90′s Christmas commercial from Safeway.

Safeway was a chain of supermarkets and convenience stores in the United Kingdom. It started life as a subsidiary of the American Safeway Inc. before being sold off in 1987.

Safeway was listed on the London Stock Exchange and was a constituent of the FTSE 100 Index until it was acquired by Wm Morrison Supermarkets in March 2004. Most of its 479 stores were rebranded as Morrisons, with others being sold off. The brand disappeared from the UK on 24 November 2005.

Early Years

The business was established in 1962 when Safeway Inc. opened its first store in the United Kingdom in Bradford: it was then known as Safeway Food Stores. By 1987 it had 133 stores around the United Kingdom.

The New Safeway

By the early months of 1999 Safeway was coming under renewed criticism from investors. Its shares had under-performed the food sector over the previous five years; it had been pushed back into fourth position by Asda and it did not have enough stores of adequate size to offer a comprehensive non-food range.

In July, Safeway announced the appointment a new chief executive, Carlos Criado-Perez, who had held senior posts in Wal-Mart’s international division.

The problem was how to distinguish Safeway from Tesco and Sainsbury’s, and how to minimise its scale disadvantage. According to estimates made by the Competition Commission, Tesco was able to negotiate significantly lower prices from its suppliers than Safeway – averaging about 3 per cent on big-selling branded items.

Criado-Perez’s response was to introduce selective deep discounting, the so-called high/low pricing formula, which was later branded as ‘substantially discredited’ by Morrisons management, making deep price cuts on a limited set of products for a limited period. Criado-Perez also abandoned Safeway’s loyalty card, arguing that these cards were no longer an effective marketing tool. This project was branded ‘New Safeway’.

The new approach to pricing was one of the four pillars of Safeway’s strategy, the others being “Best for Fresh Foods”, “Best for Customer Service”, and “Best for Product Availability”. Criado-Perez envisaged a five-year programme of developing the stores along these lines, to be completed by 2004.

In 2002, Safeway was the fourth largest supermarket chain by sales in the UK. However, it was growing more slowly than other large UK chains and this was reflected in a share price below the values of the group’s assets, leading to the various takeover rumours that circulated during 2002, indicating the City was unconvinced with the Criado-Perez strategy.

Info gleaned from Wikipedia

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