CLOSE-UP: LIVE ISSUE/SAFEWAY - Why Safeway is staying away from TV campaigns. Camilla Palmer reports on Safeway's plan in the wake of the appointment of CHI

Anyone expecting Safeway to roll out the red carpet for a big TV branding campaign following its appointment of Clemmow Hornby Inge last week had better think again, because there won't be one. The supermarket group's brand marketing controller, Sarah Baxter, is almost apologetic about the fact that there are no current plans to put Safeway back on TV after an absence of almost three years.

"It all sounds a bit boring, doesn't it? she laughs. "Our strategy won't be changing drastically in the short term, but what will change is the creative and the message it will carry to consumers. Ultimately, Safeway has a great story to tell consumers, and we're confident that the best way to do this doesn't involve TV."

That original strategy, spearheaded in 1999, saw Safeway's rejection of national branding campaigns, instead focusing on regional and promotional drives. As a consequence, the lion's share of its £45 million account was ploughed into below-the-line activity, handled by the Bates UK subsidiary 141, as the company concentrated on telling consumers what offers their local store held by posting millions of leaflets through doors all over the country.

The catalyst for this, and the consequent departure of Bates' TV campaigns featuring the company mascots Molly and Harry, was Safeway's new chief executive, Carlos Criado-Perez. The former Wal-Mart executive was imported to Safeway to reverse the disastrous fall in market share, sales and profits seen under the stewardship of his predecessor, Colin Smith, at a time when Safeway lagged well behind its key rivals.

Since then, Criado-Perez has cut a swathe through the sector, drawing on the US retail tactic of splitting a country into regional territories, banishing the word "advertising from the company's rule-book and abolishing its loyalty card. Instead, he concentrated on deep promotional deals of up to 65 per cent on a constantly changing range of products, and investing serious money in improving its portfolio of stores.

The approach worked to pull Safeway out of the doldrums. Stores marketed promotions locally and in a staggered way to avoid the retail "kiss of death - running out of reduced items - and reminded consumers with a constant feed of flyers. Customers took up the baton, responding positively to Safeway's tactics at a time when across-the-board low prices from Asda dominated the supermarket sector. Store managers were happy too, enthusing about having the power to choose what was discounted.

The City was also impressed with its recovery - in May 2000, the company announced a profits drop of 30 per cent, which was reversed to an 11 per cent increase a year later. This year, there has been a slight blip, with like-for-like sales slowing to 2 per cent in the first part of the financial year, but this is largely credited to its store revamping process.

"Since Carlos arrived, we've moved from a national to a local marketing strategy, and this won't change, says Baxter, who ran the pitch with Safeway's marketing director, and the architect of the previous above-the-line campaign, Karen Bray. "Aside from the money we spend on our leafleting, we have been spending about £4 million each year on above the line, but because it's largely local, it's not picked up by the industry. What we need to do now is build on the work going on in stores, and use that as our point of difference, Baxter stresses. Regional radio, poster campaigns and other ambient activity have been very much in evidence, even if real creative insight has been lacking, and Baxter is quick to point out that Safeway has no intention of reinstating the loyalty card scheme.

While Baxter and, by default, Criado-Perez are obviously sceptical about a full-scale return to TV-heavy branding advertising, Safeway needs something which will give it some power against formidable competition, a senior agency executive working on one such rival's account argues. "Safeway must move fast to define its position in the minds of consumers. The brand equity that Tesco, Sainsbury's, Asda and Waitrose have built up through above-the line advertising is very strong, and it's going to take one hell of an idea to build one for Safeway without using TV as part of the strategy at some stage."

Although Baxter is well aware of the power held by Tesco through its "Every Little Helps slogan, or by Sainsbury's "Making Life Taste Better strapline, she remains adamant that building a credible platform for Safeway does not mean a return to TV. She is convinced that two factors counter such concerns, saying: "One, Safeway has to compete differently, and two, our store revamping programme isn't finished - we've only converted a quarter of them. It's not appropriate for us to construct a branding campaign based on the excellence of all our stores when only a proportion of that work has been done. Consumers in some areas would still be shopping in older stores and would miss out on the brand experience being promoted."

One well-placed source agrees, saying: "It must wait until it has critical mass before it makes its stores the lynchpin of a big branding campaign. Anything it launches now on a mass scale would be bland and run the risk of alienating its customers."

Another senior player in the pitch process thinks that Safeway's strength lies in its difference from its competitors. "If you look at the work they've done in the stores, it points to a company which is anything but sterile. OK, there are less stores, and they're usually much smaller, but they look fantastic, and they should play on that," was his advice.

"Go into any new store, and you'll see where their priorities lie."

But its customer base, although increasing in size, is the really key factor in defining a workable marketing strategy. One executive familiar with the business claims that the majority of Safeway's new customers are irregular shoppers, enticed into the new stores by its food-to-go counters at lunchtime, rather than the prospect of doing a weekly shop for a family of four. "The company's entire premise, that of deep discounting on an ever-changing range of products, encourages the kind of deal-hunting consumers who are largely immune to the brand loyalty Safeway needs to build, is his analysis.

Whatever the conundrums associated with strategy, Baxter says her main focus for the next few weeks will be the handover of the account from 141 to CHI, before moving into new-look creative for more of the same regional, promotion-based and targeted direct activity. This will be quite a task, according to well-placed observers, who expressed concern at CHI's ability to handle such a massive and complex task. "They are going to get a big shock when they realise how much maintenance that account will need, says one, who estimates that more than 100 tactical campaigns get created, planned, bought and signed off in an average year.

Baxter, however, thinks CHI's one-year-old small size is an attractive feature. She points to its client list, where names such as Carphone Warehouse, Heineken and Tango make it "perfectly capable of handling big business". And the fact that the agency has already started recruiting for a new, fast-turnaround department for its new client suggests things are under control. "All the agencies were brilliant, Baxter asserts. "But CHI had a structured approach and really understood what we needed. Within the pitch period, it consistently reached that understanding very quickly, which gave it more time to work on strategic and creative ideas."

One executive working on a rival brand's above-the-line account thinks Safeway's decision to go for a smaller agency is a good one.

"Instead of a shop which thinks it knows all about advertising in this market, Safeway has hired a collection of experienced people who will be very keen to make sure this, their largest account, works. Indeed, some of those people have themselves worked on key retail accounts, and will no doubt be drawing on that experience.

Perhaps most interestingly, at a time when both agency and retailer are keen to make their mark, Safeway executives will be very close to CHI's expansion, which they will doubtless be well-placed to influence.

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