Safeway Takes First E-Commerce Plunge in Cloak-and-Dagger Deal

Share this content:
Food and drug store chain Safeway Inc. said today it will plunk down $2 million in MainStreet USA Corp., a self-styled marketing and technology e-commerce company.

Safeway called the investment "interim funding in the form of a ... loan." Safeway will hold an unspecified minor stake in MainStreet, according to the company, keeping potential MainStreet losses off Safeway's books.

"This is our first publicly announced e-commerce investment," said Debra Lambert, corporate director for public affairs at Safeway, Pleasanton, CA.

The retailer was required by law to disclose its relationship with MainStreet in its proxy statement filed March 29, Lambert said.

Safeway has also signed a nonbinding letter of intent to invest $25 million in MainStreet for a less than 20 percent share of that company. This again is subject to certain conditions, according to Safeway.

Little is known about MainStreet. The privately held company was founded in December and is also based in Pleasanton, some 40 miles east of San Francisco. It does not yet have a Web site of its own.

"At this moment, MainStreet is not disclosing any information about the company or its relationship with Safeway, other than the investment," said Maria Murnane, spokeswoman for MainStreet. "We'll make an announcement later this year."

Safeway's Lambert also declined to dive into the specifics of the deal, including a confirmation that the currently information-only site would start selling this summer.

Safeway operates 1,659 stores in North America. Sales last year were up 18 percent to $28.9 billion, and net income for the same period grew by 20 percent to $970.9 million.

Barring a few sketchy details about MainStreet, Safeway is mum about its e-commerce projects.

William Y. Tauscher, a director on Safeway's board, is MainStreet's CEO. The bonds between the two companies further strengthened on March 28 when Gary D. Smith quit Safeway after 30 years to become MainStreet's chief marketing officer. Smith's last assignment at Safeway was working on Internet strategies.

Still, Safeway is hedging its bets with MainStreet.

"There can be no assurance that Safeway will make an investment in MainStreet," a prepared statement said, "and the timing and terms thereof are yet undetermined."

Next Article in Digital Marketing

Sign up to our newsletters

Company of the Week

Brightcove is the world's leading video platform. The most innovative and respected brands confidently rely on Brightcove to solve their most demanding communication challenges because of the unmatched performance and flexibility of our platform, our global scale and reliability, and our award-winning service. With thousands of customers and an industry-leading suite of cloud video products, Brightcove enables customers to drive compelling business results.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here

Relive the 2017 Marketing Hall of Femme

Click the image above