Safeway has begun its fight back for market share in Scotland with the opening of its first Megastore north of the border at Anniesland, Glasow.
As reported in The Grocer on August 24, Safeway is determined not to let Asda's ambitions push it back to number three in Scotland. The Anniesland Megastore is just a fraction of its proposed investment in its heartland.
The extension and refurbishment of the Anniesland store and conversion to the new format looks set to boost turnover at the site by more than 50%, appearing to represent a considerable return on Safeway's investment.
However, when cannibalisation of the rest of the Safeway estate in the surrounding area is taken into account, things may not be as clear cut. It looks as though Safeway will suffer the inevitable consequences of its high presence in the surrounding area, suffering significant impacts at three of its stores. Most notably the Partick store can expect to see a loss of turnover approaching 8%.
Overall Safeway is likely to see a net growth in turnover of just £14.5m across its full estate, a marginal return on the likely costs of the new store.
Given its large size, the Anniesland Megastore is inevitably ranked among the chain's top turnover stores. However, sales density looks set to remain poor, with the store ranked around 300th out of all Safeway stores on sales per square foot. This reflects the high level of competition in the catchment.
Despite low sales densities and marginal returns, once cannibalisation is accounted for, the investment is probably justified given the key requirement to defend market share in the light of aggressive expansion plans of Asda.
It is Asda which is likely to face the biggest impact, with its stores in nearby Summerston and Bearsden likely to lose approximately £6m a year. With high levels of provision of both Safeway and Asda in this part of Glasgow, there would be considerable duplication were speculation about Wal-Mart's designs on the Safeway estate to come to fruition.
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As reported in The Grocer on August 24, Safeway is determined not to let Asda's ambitions push it back to number three in Scotland. The Anniesland Megastore is just a fraction of its proposed investment in its heartland.
The extension and refurbishment of the Anniesland store and conversion to the new format looks set to boost turnover at the site by more than 50%, appearing to represent a considerable return on Safeway's investment.
However, when cannibalisation of the rest of the Safeway estate in the surrounding area is taken into account, things may not be as clear cut. It looks as though Safeway will suffer the inevitable consequences of its high presence in the surrounding area, suffering significant impacts at three of its stores. Most notably the Partick store can expect to see a loss of turnover approaching 8%.
Overall Safeway is likely to see a net growth in turnover of just £14.5m across its full estate, a marginal return on the likely costs of the new store.
Given its large size, the Anniesland Megastore is inevitably ranked among the chain's top turnover stores. However, sales density looks set to remain poor, with the store ranked around 300th out of all Safeway stores on sales per square foot. This reflects the high level of competition in the catchment.
Despite low sales densities and marginal returns, once cannibalisation is accounted for, the investment is probably justified given the key requirement to defend market share in the light of aggressive expansion plans of Asda.
It is Asda which is likely to face the biggest impact, with its stores in nearby Summerston and Bearsden likely to lose approximately £6m a year. With high levels of provision of both Safeway and Asda in this part of Glasgow, there would be considerable duplication were speculation about Wal-Mart's designs on the Safeway estate to come to fruition.
{{INSIGHT }}
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