''Safeway.com'' - The Next Generation of On-Line Grocery Shopping Unveiled.

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--March 13, 2002

Internet-based Grocery Shopping and Home Delivery Service to be

offered in the San Francisco and San Jose CA areas.

Safeway Inc. announced today the formal Bay Area launch of Safeway.com, the company's Internet grocery shopping and home delivery service to consumers living in the San Francisco and San Jose areas. Safeway will offer a high quality on-line grocery service through GroceryWorks, an Internet-based home shopping service, which is 50% owned by Safeway and 35% owned by Tesco plc, the number one food retailer in the UK and operator of Tesco.com, the world's most successful seller of groceries on-line.

"We are pleased to offer busy Bay Area customers the convenience of ordering groceries on-line for delivery to their doorstep. By picking and delivering orders from a local store, we can offer the entire range of products available in our stores at in-store prices, including all Club Card discounts. We expect to delight Bay Area customers with the ease of use of our website, the quality of our products and, more importantly, the excellence of our delivery service" said Vasant Prabhu, Safeway's EVP, CFO and President of E-commerce Businesses.

"With the launch of Safeway.com in San Francisco and San Jose we are looking forward to 'delivering our best' to Bay Area on-line customers. We plan to roll out to the rest of the greater Bay Area over the course of the next few weeks. With the busy lifestyles, heavy traffic and long commute times of the Bay Area, we feel this service will be well received here," said Steve Frisby, President of GroceryWorks.

How it works

When customers visit www.safeway.com, they simply click on the "shop now" icon. Once registered, the site checks the address to ensure delivery is available in their neighborhood and the process begins. Customers can go to the "first time user" section for instructions or just start filling a basket. Payment is made on-line via VISA, MasterCard and Discover.

Nearly all items available in a Safeway store are available for purchase on-line and at the in-store prices -- including Safeway Club Card specials. Club Card members will be able to access their regular store purchases and new on-line purchases through a timesaving feature known as "My Favorites." In addition, customers will continue to earn bonus air miles in the Safeway/United Airlines Mileage Plus(R) program, earn Safeway "savings awards" and participate in special promotions and sweepstakes.

The customer-friendly website is designed similar to the aisles in-store where products are organized into various sections including frozen foods, dairy products, fresh produce, grocery and non-food items, making it easy for customers to locate and select items to buy. Customers can choose the brand they prefer including Safeway award-winning brands available exclusively at Safeway stores and select fruit or vegetables to suit their own "ripeness" preferences. Orders are delivered the next day between 10 a.m. and 9 p.m. and within a two-hour time slot selected by the customer. Same day delivery is available for orders placed before 10 a.m. Deliveries are made seven days a week.

Every order is processed by trained Personal Shoppers located in a nearby Safeway store who select each item on the shopping list. Once complete, the order is carefully packaged and loaded into a temperature controlled truck. Frozen goods are stored in a specially designed freezer compartment; produce and other perishables are placed into a separate refrigerated section and dry products are stored under ambient temperature. A friendly Safeway.com courier delivers the order directly to the door and will gladly carry the groceries into the customer's home. The cost of the service is $9.95 and no minimum order is required.

About Safeway Inc.

Safeway Inc. is a Fortune 50 company and one of the largest food and drug retailers in North America based on annualized sales of $34 billion. The company operates 1,759 stores in the United States and Canada and currently has approximately 200,000 employees. The company's common stock is traded on the New York Stock Exchange under the symbol SWY.

About GroceryWorks

GroceryWorks is Safeway Inc.'s exclusive provider for on-line grocery shopping and home delivery. With the support of Safeway, one of the largest food and drug retailers in North America, and Tesco PLC, the number one food retailer in the UK, GroceryWorks leverages the store branding, merchandising and store operations expertise of Safeway and the know-how and systems of Tesco.com, the world's most successful on-line grocery shopping service to provide a high quality, efficient grocery home delivery service. It currently operates in Portland-OR, Vancouver-WA, Sacramento, San Francisco, San Jose, and Pleasanton /Tri-Valley markets of California.

About Tesco plc

Tesco has four parts to its strategy: to maintain a strong core UK business, to be as strong in non-food as food, to grow internationally and to move into retailing services such as on-line shopping. This strategy is delivering the fastest organic growth of any major retailer in the world, with group sales of (pound) 22.8bn ($32 billion) and group profit before tax of (pound)1.07bn ($1.5 billion).

The company operates over 900 stores in the United Kingdom, Republic of Ireland, Hungary, Poland, Czech Republic, Slovakia, Thailand, South Korea and Taiwan. It has 240,000 staff worldwide and 25 million sq. ft. of sales space, of which nearly 40% is outside of the UK.