Supermarkets: Battle for the family market intensifies

Safeway was a great British buyout, which soared in sales after freeing itself from its huge American parent a decade ago. But it is now under pressure from rivals as it tries to define itself as the supermarket chain for families.

Colin Smith, chief executive of Safeway, says he is the longest-serving chief executive among the big supermarkets. It's quite an achievement. He has been in the post since ... oh, 1993. According to one analyst, these short tenures at the top are a fair measure of the pressures of the job, and of the speed at which the business moves.

It shows at Safeway, which in three years has taken itself away from being seen simply as a lower-quality rival to Waitrose. The group has gone after one core market, the family shopper. But will that be enough?

Mr Smith, married with two sons, is a family man. According to a colleague: "He does the family shop himself from time to time, shops in competitors' stores, and has very strong empathy for mums and kids, with limited budgets and time".

Perhaps with this in mind, at the height of the recession when supermarkets were floundering, Mr Smith set about a massive overhaul of the group, dubbed Safeway 2000.

The company refocused and stores now appeal to value-seeking family shoppers rather than to higher-income couples. In this way he increased number of shoppers by 50 per cent in two years, although last month the group warned of non-existent sales growth, with analysts observing that it was losing out to Sainsbury's.

Perhaps, say some, the age of the great supermarket patriarchs is over. Prior to Mr Smith, Safeway's public face was that of Sir Alistair Grant, who retired as chairman in April from his place in the triumvirate of larger-than life characters, along with Sainsbury and MacLaurin.With finance director David Webster (now chairman), Sir Alistair had bought the British subsidiary of the giant American supermarket group Safeway in 1986-87. Once it was independent, turnover soared from pounds 1bn to pounds 7bn over the next few years.

Mr Smith and Mr Webster use information gleaned by institutions such as the Henley group to determine Safeway's direction. According to customer development director Roger Partington, the results are often surprising.

"We had thought that the shopper just wanted a continuing array of choice and variety, which they do, but it also creates confusion ... Our average supermarkets sell between 22 and 25,000 lines. It can be a bit daunting. So we set about ways to make it easier." It was information from customers that was the genesis of a pilot scheme in Basingstoke, ``collect and go'', where customers can ring up and order basic grocery items, and collect them when they do their fresh goods shop.

According to one Safeway insider, everything the company does is to make things easier for families. "Harry and Molly [the childrenin TV advertising] convey our general market position, very much aimed at families with children 0-5," he said.

Safeway is also adopting the "market-hall" concept favoured by Asda, with increasing in-store pharmacies, dry cleaners and own-range kids clothes, replicating the traditional high street.

The group thinks there is little left to be gained from straightforward price competition, because the market is now so keen. Safeway has launched "Price Protected" - if customers buy a product cheaper elsewhere, the store gives it to them for free.

So where next? Last year, it launched a venture with BP to base "proper" supermarkets in 24-hour petrol stations. This may not appeal to some, but according to Safeway, it is the future. It must hope so. Because another version of the future in the trade has it that Safeway will be swallowed up by its aggressive, expansionist rival, Asda.