It’s been just over a decade since the disappearance of Safeway as a high street name, but Morrisons has today unveiled plans to resurrect it.

Morrisons, which acquired Safeway in March 2004 and rebranded the majority of the 479 stores, is reviving the name as it continues to beef up its wholesale business.

Having already launched a partnership to supply thousands of own-label fresh, frozen and ambient products to etail titan Amazon, Morrisons will soon start selling hundreds of Safeway products to independent convenience stores as part of a drive to seek “capital light” ways to grow sales volumes.

News that Morrisons is relaunching the Safeway brand would have been viewed by some as a gamble – coming, as it did, almost 11 years to the day since it disappeared from British high streets.

But for others, the move to bring back Safeway is a safe bet.

Unsurprisingly, Morrisons’ house broker Shore Capital is among those in the latter category.

Shore head of research Clive Black describes the venture to bring back the “much liked” Safeway brand as “an eminently sensible move.”

“Relaunching the Safeway brand would have been viewed by some as a gamble – coming, as it did, almost 11 years to the day since it disappeared”

However, Black cautions that the “careful selection of wholesale partners” will be required in order to ensure the renewed brand holds “virtuous values.”

A source close to the situation suggests that very point will be high on Morrisons boss David Potts’ agenda ahead of the Safeway relaunch.

The source told Retail Week that the supermarket giant is likely to target independent c-stores where the Safeway proposition would represent “a step-up in terms of quality”, when it begins the roll-out early next year.

Timing

That timing certainly makes sense. When Potts walked through the door of Morrisons’ Bradford headquarters, he rightly focused on the core supermarket business.

Now, after four successive quarters of positive like-for-likes, the former Tesco exec is exploring new avenues for growth – and harnessing the grocer’s vertically integrated model to supply products to Amazon and independent stores arguably represents the biggest of those.

“I think there still is a degree of resonance there and brand recognition”

Bryan Roberts, TCC global insights

TCC global insights director Bryan Roberts believes using the Safeway brand will “ensure there is no overlap or confusion” between the core Morrisons proposition and the ranges it sells to independents.

But will products bearing the Safeway name resonate with consumers so long after it last held a place on the high street?

“I think there still is a degree of resonance there and brand recognition. It will stack up as well as any other brand you might find in many independent retailers,” Roberts argues.

“By marrying together Morrisons expertise in fresh and convenience food and sticking a biggish brand on the front of it, there is no reason why it shouldn’t be successful.”

Safeway stores

A similar argument could be made for reintroducing Safeway stores – and Retail Remedy partner Phil Dorrell suggests Morrisons should have rolled the dice more vigorously in its efforts to revive the brand, by committing to a bricks-and-mortar presence.

“Early on, they definitely missed a trick by converting all of the [Safeway] stores to Morrisons. That brand meant nothing to the vast majority of people living down south,” Dorrell says.

“The heritage that Safeway had in fresh food and small store formats was pretty good and Morrisons disposed of it, probably unwisely.

Safeway is reportedly preparing for a float (Credit: Elvert Barnes, Creative Commons)

Safeway

One of Safeway’s former 479 stores, which were either converted or sold off by Morrisons following the acquisition in March 2004. 

“It adds cost and complexity to a business to have two brands, but Morrisons could have experimented with Safeway stores in really high demographic areas where people just do not get, want, desire or have any value in the Morrisons brand.”

While Morrisons left that idea alone, Roberts warns that the race the grocer has elected to enter will be far from one-horse in its nature.

“Booker has done a fantastic job on is private label portfolio, particularly in fresh, over the past couple of years, and symbol groups’ wholesalers already do a compelling job on private label,” Roberts says.

“There is a huge potential audience there, but it is pretty crowded in terms of Booker, Spar and the like who are already doing a pretty decent job at servicing independents, so it won’t be a walk in the park.”

‘Huge’ opportunity

The “huge potential audience” Roberts refers to – and the subsequent opportunity for Morrisons – is as clear as it is colossal.

“Despite the aggressive expansion of Morrisons’ big four rivals Tesco and Sainsbury’s within the fast-growing sector, it is still the independent operators that dominate”

According to forecasts from IGD, the convenience market will be worth £37.5bn by the end of this year – and £41.9bn by 2021.

Yet, despite the aggressive expansion of Morrisons’ big four rivals Tesco and Sainsbury’s within the fast-growing sector, it is still the independent operators that dominate.

Research published by IGD in the summer of 2015 revealed that unaffiliated independent c-stores and symbol groups raked in £21bn between them last year, compared to the £8.2bn spent at the multiples.

If Morrisons can tap into even a small portion of that goldmine, it could well have backed a winner.