1. Grocery Wars The Fight for Sales Howard Gerelick, Safeway Inc. November 12, 2004 10th Annual Rocky Mountain Commercial Real Estate Expo - DU Fall Forecast

2. Past  Changes in the competitive battlefield  Changes in store size & additional departments Present  Reviewing the competitive battlefield  Who’s winning the war? Future  Who will win?  How the winners will change the way we shop  How this will impact shopping center development

3. Changes In The Competitive Battlefield Denver SMSA Population # Store’s KS, Swy, ALB # People per Store 1989 1,675,400 115 11514,569 2000 2,027,500 137 13714,799 2004 2,291,400 163 16314,100

4. Changes In The Competitive Battlefield % Change - Population 1989 to 2000 21% 2000 to 2004 13% 1989 to 2004 37% % Change - # Stores 19% 42%

5. Changes In Store Count KSSWYALBTOTAL 1989 2000 2004 494323115 584831137 725635163 % Change 1989 - 2004 47%30%52%42%

6. Changes in Size KSSWYALB Pre 1990 48,000 SF 35,000 SF 30,000 SF 1990 - 2000 60,000 SF 55,000 SF 50,000 SF Post 2000 72,000 - 100,000 SF 58,000 SF 55,000 SF

7. Specialty Departments FloralBanksFuel Natural Foods Service Meats & Seafood Starbucks Photo Centers Other Changes

8. Changes In Market Share KSSWYALBTOTAL 1989 47.3%22.2%13.7%83.2% 2000 47.2%27.4%13.2%85.1% 2004 43.2%23.6%11.7%78.5% Net Change (4.1%)1.4%(2.0%)(4.7%) % Change (8.7%)6.3%(14.6%)(5.6%)

9. National Trends Market Share PriceOperator ConventionalSupermarketsSpecialtyStores 21%76%3% 1997 29%67%4% 2003 39%55%6% 2009 E

10. Market Share Comparison Denver SMSA King Soopers Safeway Albertson’s Cub Foods Wal-Mart Wild Oats 19892000200447.3%47.2%43.2% 22.2%24.7%23.6% 13.7%13.2%11.7% 8.5%6.8%0.0% 0.0%1.5%8.8% 0.0%1.7%1.8%

11. Summary 1989 - 2004 1989 - 2004 Population Growth 37% Store Growth 42% Market Share Total (5.6%) King Soopers Market Share (8.7%) King Soopers Store Count 47% Safeway Market Share 6.3% Safeway Store Count 30% Albertson’s Market Share (14.6%) Albertson’s Store Count 52%

12. Future  Conventional Supermarkets will experiment with alternative formats  More emphasis on remodels than new stores  Continued expansion of Super Wal-Mart, Super Target and Specialty Food Stores  Fewer Grocery Stores will be built

13. Grocery Wars: The Fight for Sales Howard Gerelick, Safeway Inc. November 12, 2004 10th Annual Rocky Mountain Commercial Real Estate Expo - DU Fall Forecast