Former chief executive officer, Safeway PLC
Born: 1952, in Buenos Aires, Argentina.
Family: Children: three.
Career: SHV Makro, 1976–1990, international roles; 1990–1997, executive director; Wal-Mart, 1997–1999, COO of International Division; Safeway, 1999, COO; 1999–2004, CEO.
Awards: Retail Personality of the Year, Retek, 2001.
■ Carlos Criado-Perez, a charismatic Argentinian and onetime executive with Wal-Mart, was hired as chief operating officer and quickly became chief executive officer of the United Kingdom's Safeway retail food chain in order to help revitalize the ailing company. His impressive management style and unusual marketing tactics, which led to the chain's quick turnaround, attracted much attention from the company's executive management team, investors, and the general public. In a bitter—and according to Criado-Perez and others, unfair—takeover bid, Safeway was sold in March 2004 to a smaller competitor, and the outgoing chief executive remained uncertain about his plans for the future.
When Criado-Perez left Safeway in early 2004, his annual income was around £100,000, and his compensation package was upward of £4 million. Life had not always been so lucrative, however. Born into a middle-class family in Buenos Aires, Criado-Perez left the Argentinian university where he was studying civil engineering after his parents separated and his mother moved to Spain. There, bereft of immigration papers, he cleaned a bar by night and pushed supermarket carts by day. Within a year, however, the man who described himself as a doer was managing a supermarket store. In 1976 he joined the Dutch-based SHV Makro, a job that took him to Portugal, Brazil, and Taiwan, where he learned Mandarin. He became an executive director in 1990, where he remained until Makro was sold in 1997.
Criado-Perez next found himself in the United States as COO of Wal-Mart's International Division. An independent thinker, he disagreed with the company's "one strategy fits all countries" philosophy. He told Sarah Cunningham on the Safeway Web site that his 14 months with the world's biggest retailer taught him a great deal, including "not to be too in awe of the company" (May 24, 2000). He joined the United Kingdom's Safeway (which bore no relation to the U.S. retailer) as COO in 1999 and three months later had become chief executive. Coincidentally, Wal-Mart owned Asda, one of Safeway's major competitors.
Criado-Perez—with a reputation of being charismatic, creative, outspoken, personable, enthusiastic, and frank—had been brought on board specifically to revive the ailing Safeway. Sarah Ryle wrote in the Observer on November 25, 2001, that a colleague called him "dynamic—one of those people who jollies everybody along"; an analyst said of him, "This is somebody with a vision, and there isn't much of that in this sector." Ryle said that during their interview, Criado-Perez was "answering questions with a fullness that visibly disconcerts his chairman, David Webster, who is perhaps more used to the tight-lipped style of chief executives trained in Anglo-Saxon business." In spite of his outgoing nature, Criado-Perez was uncomfortable with all the attention he attracted, insisting his accomplishments depended on the efforts of his team.
Criado-Perez brought an entirely new marketing style to the United Kingdom's retail food industry. His first tactic was to "buy" customers with what observers called guerrilla tactics. He made deep price cuts on selected products, having heavily invested in extra stock so stores could meet customer demand. In a vision statement on the company's Web site, he wrote, "It was clear to me that we had to deliver these deals in a way which both motivated our store managers and their teams and made it difficult for competitors to respond" (May 24, 2000). He therefore strategically grouped certain stores; ran different promotions in each group for limited periods, which made competition more difficult; and gave individual stores incentives and resources to advertise promotions through distribution of flyers to homes.
When stunned competitors engaged in the inevitable price war, Criado-Perez was prepared with hit squads that descended on rival-supermarket parking lots distributing fliers that urged consumers to demand the advertised discounts. Competitors ran out of stocks within hours. "The tactics achieved legendary status in British retail circles," said Ryle, who noted that the move was merely a business strategy to Criado-Perez (November 25, 2001). Safeway's customer base grew by around 750,000 shoppers every week, and sales volume soared.
While impressed, analysts declared that Criado-Perez needed to do more than just cut prices in order to develop a loyal customer base; Criado-Perez agreed. In his vision statement, the highly customer-oriented chief executive explained that his short-term "best deals ever" tactic was just the beginning. Longer-term ambitions were to be the "best at fresh, best at availability, and best at customer service" (May 24, 2000).
