Carlos Criado-Perez, a Spaniard who speaks six languages, will join Safeway in August with responsibility for retail operations, marketing, trading and logistics.
Mr Perez was previously head of Wal-Mart's international operations but left the US giant earlier this year after a bust-up over strategy with Bob Martin, who also left the group after disagreements over Wal-Mart's pounds 6bn takeover of Asda.
Safeway has itself been at the centre of continued bid speculation this week regarding a deal with Kingfisher though it is understood that no talks have taken place between the two companies.
Mr Smith's position as chief executive has also been the subject of intense speculation as the group struggles to improve its sales.
Mr Perez, 47, only worked at Wal-Mart for a year. Prior to that he was a board member at SHV Makro, the Dutch cash- and-carry group.
Analysts welcomed his appointment saying that it would put a top retailer on Safeway's board, which is currently dominated by accountants.
They said Mr Perez' background meant he would be well placed to advise Safeway on supermarket consolidation in Europe.
Mike Dennis of SG Securities said: "He would have a good idea of the price of European assets, what is up for sale and who is talking to who. He will also be able to help on Wal-Mart's plans for the UK."
Paul Smiddy of Credit Lyonnais Laing said: "There has been a need for a heavyweight retailer on the board for some time. Whether this guy fills it or not only time will tell."
Mr Perez's appointment sees the departure of Roger Partington, marketing director with immediate effect.
He will be eligible for compensation for loss of office, based on his two-year contract on a basic salary of pounds 248,000 a year.
Commenting on the appointment of Mr Perez, Mr Smith said: "I would hope in time to appoint him as my successor, but we are talking years. It is a rough, tough old market place but I enjoy my job."Reuse content