The franchise announced record sales last week and its managing director, Donal Horgan, said that Musgrave was already focused on attempting to take on Tesco, which remains the market's leading player.

"We already see ourselves as second to Tesco in share and we are getting closer to them. We've exceeded average market growth in recent years and you have to think that we are growing share at the expense of somebody, " he said.

He revealed that the Pettit chain of supermarkets in the south-east of the country, which adopted the Supervalu brand in late 2005, had contributed around 85 million to the franchise's turnover last year.

"It has been a good opportunity for us to extend the reach of the brand into the South-East of Leinster, " he said.

According to Horgan, Supervalu has now decided to concentrate its marketing on its fresh food departments and the expertise of its staff, which include in-store bakers and butchers, rather than price.

He said, however, the franchise would continue to ensure that its prices were comparable to Tesco and Dunnes Stores, its main competitors.

"Our position is rooted in firmly grounded consumer research. We believe that consumers want value and something else. This has been borne out by our performance in 2006, " he said.

Horgan denied that the change in strategy was an indication of failings in its old approach. "I don't think so. I think we are reawakening ourselves and working our strengths hard and communicating them better to our customers."

He said that Supervalu hoped to introduce "an element of theatre" to shopping through the introduction of in-store kitchens, where cooking demonstrations could take place, unusual product tastings and recipe cards.

The franchise also plans to boost its convenience food range. "Consumers want to be involved in the preparation of their food but they don't want to do it from scratch, " noted Horgan. He said that although the strategy was linked to its ongoing programme of revamping it stores, consumers would notice the change in the franchise's approach immediately. "All our stores will see a shift in emphasis to fresh food and the increased product range, " he said.

"In terms of our long-term success, we need to offer consumers something that differentiates us from our competitors."