Morrisons is airing a nationwide TV ad campaign to highlight the fact it has cut 7,500 Safeway prices since the acquisition.

The ads - which carry the tag line ‘Enjoy the change’ - were launched just days before Morrisons revealed at its AGM that Safeway sales had slumped.

However, chairman Sir Ken Morrison told shareholders that customer numbers were increasing and he anticipated sales would pick up due to the advertising campaign and plans to convert up to 50 Safeway stores to the Morrisons format before the end of the year.

As well as slashing prices, the retailer has also started selling Morrisons own label products in Safeway stores.

Sir Ken reported Safeway sales for the 10 weeks to May 16 were down 5.2%. But he said there were some encouraging signs - with the company seeing an average increase of 40% in sales at the first four former Safeway stores it converted to Morrisons.

Sir Ken also admitted coming up against an unexpected hitch as it re-engineered the former Safeway estate. He said a new accounting system introduced by Safeway in February had “not made our integration task any easier”. It planned to address this unexpected issue by moving the business to a common accounting programme.

Morrisons has sold 14 stores to Sainsbury. But it still has to sell 25 stores to comply fully with the conditions imposed by the Competition Commission when it bought Safeway.

Morrisons, excluding Safeway, reported sales for the 15 weeks to May 16 up 14.8%, an increase of 13.9% excluding petrol, on the previous year. Excluding new stores, sales increased 8.9%, or 8.5% if petrol is excluded.
Anne Bruce