Supermarket brands are increasingly international. The UK’s ASDA now proudly proclaims itself as “part of the Wal Mart family” and Britain’s own answer to the hegemony of Wal-Mart, Tesco, is now to be found across Eastern Europe and Asia. America’s Whole Foods Market (a topic for a future post) is set to bring its brand to the UK soon in a move that’s expected to shake up the UK’s grocery sector. So, it is perhaps rare to witness the disappearance of a familiar brand – even one that hails from overseas.
Safeway will vanish from the UK this week as new owner Morrisons completes a 20-month conversion programme to change the livery of the stores it purchased for £3 billion ($5.16 billion) in March 2003. Of the 479 Safeway stores, Morrisons has converted more than 200, with most of the remainder sold off to rivals. The few remaining Safeway stores not being sold will close this Saturday.
The chain was founded in the UK in 1962 as a subsidiary of the US retailer Safeway Inc. The parent company was acquired by New York based private equity firm Kohlberg Kravis Roberts in 1986. In 1987 the UK business was sold to Argyll Stores, which later changed its name to Safeway plc. Slow growth and a purchase offer from Morrisons led to a takeover battle in 2003. Competition rules and the drop out of some bidder meant Morrisons was victorious and so began the process of Safeway’s removal.
For 43 years, until the Morrisons buyout, changing ownership of Safeway had left the brand intact and shared with its erstwhile American parent. For the majority of UK consumers however, nationality of ownership was never an issue. This is probably because most regarded the company as indigenous.
Whether foreign ownership in the supermarket space is something that really matters to consumers is an unanswered question. ASDA has grown under Wal-Mart, but the American owner has shied away from a full re-branding. In Paris shoppers went crazy for Britain’s Marks & Spencer, situated in the one of the most chic shopping areas of the capital. Its closure, due to poor results in the UK, brought Parisians out onto the street to protest, but across the rest of Europe the British favourite has struggled.
To be successful abroad, a store chain must examine its market in detail and present itself accordingly. Whether the brand is an import or originates from home is less relevant than the need for the offering to fit in seamlessly with local tastes and provide precisely for their expectations. For example, Wal-Mart did not succeed in Thailand or Indonesia, where customers preferred scruffy street-market-style stores, to which they were accustomed, rather than clinical Western ones. In more up-market locales however, there needs to be an appeal to a sense of snobbery, appearing to offer something new, exotic and exciting. It not for nothing that Whole Foods Market is opening its first own-branded store on London’s ritzy Kensington High Street.
