TROUBLE IS brewing in the aisles of Scotland’s supermarkets. Products and produce once easy to hand are either on distant shelves or have simply disappeared altogether. Safeway, the supermarket located in almost every leafy suburb, is growing into a monster called Morrisons at a national rate of three stores per week, and shoppers are less than pleased.
In March, the supermarket chain famed for its rotisserie chickens, pitted olives and decidedly middle-class clientele was embraced into the family bosom of Morrisons - a smaller, English-based chain whose style is decidedly cheap and cheerful - when
Sir Ken Morrison, the company’s founder, paid £3 billion at the City’s check-out. The first Scottish shoppers knew about the change was the removal of Safeway’s distinctive white plastic bags, to be replaced by Morrisons’ clear bags complete with the firm’s utilitarian yellow and black logo.
For customers who found the colours aesthetically displeasing, more distress ensued as they toured the aisles with their trollies. Across Scotland’s 111 Safeway stores, the product stock was cut by 30 per cent, from 30,000 lines to just 20,000 lines. Result? The customers walked. In May, Morrisons reported that despite cutting the price of 7,500 products in all Safeway stores, sales were down 13.8 per cent. Yesterday the extent of customer dissatisfaction was apparent as the company announced that Safeway’s half-year profits had dropped from £131.6 million to £121.6 million.
The irony is that while sales in Safeway stores have dropped by 13 per cent, the stores that have been re-branded as Morrisons are reporting an increase in sales of up to 10 per cent. In Scotland, to date, only three stores have been re-branded, those in the Gyle centre in Edinburgh, Newlands in Glasgow and a store in Dumfries. Two newly-built Morrisons have also appeared in Kilmarnock and Falkirk. But while the chain insists that every store now employs more staff than it previously did, customers are still lamenting the reduction in the range of available products.
"When Safeway first arrived in Britain it had a high-end value," says Peter York, a style analyst. "One tends to think of Safeway in the King’s Road and Kensington High Street in London, but it has been losing its upmarket credibility in recent years. I’m surprised if Safeway customers had any particular perception of what type of store Morrisons is - unless, of course, they read the business pages. But there is the feeling among some consumers that they don’t want to pay less if they are losing choice."
This is the case at the Safeway/Morrison store located at the top of Byres Road in Glasgow, at the hub of the city’s fashionable west end. For decades it has served a generation of public figures from former first minister Donald Dewar to TV presenter Kirsty Wark, but now many customers are looking elsewhere for their ingredients. The question is: could Sir Ken Morrison, Safeway’s new owner, care less if he loses a few food snobs but gains a flood of new customers keen on price cuts? As a former market stall-owner, the answer is probably not.
When Morrisons floated on the stock exchange in the late 1960s, there were just four stores. By the time it bought Safeway this year, there were 119, stretching from Carlisle to London, many with petrol stations and cafés selling hot pies made in Morrisons’ own factories using meat from animals from the Morrison abattoir. The "Morrisons Mission" has always been to deliver the very best for less. This is the same "pile it high, sell it cheap" strategy on which Sir Jack Cohen built Tesco.
IN PERSON, Morrison doesn’t smoke, barely drinks and enjoys plain food, as well as the occasional luxury. He lives in a grand Jacobean mansion, drives a Bentley and takes holidays in the Caribbean. Yet, according to Joanna Blythman, author of Shopped: The Shocking Power of British Supermarkets, he may well have bitten off more than he could possibly chew. In her opinion, yesterday’s results are unsurprising: "I think that Morrisons is a family business and it’s run in an old-fashioned way. When Ken Morrison bought over the Safeway chain, I think they had big ideas of what might have happened. Morrisons was a small family store and Safeway was a huge brand and that has been the problem. If Morrisons thinks it can swallow Safeway and then just compete with the giants of Asda and Tesco and global players like Wal-Mart then it has another think coming. When it took over the stores it wasn’t happy with the sizes of them. They were different to what it were used to and have different systems of management."
The most popular supermarket in Scotland is Tesco, which holds 25 per cent of the market share. Asda comes a close second with 24 per cent while Morrisons/Safeway trail third with 19 per cent. This is a position Morrison is anxious to improve on, and many in the industry believe he is capable of doing so.
Stuart Feather, managing director of Feather Brooksbank, the Edinburgh advertising agency who used to work on the Morrisons account, is dismissive of the notion that the supermarkets are of a lower class than Safeway. "Morrisons has a strong image and it is one of no-nonsense with an importance put on price and value," he says. He also points to their television campaign, which is comprised of ten-second commercials that list reasons to shop at Morrisons: "They are short, sharp and get the right message across."
In Feather’s opinion, the supermarket is going through a transitional period, but will remain a major player. "I think they are a very strong force, but they are careful. One thing they are not going to do is over-promise and then fail to deliver. They have been very successful in the style of their larger stores, which are laid out like a street-market with customers able to move from section to section. In Falkirk, where they recently opened a large store, the feedback has been very good. People have raved about the quality."
The perception that Morrisons delivers value for money is backed up by a survey carried out by The Grocer, the industry’s trade magazine, which found that only 11 per cent of Safeway’s customers wished to retain the brand name after the store’s takeover by Morrisons. A quarter of all Safeway customers said the shopping experience had improved since the takeover, with most believing they are getting better value for money. However, the survey of 1,700 shoppers also showed that there was lingering loyalty towards Safeway among older shoppers and those previously unfamiliar with the Morrisons brand, such as the customers in Scotland.
THE IRONY IS THAT no sooner will loyal Safeway shoppers begin to settle into the Morrisons style of business then more changes will take place in their weekly shop. As many as 50 of the smallest Safeway/Morrison stores in Scotland are currently sitting on the shelf and are expected to be purchased by Somerfield within the next few weeks. Small stores - ie those with less than 15,000 square feet of floorspace - are not beautiful in the eyes of Sir Ken Morrison, and he’s keen to re-coup £200 million from their sale. For all those shoppers who despise the brightly-coloured bags, the sale will only be welcomed.