Criado-Perez believed success would come only through his staff. He noted in his vision statement that he intended to create an environment in which employees were "passionate about our products, our stores, and everything we do; have an unbreakable will to compete; and have the skills, knowledge and resources to do their best, every day" (May 24, 2000). He gave store managers more autonomy to fine-tune selections to suit their customer base and provided them with crucial store information such as daily profit and loss statements. He decentralized authority to area teams and felt that managers were better informed as a result, with businesses being discussed more openly. He also insisted that members of headquarters management enter stores to see just what shoppers wanted. As a chief executive who actually spent time at the ground level, he said he was impressed and humbled when talking to his staff in their own environment. "They'll make any sacrifice for the company if they are taken care of," he told Cunningham. "British people are very talented but very process-driven. I'm creative and can push. And here if you push, things do happen" (2000).
Criado-Perez's push naturally focused on another group of people as well: shoppers. His long-term goal was to turn shoppers into loyal customers by developing a dialogue with them, responding quickly to their needs, and building their trust, such that Safeway would become customers' first choice for local shopping. He noted that while Safeway was smaller than its three major competitors, scale of operations played no part in this strategy. He believed that leveraging skills and assets drove sales, and doing so had nothing to do with size. His ideas were working: in a statement in Safeway's 2000 preliminary results, Chairman Webster indirectly acknowledged Criado-Perez's influence on the chain's turnaround when he commented, "Safeway has regained its confidence. It is now positioned to grow profits and value for shareholders" (May 17, 2000).
To further gain and retain customers, Criado-Perez aimed to liven up their shopping experience. In 2001 Safeway launched a new-concept store that embodied his vision of that experience. Nigel Cope of the Independent said Criado-Perez had never hesitated to express his view that British supermarkets were sadly lacking in "visual merchandising and retail theatre" (January 2001). In this instance, Criado-Perez's idea was to take fresh produce out of its sweaty plastic wrapping, create a continental marketplace, and give customers a more sensual shopping experience.
The innovative prototype store was a success. In a fresh-to-go department at the front of the store, chefs cooked up Chinese meals in woks and threw pizza dough in the air, to the delight of customers. A pasta machine made fresh noodles while shoppers chose their favorite sauces. Lighting and color became a major feature: there was softer lighting in the food-to-go section and spotlights on visually attractive products, giving certain areas the feeling of being a shop within a shop. The beer and liquor section sported dark floor tiles and a vaulted ceiling and offered a broadened selection. "The range extended from £2.99 plonk to a £36.99 Penfolds," wrote Cope (January 2001). In keeping with the "best at fresh" tactic, fruit and vegetables were set off in blocks of color—freed of their plastic wrapping—and upmarket breads as well came out of plastic bags and were put into wicker baskets. Criado-Perez even employed actors to help build staff members' confidence in their ability to interact with customers.
One retail analyst said that the single store in itself was not that important, but it did allow insight into the company's intentions. Cope quoted the analyst as saying, "If Carlos can reproduce this elsewhere then Safeway can become a growth story as well as a recovery story" (January 2001). Safeway's pretax profits increased 10 percent over the last half of 2000 to £166 million. By May 2001 those numbers had increased 30 percent over the previous year to £320 million. Cope commented: "Safeway has achieved a remarkable renaissance since Mr. Criado-Perez joined little more than a year ago" (January 2001). To Criado-Perez, the rennaissance was just the beginning. He planned to add 50 "sensual" stores and seventy "hypermarkets" that would sell everything from TVs to bed and bath goods. He told Cunningham: "I have a great knowledge of retail. And because I have seen so much I often know what will happen next. I can see opportunities" (2000). In the chairman's statement in the 2000 annual company report, Webster wrote, "Since Criado-Perez's arrival he has proven time and again that he is a first-class international retailer with outstanding leadership skills."
By the end of 2002, Safeway still lagged behind its three major competitors, Tesco, J. Sainsbury, and Asda. There was also speculation of takeover bids, which became a reality in January 2003 with a bid from Safeway's smaller rival, William Morrison. Not to be left behind, the three rich and powerful competitors and one private investor entered what became a bitter bidding war, which Alex Brummer of the Daily Mail called a "web of intrigue that became more complex by the day" (January 17, 2003). Safeway management eventually acknowledged that they could no longer compete independently, and 14 months later Morrison won a £3 billion bid with the help of the Competition Commission, which disallowed bids by the three largest groups on competitive grounds. The ruling had left Morrison as the only truly viable bidder.
