Page 1: Introduction
Shopping for food is an activity that all of the UK’s 23 million households regularly have to carry out. Providing food stores for these households is a very competitive business that has seen the rise of a number of national grocery retailers offering a wide range of goods and services within their stores. Their influence is measured by the increase in the market share of the multiple retail grocers, rising from 44% in 1971 to over 80% in 1995. The typical household will now shop with a multiple retailer and, again typically, this will be done at one of the supermarkets owned by a national business such as Safeway.
The challenge for companies in this sector is to provide a service that will regularly bring customers back to their stores. So they have to pay the closest attention to what their customers want and ensure that this is delivered, every day, to a consistently high standard.
Safeway 2000 - the rationale for change
Safeway in the UK was originally owned by an American company of the same name and opened its first supermarkets in the early 1960s. In 1987, Safeway UK was bought by the Argyll Group plc - now called Safeway plc – which immediately began a programme of rapidly expanding the number of Safeway superstores i.e. outlets over 28,000 square feet. By 1993, however, new planning restrictions imposed by the Government were making it much more difficult for all the large supermarket chains to go on expanding their sales simply by opening new selling space. The focus of competition was shifting to customers’ perception of value for money and it soon became clear to Safeway’s management that, in this area at least, the company’s performance stood in need of improvement. Under the banner ‘Safeway 2000’ a fundamental review of the business was initiated and completed within 18 months. Through this review the company identified the following weaknesses:
- Price perception was poor - Safeway was seen as too expensive.
- Product ranges lacked real focus.
- In-store availability of products was not reliable enough.
- It was strongest with the under 30s, particularly single people and pre-family couples, but lost too many of these customers to its competitors once they started their families.
Safeway then went back to first principles to formulate a strategy that would strengthen its competitiveness. It refocused the Safeway ‘offer’ on families, particularly those with young children. From here, the emphasis moved on to restructuring the business and changing its predominant style of management in order to deliver the new offer to its customers.