TNS data suggests Safeway has dramatically reduced the number of deep cut promotions since January 2003 in a bid to make sales more profitable.

The data, based on a weighted average of the prices paid for all products in 233 categories between October 2001 and October 2003, shows prices have lurched up from January this year, moving from less than 95 on the index (100 is average) to almost 105.

Safeway communications director Kevin Hawkins said he was not surprised. The data reflected a “well-publicised” switch in strategy to reduce reliance on deep ‘Gonzalez’ discounts to stop customers cherry-picking its stores for deals and doing most of their shopping elsewhere.

The cash saved had been partly reinvested in shallower price cuts on a broader range of products, but mostly on other areas of the business such as new product development. Hawkins added: “This is not a ‘dash for profit’ but we have reduced the investment going into Gonzalez and changed the promotional mix to put less emphasis on driving footfall and more on driving basket spend.

“We are trying to make our sales more profitable.”

Safeway, which this week produced its cheapest basket for The Grocer 33 since our revised list was drawn up in June, is nevertheless consistently more expensive than rivals on our 33 items, and has yet to come in under £40.

Meanwhile, Philip Green has requested and received fresh financial data from Safeway under section 20 of the Stock Exchange’s code - indicating, said Hawkins, that Green was still interested in a takeover.

One City analyst believed the news was leaked by Safeway to put pressure on Morrisons to come in with a high bid.

Topics