Morrisons finds the old ones are the best where brands count

Comment Martin Flanagan

What goes around comes around. Supermarket giant Morrisons is restoring the Safeway brand. Morrisons came a cropper when it bought its grocery rival in 2004 in what was a step-change in growth for the Bradford-based group.

The takeover of Safeway took Sir Ken Morrison’s group on to the big UK grocery stage, extending its footprint into Scotland and the south of England. But in what turned out to be a nightmare of an integration, Morrisons was plunged into a snowstorm of profit warnings and losses, with rivals crowing that it had bitten off more than it could chew.

Fast forward to 2017, and a nascently revitalised Morrisons under chief executive David Potts is relaunching the Safeway brand because apparently the public have fond memories of it.

Well, not quite that simple. The brand is being relaunched as part of a new wholesaling deal for Morrisons to supply the fast-growing Mccoll’s convenience store chain. Own-brand products will be supplied under both the Morrisons and Safeway names, for 12 months exclusively to Mccoll’s, suggesting it is not ruled out to extend the service to other businesses further down the line.

But even the scene-setter is not small potatoes. Morrisons thinks it could be earning £700 million from the contract with Mccoll’s by the end of 2018 and £1 billion “in due course”.

Such are the twists of retail. Morrisons went from low-key impressive challenger to the Big Four supermarkets to joining the club, then endured the schadenfreude when it was seen as having succumbed to hubris in the Safeway purchase, and subsequently been battered by the discounters in recent years only to make a revival under Potts.

Now it comes full circle to Safeway not being an albatross any more, but an interesting engine of future growth.