodsService Meats & SeafoodService Meats & Seafood

StarbucksStarbucksPhoto CentersPhoto Centers

Other ChangesOther Changes

Changes In Market ShareChanges In Market Share

KSKS SWYSWY ALBALB TOTALTOTAL

19891989 47.3%47.3% 22.2%22.2% 13.7%13.7% 83.2%83.2%

20002000 47.2%47.2% 27.4%27.4% 13.2%13.2% 85.1%85.1%

20042004 43.2%43.2% 23.6%23.6% 11.7%11.7% 78.5%78.5%

Net ChangeNet Change (4.1%)(4.1%) 1.4%1.4% (2.0%)(2.0%) (4.7%)(4.7%)

% Change% Change (8.7%)(8.7%) 6.3%6.3% (14.6%)(14.6%) (5.6%)(5.6%)

National TrendsNational TrendsMarket ShareMarket Share

PricePriceOperatorOperator

ConventionalConventionalSupermarketsSupermarkets

SpecialtySpecialtyStoresStores

21%21% 76%76% 3%3%19971997

29%29% 67%67% 4%4%20032003

39%39% 55%55% 6%6%2009 E2009 E

Market Share ComparisonMarket Share ComparisonDenver SMSADenver SMSA

King SoopersKing Soopers

SafewaySafeway

Albertson’sAlbertson’s

Cub FoodsCub Foods

Wal-MartWal-Mart

Wild OatsWild Oats

19891989 20002000 20042004

47.3%47.3% 47.2%47.2% 43.2%43.2%

22.2%22.2% 24.7%24.7% 23.6%23.6%

13.7%13.7% 13.2%13.2% 11.7%11.7%

8.5%8.5% 6.8%6.8% 0.0%0.0%

0.0%0.0% 1.5%1.5% 8.8%8.8%

0.0%0.0% 1.7%1.7% 1.8%1.8%

SummarySummary 1989 - 20041989 - 2004

Population GrowthPopulation Growth 37%37%Store GrowthStore Growth 42%42%Market Share TotalMarket Share Total (5.6%)(5.6%)King Soopers Market ShareKing Soopers Market Share (8.7%)(8.7%)King Soopers Store CountKing Soopers Store Count 47%47%Safeway Market ShareSafeway Market Share 6.3%6.3%Safeway Store CountSafeway Store Count 30%30%Albertson’s Market ShareAlbertson’s Market Share (14.6%)(14.6%)Albertson’s Store CountAlbertson’s Store Count 52%52%

FutureFutureConventional Supermarkets will Conventional Supermarkets will

experiment with alternative formatsexperiment with alternative formatsMore emphasis on remodels than new More emphasis on remodels than new

storesstoresContinued expansion of Super Wal-Mart, Continued expansion of Super Wal-Mart,

Super Target and Specialty Food StoresSuper Target and Specialty Food StoresFewer Grocery Stores will be builtFewer Grocery Stores will be built

Grocery Wars:Grocery Wars: The Fight for Sales The Fight for SalesHoward Gerelick, Safeway Inc.Howard Gerelick, Safeway Inc.

November 12, 2004November 12, 2004

10th Annual Rocky Mountain Commercial Real Estate Expo - DU Fall Forecast