At the dawn of the 1930s, Safeway Stores, Inc., was operating 2695 units under the Safeway, Piggly Wiggly, Sanitary and Pay ‘n Takit names, among others, with sales of $219 million. The closely related MacMarr chain, also assembled by Charles Merrill boasted 1400 stores and sales of $86 million. Most of these were traditional, smaller stores, although many had upgraded to include meat markets and some level of self-service. On 10 July 1931, it was announced that the two chains would merge, creating the nation’s second largest retail grocery concern behind The Great Atlantic and Pacific Tea Company (A&P). Safeway Stores also became the largest retail-only concern traded on the New York Stock Exchange; the larger Sears, Roebuck & Co. was both a retailer and a mail order operation, while A&P was privately held at the time.
Merrill had planned to merge the two chains since he founded MacMarr, and the deal resulted in a consolidation of Safeway’s market share in its operating area, as no new territory was added to its operations. At the time of the merger, MacMarr had stores in Washington, Oregon, California, Arizona, Colorado, New Mexico, Nebraska, Idaho, Montana, and Wyoming. Safeway operated in these states in addition to Nevada, Kansas, Oklahoma, Texas, Iowa, Missouri, Arkansas, Maryland, Virginia, and the District of Columbia (plus Canada and the territory of Hawaii). Shortly after the merger, Safeway president Marion Skaggs announced in the Wall Street Journal that no new mergers were pending, denying reports that Safeway was negotiating with Kroger or with New York-based Daniel Reeves or H.C. Bohack.
Operations among the three major brands (Safeway, Piggly Wiggly, and MacMarr) were consolidated in a variety of ways. A subsidiary, the Modern Foods Company, was established to operate the MacMarr stores in the Oakland, California, division, although this approach was not copied in other areas. More common, perhaps, was the approach taken in the Los Angeles area, where advertising ad other operations of the three names were combined over several months, with Safeway becoming the predominant brand and the MacMarr name apparently being tossed aside to a large extent. Advertisements first noted the “combined operations” of all three store brands but ultimately mentioned only Safeway Stores and Piggly Wiggly. The Piggly Wiggly name had also disappeared by 1935 in most operating areas. In Washington DC, however, the Sanitary Stores and Piggly Wiggly names would last a bit longer.
Ling Warren, Supermarkets, and Taxes
In 1934, Lingan Warren, president of Safeway’s MacMarr division, became CEO of Safeway Stores, Inc., a position he would hold for more than twenty years. The Depression having put a damper on operations, Warren focused on internal improvements rather than growth of the chain, which peaked at 3400 stores in 1935.
– From Uno Animo, Safeway employee magazine, 1933. Used by permission.
The drop in store counts was not only attributable to the economy, but to the consolidation of stores into the first wave of “supermarket” style units that combined groceries, produce, meats, and self-service into a larger store footprint that often also featured parking lots. The rise of the automobile trade allowed larger units to serve a larger trade area, although many small, urban locations were remodeled and remained open in cramped quarters for years to come. Safeway was perhaps somewhat conservative in the move to supermarkets; A&P closed or consolidated more than half its 15000 stores during the 1930s, while Safeway’s store count dropped by only about a quarter. The first Safeway supermarket units were also somewhat smaller than those of some competitors.
Safeway and other large chains faced another challenge in the mid 1930s as states around the country began, at the urging of local merchants, efforts to impose debilitating taxes on chain stores in an effort to drive them out of business. Through public relations and delaying tactics, the chains were able to bring these proposed taxes to referendum in many states, notably California, and they were generally overturned.
In 1935, Safeway divested its Hawaiian stores, citing the difficulty of supervising such a small collection of stores from such a great distance. That same year, the company purchased fifty-three Kroger stores in Oklahoma as well as a large number of Public Food stores in California. In 1936, the Canadian store count was increased by 40% through the acquisition of Piggly Wiggly (Canadian) Ltd.
Through numerous mergers, Safeway’s store count peaked in 1932 at 3411. By 1939, supermarket consolidations and divested stores had reduced this total to 2967 stores with annual sales of $385.9 million. By comparison, industry leader A&P reduced its store count by more than 35% during the same period, from 15000 to 9200 stores.