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This year we have conclusively proved that not only are we the most innovative food retailer in the UK but that we can translate new ideas into action faster than any of our competitors. These ideas all focus on delivering our vision of being the first choice retailer for those customers who have the opportunity to shop locally in one of our stores.
Our new formats
The key concept is the blending of catering, fresh foods, ambient groceries and a growing range of non-food products and services in a multi-format store portfolio. We have now proved that we can deliver in each of our four formats a distinctive shopping experience which is proving successful. Overall, we now have 121 stores, equivalent to 26% of our selling space, which have been refitted in one or other of our new concepts. The sales performance of these stores and the feedback we are receiving from our customers convinces us that we have a winning strategy.
Our first new concept convenience store was launched at St Katharine Docks in December 2000 and since then we have refitted all but one of the 18 stores in this category in our portfolio, including stores in London, Leeds, Aberdeen and Glasgow. Our first new concept supermarket was opened in Wimbledon in May 2001, closely followed by our new concept superstore at Woking which included our second Café Fresco. Finally, in December 2001, we launched our first hypermarket, or megastore, at Plymstock, Devon.
The Plymstock megastore is a landmark in our format development. It demonstrates how we can transform a 28,000 square foot superstore into a 58,000 square foot hypermarket and do so in a way which breaks free of the standard model first developed by Carrefour in the 1960s and subsequently replicated by our competitors in the UK. At the core of our new megastore format is the Hub, which blends our “Fresh to Go” and Café Fresco concepts with browsing for books, music, films and magazines in a relaxing environment.
We are on track to complete the reformatting of our entire portfolio within the next three years. Obviously this will continue to cause some disturbance to our normal trading patterns and sales performance in the current year. Going forward, however, the disruptive impact of further reformatting will begin to be offset by the cumulative contribution of refitted stores.
Our new products
Another vital part of being best at fresh is product innovation. During the year we completely revitalised our product development team by recruiting some talented and experienced senior people from our competitors. Their contribution is already evident in our much-improved range of ready meals. The initial success of our British Traditional and Eat Smart ranges has demonstrated how much scope we have to build our share of this market. We are now accelerating our new product development programme.
In addition to strengthening our prepared meals ranges, we are continuing to offer new ideas in fresh foods from around the world. Last summer we launched a month-long promotion of authentic Italian food, “Viva Italia”, rounding it off with a concert by Luciano Pavarotti in Hyde Park. This attracted a capacity audience of over 70,000 and raised £500,000 for charity. This summer we are offering a further promotion of international foods, “World Favourites”, ending with a celebrity musical event in
Hyde Park.
Our deep-cut promotions now deliver the best value in the market. As reported by the regular Taylor Nelson Sofres shopping basket comparisons, based on 15,000 consumers, our basket is now consistently cheaper than most of our competitors’.
We have also organised over 1,000 independent price challenges in a representative sample of stores across the country. In these challenges, our customers compare what they would pay for a given basket of products at any of our competitors’ stores with what they actually pay for the same basket in their local Safeway. The comparative till rolls are audited by an independent research agency and we refund double the difference if the Safeway basket proves to be more expensive. The results of these comparisons are conclusive – nine out of ten times we are cheaper than Sainsbury, eight out of ten cheaper than Tesco and seven out of ten cheaper than Asda.
New commitment
Successful retailing is ultimately about good and consistent execution in stores. That is what our customers remember on their way home. Execution in turn depends on the spirit and the skill of our store managers and their teams who deal directly with our clients. Our clients’ perception of our Company is only as good as their most recent experience when shopping in our stores. So the spirit of our people and their commitment to building New Safeway is fundamental to our success. I am really delighted by the way in which our people have answered the many challenges we encountered during the year and I look forward with enormous confidence to those that lie ahead.
Carlos Criado-Perez Chief Executive
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