Safeway and BP pump pounds 100m into petrol shops

Safeway and BP have joined forces to open 100 new convenience stores featuring petrol forecourts. The companies will invest a total of pounds 100m in the sites, which will be selected from the network of 2,000 petrol stations created by the recent merger of BP and Mobil's European retail businesses.

The stores will be jointly branded under the BP and Safeway names. They will feature a petrol station, a shop with around 2,000 product lines, car parking, cash dispensers and car-wash facilities. Safeway said other services such as dry cleaning could be added.

The first site will open next month in Basildon, Essex. Further sites are planned for early next year. Safeway said the stores would be slightly larger than many convenience stores and would target customers who required more than just a "top-up" shop.

"For us, it's a way of seeking leadership in the growing convenience store market," said Safeway's Steve Webb. "By going in with BP we think we can achieve that faster than anyone else."

With the Government clamping down on the development of out-of-town superstores, all the large supermarket groups are looking for different ways to add to their floorspace. Most are expanding stores while others are establishing smaller high street formats.

The supermarket sector is facing a renewed price war from Monday when Tesco cuts the price of 600 product lines. Sainsbury's has pledged to match the prices while rivals such as Asda are expected to launch other campaigns.

Safeway shares closed 0.5p higher at 330p.