Big Merger in Store?

Safeway Inc.’s $3.25-billion stock offer for the two-thirds of Vons Cos. it doesn’t own would merge two of the top operators in the grocery business. Both grocers have seen some of the industry’s highest gains in sales. A look at the strengths and weakness of the chains:

Safeway

Strengths:

* As California’s largest employer, excels at labor productivity. Has increased the number of jobs and employee hours at its stores and plans to do the same at Vons outlets, company representatives say.

* Has boosted sales by providing quicker checkout service and cleaner, better stocked shelves at its 1,057 stores in 16 states and Canada.

Weaknesses:

* Has yet to regain a stake in the lucrative Southern California market after selling 172 of its stores to Vons in 1988.

* Had to contend with several contentious labor disputes this year, including a 40-day strike in Canada, where more than 14,000 workers walked off the job, and a six-week strike in Denver involving 69 stores.

Safeway Stock Price

Monthly closes and latest:

Wednesday: $42.13, down $1.25

Vons

Strengths:

* As one of the largest food retailers in Southern California--with 325 Vons and Pavilions stores here and in southern Nevada--would account for about 60% of Safeway’s domestic division.

* Has consistently had the lowest prices compared with Ralphs, Lucky and Hughes in a quarterly market basket survey--of coffee, tuna and orange juice, among other products--conducted by the Los Angeles Economic Development Corp.

Weaknesses:

* Is fighting to increase market share in Southern California. Slipped further behind Ralphs after Ralphs bought the Alpha Beta, Boys, Viva and Food 4 Less stores in 1995.

Vons Stock Price

Monthly closes and latest:

Wednesday: $54.34, up $11.22

Market Share

For five-county Southern California region:

Ralphs: 28%

Vons: 25%

Lucky: 22%

Other: 25%

Sources: Times and wire reports, Bloomberg Business News, TradeLine