Magazine article Marketing

ANALYSIS: Is Safeway Falling Too Far Behind? - Safeway's Recovery Looks Less Certain in the Light of Its Annual Results. Can the Chain Do More to Challenge Its Bigger Brothers? Mark Kleinman Investigates

Magazine article Marketing

ANALYSIS: Is Safeway Falling Too Far Behind? - Safeway's Recovery Looks Less Certain in the Light of Its Annual Results. Can the Chain Do More to Challenge Its Bigger Brothers? Mark Kleinman Investigates

Article excerpt

The UK supermarket war has never been more intense, and Safeway, the UK's fourth-largest grocery chain, is determined to punch its weight.

Since Argentine chief executive Carlos Criado-Perez joined the company in 2000, the introduction of 'New Safeway' has got the chain back on track.

But the warning bells were ringing again last week, when at the announcement of the company's full-year results, Criado-Perez revealed that like-for-like sales growth had slowed to just 2% in the first part of the new financial year.

Immediately, City analysts began to question Safeway's strategy and, comparing them with robust figures from Asda, warned that the company's recovery might be coming to an end. But last year's 11% rise in pre-tax profit to pounds 355m, combined with the fact that the slowdown in sales can be attributed to disruption caused by Safeway's store transformation programme, suggest that the initial slowdown in growth will only be a temporary blip.

Indeed, the company is bullish about its prospects, and says its focus on store revamps and new product development are the keys to its future growth.

Safeway has identified four core store-types (convenience, supermarket, superstore and mega-store), with the largest incorporating dedicated health and beauty, electricals, homewares and pharmacy areas. By July, five of these mega-stores will have been launched.

'The idea is to get customers to migrate from their grocery shop to seeing Safeway as the place to buy other types of products,' says the chain's marketing controller, store communications, David Sinfield.

But Safeway is not losing sight of the paramount importance of its food offer. In an intensely competitive market, Safeway aims to be the 'Best at Fresh', and its Fresh To Go initiative, which sees food cooked for customers in-store, is a significant step along that road.

The introduction of own-label ranges such as healthy eating portfolio Eat Smart are also a signal of Safeway's future direction. Under new product development chief Judith Batchelar, recruited from Marks & Spencer last year, the chain now has an NPD team of 40. Batchelar says there will be significant initiatives relating to vegetarian and snacking products in the near future.

Safeway has also just appointed its first own-label brand manager, with Roger Hart, an ex-Seagram and Mars marketer, taking over responsibility for The Best range. …

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