Morrisons heads south on a charm offensive

Sir Ken's staff are backing the bid for Safeway; now he just has to persuade the City

Bob Stott, the joint managing director of William Morrison Supermarkets, can contain himself no longer. He leans into the chilled cabinet at the company's Grays store in Essex and grabs a big hunk of gammon. "Look at that for a fiver," he says, beaming.

His infectious enthusiasm continues. "These are our bumblebees," he says pointing to a free-standing cabinet in the middle of an aisle with a yellow and black awning over the top. "Customers know these are where some of our best bargains are." Today there is a two-for-the-price-of-one offer on Micro Pizzas at 85p.

Later he stands proudly in front of the bubbly section of the wine aisle. "People say we're a discounter but would you get a display of champagne like this in a discounter?" he asks gesturing towards a rack of a dozen different varieties. "We also have a 100 wines under £3. But it's not plonk."

Welcome to the William Morrison charm offensive. Embroiled in a six-way bid battle for Safeway, the Bradford-based group is conscious that southern-based investors and the London-centred media know precious little about its business which has only a handful of its 119 stores outside its northern heartland. So it is holding court in one of its newest stores in the south in order to display its wares.

The management team has come down from Bradford mob-handed. Sir Ken Morrison, the company's 71-year-old chairman, is on hand, looking dapper in a pale grey suit with red lining and matching red braces. He cracks jokes and answers questions helpfully while managing to divulge nothing he doesn't want to.

Also in tow are Marie Melnyk, the elfin-looking joint managing director in charge of trading and buying, Mr Stott, a white-haired, cheerful character who looks after finance and IT, and a bevvy of divisional managers. Sir Ken is making a deliberate point by bringing most of the board with him. "The press sometimes has the impression that we are a one-man band. But we have a very good team here."

The immediate impression is that this is no downmarket concept. True, the Grays branch is only eight months old but the impression is light, bright and while much is made of the low prices it is not to the exclusion of everything else. As Sir Ken cannily observes. "It's like your newspaper. It's not how much it costs, but what's in it."

There are subtle innovations in areas such as product display. Bananas are hung up on hooks rather than stacked on top of each other lest they become bruised. The same goes for grapes and plums. Pizzas are displayed on shelves which tilt them towards the customer under spotlights that pick out the colourful toppings. The toppings, by the way, are added in house by the delicatessen in 60 per cent of the pizzas on sale.

Melons are shown off on tiered shelves so you can see each individual piece of fruit. And customers can buy a quarter or a half of a melon, as well as a whole one. It is the same in fresh produce where the store prepares and packs half of its own fruit and veg on-site. Customers can buy as much or as little as they want. With broccoli, for example, there are smaller sizes priced at just 16p and 27p. All this is part of each store's "Market Street" concept which would be introduced in all Safeway stores apart from the smaller branches which will continue to trade under the Safeway name.

Morrisons' vertical integration is one of its unique features among UK supermarkets. The group has its own fresh food manufacturing company called Farmers Boy as well as produce packhouses and abattoirs. This cuts costs and gives the group more control over its supply chain.

In the Grays meat section most of the meat, apart from mince and offal, is cut and packed on the premises by a team of butchers. So if a pensioner wants a single lamb chop, they can have it.

The group is expanding in non-food and the Grays store has a music and video section as well as a growing homewares offer. There are pillows, cushions and lampshades as well as a double 13-tog duvet for £9.99.

Almost 10 per cent of Morrisons' group sales are now in non-food as it develops ranges of crockery, small electrical appliances, baby goods and lightbulbs (89p for five 60 watt bulbs).

But as Andrew Pleasance, the home and leisure director, makes a point of saying: "We're grocers at heart. We want the non-food to complement the food, not dominate it."

The cafeteria offers standard fare such as sausage, mash and peas but with a kind of "semi waitress service". Customers place their orders, pay at the counter and the meal is brought to their table within seven minutes. This helps mothers who would otherwise be trying to juggle two trays, a buggy and a hungry toddler. Again, cafes would be added to all Safeway branches that are big enough.

There is no loyalty card and no home delivery service, though these are not offered by Safeway either. Again, the theory is to concentrate on what it is best at rather than trying to be a bank or a telecoms provider as well.

It is in this way that Morrisons plans to raise Safeway's rather dismal sales per square foot from its current £17.30 to the Morrisons level of £20.35 within three years. It also wants to hike Safeway's average shopping basket from £13.90 to match Morrisons' average of £22.78.

As Sir Ken says: "We believe we have a very clear understanding of Safeway and a very clear plan for it. And we believe we can do this without losing the culture and characteristics which have distinguished the Morrisons business."

Behind the scenes Morrisons takes personnel matters seriously, On the stairs down to the shop floor there is a mirror with a sign reminding staff to ensure their appearance is appropriate. "Are you clean-shaven?" "Are you wearing tasteful make-up?" Other signs bear caution "Accuracy, not speed" next to lists of sales targets for daffodils and cheese.

The staff look happy enough, resplendent in their burgundy uniforms. Sir Ken reckons he has them on side with his bid. Now he has to do the same with the City.