For many years, shoppers have found Safeway to be rather costly, despite the number of discounts and coupons they regularly offer.
In fact, Safeway is 16% more expensive than Walmart, whose superstore also provides produce and grocery and carries many of the same products that Safeway does.
This begs the question, then, why is Safeway so expensive? There are several reasons that could answer this question, but we will explore nine below.
Why Is Safeway So Expensive?
1. Safeway Is A Unionized Company
Safeway may be so expensive due to the fact that they are a unionized company.
Being part of a union will affect wages and company expenses in a large way, as unionized employees earn nearly a third of what regular non-union employees make.
Therefore, it costs Safeway more to pay workers and stock their stores.
2. They Don’t Price Match
Unlike other grocery stores such as Save on Foods and No Frills, Safeway does not offer price matching to their customers, keeping many of their high prices on groceries, produce, household wares, and other products static.
If customers want a lower price for their groceries, they’ll either have to wait for a sale on the items they’d like price matched, or they may have to go to another grocery store.
3. High-Quality Service And Display
While Safeway is more expensive than other grocery stores such as Walmart Superstore, they are known for being cleaner and presenting their store in a more organized and pleasing way.
Additionally, Safeway employees are also trained to be extremely helpful and considerate.
Due to their positive customer experience, customers are willing to pay the extra cost for their groceries, which may prevent the store from re-evaluating their prices and lowering them.
4. Canadian Stores Don’t Have the Safeway Just For U Program
Safeway shopping is often more expensive for Canadian customers than it is for customers in the United States.
This is because Safeway doesn’t currently offer its rewards program at its Canadian stores so that they can take advantage of lower prices and coupons.
This prevents a large group of Safeway’s clientele from saving on their grocery shopping, as unlike American customers, Canadian customers can only take advantage of lower prices when sales and discounts are offered storewide.
Safeway also has no plans to bring the Just For U program to Canada anytime soon, keeping their prices higher for those customers.
5. They Have a Pharmacy
Another reason for Safeway’s high prices could have to do with its pharmacy department.
The cost of employing a full pharmaceutical team, stocking drugs and purchasing the supplies necessary to fill prescriptions and keep the pharmacy clean and orderly adds up quickly.
Depending on how profitable each individual pharmacy department is could also affect how Safeway prices their other products and departments.
If the pharmacy makes less money than it would like, Safeway has to compensate for the loss through its other products, which may result in higher prices.
6. Constant Sales and Discounts
Safeway is popular largely due to the number of discounts and sales they offer on a regular basis, such as their Two-For sales and percent-off discounts.
However, hosting sales on a regular basis costs retailers and grocers money, which has to be made up through other means.
Often, stores will account for a loss in profits by raising prices after sales, especially on their most popular in-demand products.
7. Starbucks Kiosk
Another contributing factor to Safeway’s high prices could be their Starbucks kiosk, which is owned and managed by Safeway and not the Starbucks Coffee Company.
Safeway has to employ a kiosk manager and barista team, pay for the expensive equipment required to craft beverages, as well as upkeep those machines.
Additionally, Starbucks’s products are quite expensive for stores to stock.
While the Starbucks kiosk is popular and likely profitable, it is still an extra expense for a grocery store to include in its product lineup.
Therefore, it’s possible that Safeway may account for that extra expense by the way they price their other products.
8. The Safeway Flower Department
Flowers can cost anywhere from $5- $300 depending on the arrangement, the number of flowers, and the variety requested.
Within this range, Safeway will usually stock high-quality flowers, such as red roses, which are usually quite pricey.
This is largely due to the farms the flowers are purchased from, as farms can often charge a large amount for their produce and plants.
Therefore, Safeway has to make up for the expense of stocking flowers by charging higher prices for their customers to purchase those flowers.
9. Fresh Food Departments
Unlike many other grocery stores, Safeway has departments for fresh meat, a bakery, a sandwich building station, and a hot food department.
The expense of foods such as meat, along with the cost of keeping prepared food available every day, may account for Safeway’s high prices not only for those departments but for their other products as well.
While many reasons could account for how expensive Safeway is, the fact that they are a unionized company may be one of the main reasons.
The cost of higher wages, employee benefits, paying union dues, and other expenses could account for why Safeway has to charge higher prices for their groceries than other stores.