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A core brand value of New Safeway is industry leadership in product standards and innovation. We have made rapid progress towards this goal, but there is much more to come this year. We have a new, totally dedicated team of 40 product developers who, working with our buyers, technologists and suppliers, are spearheading our drive to be best at fresh. Our goal is to achieve quality standards comparable with or better than those commonly associated with smaller, more specialist competitors but to deliver them on our scale of operations and lead times.
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| Jack Sinclair Managing Director Operations |
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| Jonathan Davies Stores Finance Director |
We are taking a leading edge approach to every aspect of our products. Values have been established for all own-brand products, covering everything from ingredient integrity to processing know-how, nutritional targets, animal welfare and new labelling standards. All of these go beyond the legal minimum standards not just for Safeway but for our industry.
Supplier relationships
Developing new and exclusive products requires long-term partnerships with suppliers who share our aspirations and are committed to helping us succeed in the market place. These suppliers may be large – for example, Northern Foods, who won our Supplier of the Year award and is responsible for many of our new ranges. Or they may be small – for example, our Scottish Supplier of the Year was Dean’s of Huntly who supplies us with “The Best” shortbread.
Our future success will depend as much on these special supplier relationships as on our ability to create new concepts.
New ranges
Our strategy is to deliver the essentials exceptionally well and then to add the excitement. Our new range of traditional ready meals exemplifies this combination, demonstrating how important it is to get the basics right. We will continue to strive to be the best in our industry in terms of quality in everything from a prawn cocktail sandwich to lasagne, as well as setting new standards in ranges such as Mediterranean, with more exotic lines such as aubergine parmigiana.
During the year we have strengthened our own sub-brands, notably “The Best” and also our Savers range. We have added new ranges such as Eat Smart, Traditional and Italian ready meals. In total we have launched over 700 new and improved lines across the business and re-designed nearly half of our own-brand packaging. Our target for this year is substantially to increase our own-brand ranges, which will deliver significant benefits in terms of both sales and margin mix. It will also include more activity in those ranges which spread over several different product categories. The total number of our own-brand lines will clearly increase but, within this range, stores will sell selected lines appropriate to their customer profile and local competitive position.
Healthy eating
Our Eat Smart range has been strictly developed to meet a “three per cent fat or less” criterion. The range is aimed both at men and women and includes many lines commonly regarded as taboo for anyone trying to lose weight. The rationale behind our innovative approach suggests that many people start healthy eating regimes but fail to stick to them because they get bored with diets. Our Eat Smart range breaks new ground by challenging the popular equation of healthy eating with self-denial. Our customers’ initial response to Eat Smart confirms our analysis and this range will be extended during the current year.
To coincide with the launch of Eat Smart, we relaunched our Nutrition Advice Service which gives our customers the professional support and advice they need to adopt and maintain a healthier lifestyle. Our research has also underlined the difficulties which many customers have in understanding nutritional information as conventionally presented on packs and labels. We are therefore working hard to make this information more relevant to the needs of the individual customer.
Local and regional food
Local sourcing of quality products has an important part to play in our best at fresh strategy. Over the past few years we have encouraged many small suppliers to develop products which we have successfully trialled and grown into well-established regional brands. Last year we were particularly active in expanding our range of traditional meat products:
Own-brand West Country
Our beef range was launched at Tiverton in November and is now sold in 18 stores with fresh meat counters. Our lamb range was relaunched in October, very soon after the end of the Foot and Mouth outbreak, and is now sold in 50 West Country stores.
Simultaneously we introduced our new range of bacon, also in 50 stores.
Our association with Westaways, a small sausage manufacturer in the West Country, is a good example of how we are expanding our business with regional suppliers. Westaways supplies 50 of our stores with their produce and ran a particularly successful promotion in our Plymstock store.
Own-brand Welsh
In February 2001 we launched a new range of pre-packed Welsh beef and, in March 2002, following a 12 month trial in our Welsh stores, we extended it to meat counters both in Welsh and Border stores.
Following the outstanding success of our Welsh Mountain lamb range, now sold in 280 stores, we are trialling the organic version of this product in our Welsh stores. Initial results are encouraging.
Own-brand Scottish
We launched our Highland lamb range in October 2001 to help Scottish sheep farmers weather the ban on exports resulting from the Foot and Mouth crisis. Celebrity Chef Nick Nairn helped to promote this product in stores. All of our 114 Scottish stores sell local produce such as Orkney beef and cheese. All beef sold over meat counters in Scotland comes from cattle reared, slaughtered and processed in Scotland.
Own-brand Northumbrian
In November, we were the first major retailer to relaunch Northumbrian lamb after the end of Foot and Mouth. We now buy up to 1,000 of these lambs every week in season through our processors.
As a result of these initiatives, backed by a strong promotional programme, we increased our total meat sales in volume terms by 4% – the strongest growth rate among the big four retailers – and grew our share of the meat market to 9.4%.
Other regional products
Other significant extensions to the range of regional products include Scottish, Welsh and West Country milk, a growing range of local cheeses and continued support for local and regional beers.
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Our strategy is to deliver the essentials exceptionally well and then to add the excitement.
Non-food sales growth
Our strategy in non-food is to drive our sales volumes in household products through the weekly flyer, to increase our share of the health and beauty market as part of our new format roll-out and to achieve incremental sales growth in electrical products and home entertainment.
The sales growth which we have delivered in all these products at Plymstock offers huge scope to achieve similar results in all reformatted superstores, as well as in future megastores.
Health and beauty
The specially-designed format for our health and beauty range is a fundamental part of our megastore and “Fresh to Go” superstore offer and is delivering substantial sales growth. At Plymstock our new beauty zone, soap table and nail bar have more than doubled our previous sales of beauty products.
Home entertainment
The megastore concept has had an even more dramatic effect on this product range, with sales of DVDs, videos and CDs seven times higher at new Plymstock than in the old store. In total our sales of these products in all stores increased by 30% during the year. We will continue to drive sales in the current year through further innovation in the way we merchandise this range in our reformatted stores.
Homewares
Plymstock has also enabled us to develop an authoritative homewares offer. The central theme is coordinated solutions, focusing on our cookshop and bed/bathroom ranges. To support coordination in these two areas, we have introduced a range of portable lighting and home accessories. Over 100 new lines have been introduced to give authority to these ranges, many of them exclusively designed for Safeway. We present them in a stylish but not domineering environment, a major point of difference from our competitors.
Electrical products
Christmas was a big success for our electrical range, including mobile phones. We launched our first own-label products and our REOC A3 DVD player achieved a 5-star award in “What Hi Fi” magazine. All our superstores now offer a range of DIY, kitchen and living room electrical products. At Christmas, we more than doubled our sales of mobile phones in a declining market for that product.
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Offering superb value
Selective sourcing of branded products from outside the UK is critical to our pricing strategy. During the year we offered well-known cosmetics at up to 50% off the recommended price. We also offered up to a third off England football shirts and up to 40% off Levi jeans. Overall, our “When It’s Gone It’s Gone” sales were up 37% on the previous year. We will continue to find great value products for our customers whenever we can.
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