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Our New Formats the Key Concept Is the Blending of Catering, Fresh Foods, Ambient Groceries the Plymstock Megastore Is a Landmark in Our Format Development

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Our New Formats the Key Concept Is the Blending of Catering, Fresh Foods, Ambient Groceries the Plymstock Megastore Is a Landmark in Our Format Development Chief executive’s review building Our new formats The key concept is the blending of catering, fresh foods, ambient groceries The Plymstock megastore is a landmark in our format development. and a growing range of non-food products and services in a multi-format It demonstrates how we can transform a 28,000 square foot superstore store portfolio. We have now proved that we can deliver in each of our into a 58,000 square foot hypermarket and do so in a way which breaks four formats a distinctive shopping experience which is proving successful. free of the standard model first developed by Carrefour in the 1960s Overall, we now have 121 stores, equivalent to 26% of our selling and subsequently replicated by our competitors in the UK. At the core space, which have been refitted in one or other of our new concepts. of our new megastore format is the Hub, which blends our “Fresh to Go” The sales performance of these stores and the feedback we are receiving and Café Fresco concepts with browsing for books, music, films and from our customers convinces us that we have a winning strategy. magazines in a relaxing environment. Our first new concept convenience store was launched at St Katharine We are on track to complete the reformatting of our entire portfolio Docks in December 2000 and since then we have refitted all but one of within the next three years. Obviously this will continue to cause some the 18 stores in this category in our portfolio, including stores in London, disturbance to our normal trading patterns and sales performance in the Leeds, Aberdeen and Glasgow. Our first new concept supermarket was current year. Going forward, however, the disruptive impact of further opened in Wimbledon in May 2001, closely followed by our new reformatting will begin to be offset by the cumulative contribution concept superstore at Woking which included our second Café Fresco. of refitted stores. Finally, in December 2001, we launched our first hypermarket, or megastore, at Plymstock, Devon. 4 Safeway plc Annual Report and Accounts 2002 Chief executive’s review the New Safeway Our new products Another vital part of being best at fresh is product innovation. During This year we have conclusively proved the year we completely revitalised our product development team by recruiting some talented and experienced senior people from our that not only are we the most innovative competitors. Their contribution is already evident in our much-improved range of ready meals. The initial success of our British Traditional and food retailer in the UK but that we can Eat Smart ranges has demonstrated how much scope we have to build our share of this market. We are now accelerating our new product translate new ideas into action faster than development programme. any of our competitors. These ideas all 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 focus on delivering our vision of being the launched a month-long promotion of authentic Italian food, “Viva Italia”, rounding it off with a concert by Luciano Pavarotti in Hyde Park. This first choice retailer for those customers attracted a capacity audience of over 70,000 and raised £500,000 for charity. This summer we are offering a further promotion of international who have the opportunity to shop locally foods, “World Favourites”, ending with a celebrity musical event in Hyde Park. in one of our stores. Annual Report and Accounts 2002 Safeway plc 5 6 Safeway plc Annual Report and Accounts 2002 Chief executive’s review Not only are we the most innovative food retailer in the UK, but we can translate new ideas into action faster than any of our competitors. New value New commitment Our deep-cut promotions now deliver the best value in the market. Successful retailing is ultimately about good and consistent execution As reported by the regular Taylor Nelson Sofres shopping basket in stores. That is what our customers remember on their way home. comparisons, based on 15,000 consumers, our basket is now consistently Execution in turn depends on the spirit and the skill of our store managers cheaper than most of our competitors’. 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 We have also organised over 1,000 independent price challenges in shopping in our stores. So the spirit of our people and their commitment a representative sample of stores across the country. In these challenges, to building New Safeway is fundamental to our success. I am really our customers compare what they would pay for a given basket of delighted by the way in which our people have answered the many products at any of our competitors’ stores with what they actually pay challenges we encountered during the year and I look forward with for the same basket in their local Safeway. The comparative till rolls are enormous confidence to those that lie ahead. 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. Carlos Criado-Perez Chief Executive Annual Report and Accounts 2002 Safeway plc 7.
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