Morrisons has revealed the five Safeway stores which will initially be integrated into its estate at the start of a £1.5bn conversion programme.
After taking control of Safeway on Monday, Morrisons said medium-sized stores would be rebadged as Morrisons Choice, with the first four situated in Ripon, Southport, Bramley and Chester. One megastore in Gamston, Nottinghamshire, will assume the regular Morrisons banner.
The five stores will be refurbished by the end of May, absorbed into Morrisons’ existing RDC network and will adopt the multiple’s IT supply chain systems. Joint MD Bob Stott said: “Then we’ll be looking at three store conversions per week from August.”
He expected the process to be completed by early 2007, with 50 large stores refurbished by November and 150 by 2006.
Executive chairman Sir Ken Morrison said the 138 Safeway outlets under 15,000 sq ft would be transformed into Safeway Compact convenience stores:
“These smaller stores will retain the Safeway name. We are committed to keeping them in our portfolio.”
Morrisons predicts that the programme will cost £525m per year for the next three years.
Sir Ken said decisions were being made on the incorporation of Safeway’s own label ranges into new look stores at the moment. Sources have confirmed Morrisons has written to suppliers saying that it will summon them to head office from next week to discuss contracts. Stott said: “Residual contracts will be honoured. The two product ranges are very compatible in terms of quality.”
Referring to the 52 stores which the OFT requires Morrisons to sell by the end of this year, Sir Ken said: “There’s a lot of interest in them at the moment and we’re delighted with the response so far, but no contracts have been signed yet.”
Morrisons remained tightlipped on plans for Safeway staff after announcing in December that it aimed to cut 1,200 jobs. Sir Ken said: “We have the 90-day consultation process and we need to gain knowledge of the workings of departments.”
Integration plans were announced at the same time as a wave of price cuts on more than 300 everyday items in both Safeway and Morrisons stores. Morrisons has vowed to drive average basket spend at each Safeway up within 18 months of conversion from £16 to the £25 achieved by Morrisons outlets.
Rod Addy