Criado-Perez was highly critical of the commission's decision, as were Webster and shareholders. "Ever since I started here," Criado-Perez told Julia Finch of the Guardian , "Asda was like a sword of Damocles. We were always wondering when they would jump. We always thought that if we did something, Asda would bid for us" (March 6, 2004). One long-standing shareholder commented that once Asda had been banned from bidding, Morrison was able to get Safeway for a bargain price; another added that the chain had been left with little alternative after the commission's decision. In fact, while waiting many months for the commission to decide on whether the three big companies could bid, Criado-Perez attempted to raise funds to place a buyout bid himself and thus force Morrison to raise its bid.
After the Morrison deal was completed, an emotional Webster told stockholders that they had received the best deal possible under the circumstances, commenting that the regulatory commission had put Safeway in a straitjacket. Some analysts believed, however, that selling the Safeway chain to Morrison may have been Webster's intent all along, as he had obviously brought Criado-Perez on as chief executive to make the chain more desirable. Richard Wachman, reporting for the Observer , commented, "The resulting marriage with Morrison is hardly a surprise. Webster and Sir Ken Morrison have often talked about a tie-up over the years. Rivals such as Sainsbury and Asda never had a snowball's chance, as any reading of competition policy would have told them" (February 15, 2004). Wachman noted that hundreds of Safeway employees would lose their jobs in a merger that would make Webster "a millionaire many times over."
Following the close of the deal, Finch reported that a tearful Criado-Perez said, "This has been a life-changing job for me. Until 14 months ago it was a straightforward turnaround job, like others I had done. But since the bidding began, it has taken on a personal dimension. I have learned so much about myself, and I have changed" (March 6, 2004).
Criado-Perez was an excellent tango dancer, a maker of his own bread and soap, a lover of Mozart and Homer, a runner of marathons, and a speaker of seven languages. Most relevantly to the business world, he was a manager who executed maverick strategies while exuding Latin enthusiasm; after Safeway was sold, he left the United Kingdom for the edge of the Atacama Desert in northwest Argentina to ponder his future. "I am very emotional at the moment," he told Finch. "My thinking is all upside down and I need some time and space. I don't think I will retire, but it may be time to do something completely different" (March 6, 2004). His immediate objective was to write a book about his life experiences—not for publication, but for his children.
See also entry on Safeway Inc. in International Directory of Company Histories .
Brummer, Alex, "Safeway Tangle," Daily Mail , January 17, 2003, http://www.thisismoney.com/20030117/nm57976.html .
Cope, Nigel, "Safeway Spices Up Grocery Shopping," Independent , January 2001, http://www.accaglobal.com/publications/corpsecrev/35/20590 .
Criado-Perez, Carlos, interview by Sarah Cunningham, 2000 Safeway annual report, May 24, 2000, http://www.gardenshed.net/clients/safeway/04_passion_people.html .
——, "Passion, People, Product," 2000 Safeway annual report, May 24, 2000, http://www.gardenshed.net/clients/safeway/04_passion_people.html .
Finch, Julia, "Emotional, Humbled, and £4m Richer, Carlos Makes a Tearful Exit," Guardian , March 6, 2004, http://www.guardian.co.uk/supermarkets/story/0,12784,1163551,00.html .
Ryle, Sarah, "Safeway Dances to Latin Beat," Observer , November 25, 2001, http://observer.guardian.co.uk/business/story/0,6903,605422,00.html .
Safeway, "Preliminary Results 1999/00," press release, May 17, 2000, http://www.hemscott.com/scripts/AFXnewstory.dll/text?EPIC=SFW&SerialNumber=902&NewsType=AFR&Indate=17/05/2000 .
Wachman, Richard, "Don't Get Too Excited, the Boom Isn't Back Yet," Observer , February 15, 2004, http://observer.guardian.co.uk/business/story/0,6903,1148167,00.html .
Webster, David, "Embracing Change," 2000 Safeway annual report, May 24, 2000, http://www.gardenshed.net/clients/safeway/02_embracing_change.html .
—Marie L. Thompson