Safeway's chief executive Carlos Criado-Perez defended the company's tough negotiating stance with suppliers this week as the group reported a £20m slump in pre-tax profit in its full-year results.
In an exclusive interview with The Grocer, Criado-Perez admitted uncertainty over the chain's future had hit its ability to negotiate with suppliers. But he declared it would continue to adopt a hard line.
"It is increasingly becoming more of a challenge to get it right in terms of pricing. But this is a business," he said. "When we deal with our suppliers there has to be negotiation on both sides. No company is a masochist."
Safeway has come under fire for its strong-arm tactics, with suppliers accusing it of making blatantly unjustified demands for money.
Criado-Perez said: "It is understandable that there is a tension, a tug of war between retailers and manufacturers.
"That's a good thing to have and it's our job to prise every penny out of them. We try to do business ethically but we also have to do the best for our customers and shareholders."
He added that the company had to take a different approach because it lacked the scale of its bigger rivals. "We have to have more creative ways of doing things," he said.
"That doesn't mean that out of 2,000 suppliers there won't be a few grumpy ones."
The company announced that its capital spend would be 26% less this year at £230m. It has already been forced to rein in its ambitious plans to refurbish its 480 stores.
Criado-Perez insisted, however, that none of the company's plans had been shelved.
"We're doing the same, only less. We have to take less risk. We're not going at 100 miles an hour any more more like 60."
He added that morale among staff had improved since Sir Ken Morrison, who he would like to see win the takeover battle, launched the bidding war for the company in January.
"Initially people were shocked and there was a period of unrest," he said, adding that his team tried to assuage staff concerns by visiting stores to explain what was happening. The company also implemented a £6m golden handcuffs programme to retain senior staff.
Criado-Perez was confident that the strategy had worked. "Now I think morale is very strong," he said. "Sometimes I feel we're on a bit of a high it's as though this is just another hurdle, another challenge."
>>p46 Losing on a high