Kwik Save

Kwik Save is a British discount supermarket chain that was founded in Wales. It has stores across the United Kingdom. It went into administration in July 2007, but was brought back in April 2012. Its stores were small to medium-sized high street supermarkets, mainly located in areas with below average incomes.

It struggled to make profits during the 2000s, as superstore operators such as Asda, Tesco and Sainsbury's introduced their own budget brands, and foreign discounters such as Lidl, Aldi and Netto (who all arrived in the United Kingdom during the first half of the 1990s) expanded.^[1]

The company was listed on the London Stock Exchange, and was once a constituent of the FTSE 100 Index. It went into administration on 6 July 2007, and closed most of its stores across the United Kingdom, with the remaining 56 being sold to a new company, FreshXpress, which itself went into administration in March 2008.^[2]

It was then resurrected in a smaller form with nine stores, but this second incarnation of FreshXpress went into administration, and ceased trading in 2009. All remaining stores have since been closed.^[3] In 2012, the brand was relaunched as a budget fascia for convenience stores supplied by Costcutter.^[4][5]

History

A Kwiksave branch trading in Pudsey, West Yorkshire in 2007.

Foundation

It was founded as Value Foods by Welsh entrepreneur Albert Gubay on 11 May 1959 and based in Prestatyn. The company rented its first retail shop in Queen Street, Rhyl, in July 1959.^[6][7] Further traditional stores were opened in Chester and Wrexham.^[6] In 1964, Gubay visited the United States with fellow director Ken Nicholson, and learnt about the "baby shark" method of retailing.^[6]

Combined with ideas gained from West German retailer Aldi,^[6] the business model was based on buying a limited range of lines on favourable (net 60 or 90 days) payment terms, distributing and selling them at or below cost before the payment fell due, and using the interest on the resulting cash flow to fund the business. The first Kwik Save Discount branded store opened in Colwyn Bay, produced more sales than the existing Value Foods supermarkets and by 1967 Kwik Save Discount had 13 stores.^[6]

Just before it was floated on to the London Stock Exchange in November 1970, the company changed its name to Kwik Save Discount Group Ltd.^[6] In 1973, Gubay sold Kwik Save for $28 million.^[8] Gubay repeated the low-price retail model using the 3 Boys brand in New Zealand, Ireland and the United States.^[8]

1990s

In November 1994, Kwik Save acquired 117 supermarkets from Shoprite, a fellow food discounter, for £45 million.^[9] The company subsequently accepted that it was focused too much on acquisitions rather than its existing operations.^[9] It announced the closure of 107 under performing stores in November 1996.^[9]

Somerfield merger

In February 1998, Kwik Save merged with Somerfield,^[10] and began operating as a trading division of Somerfield Stores Ltd. Following the merger, Somerfield's Food Giant discount supermarkets were re-branded as Kwik Save.

All Kwik Save stores were to be re-branded as Somerfield, now taken over by The Co-operative Food, but it was quickly realised that the look and feel of existing Kwik Save stores – featuring warehouse style wooden shelving, space-saving small checkouts and narrow aisles – would not lend itself well to the Somerfield fascia.^[1] For this reason, the plan was abandoned and the best Kwik Save stores were converted, based on location and market demand, receiving a full refurbishment.^[11]

Sale of stores to BTTF

On 27 February 2006, Somerfield Stores Ltd sold the brand and the remaining 171 stores to BTTF, an investment vehicle headed by Paul Niklas, for an undisclosed sum.^[12] Somerfield re-branded the 102 Kwik Save sites it retained under its own name and a further 77 stores were sold to other retailers, including 19 to Netto.^[13]

According to a report in PR Week in April 2006, Kwik Save hired a marketing agency in a bid to revitalise the brand and reposition it as an alternative to the leading supermarkets. Around £200,000 was allocated to public relations as part of a marketing brief worth £4m-£5m.^[14]

In October 2006, it was announced that a £30m refinancing package from unnamed investors was put in place, part of which was used to finance the purchase of a further 45 more stores from Somerfield. Some of those purchased were included in the Competition Commission investigation ruling into Somerfield's purchase of 114 Safeway Compact stores in 2004.^[15]

In December 2006, The Sunday Times reported that Kwik Save was suffering from a "sharp fall in sales and mounting losses", and was seeking another financial injection.^[16] On 22 January 2007, it was reported that Kwik Save was suffering problems over delays in payment to its major suppliers, with stocks of many core products being limited as a result.^[17]

On 29 January 2007, it was reported that a new investor was about to inject £70 million into the Kwik Save business.^[18] In mid February 2007, the company announced that it had managed to source a £50 million refinancing package to revive the failing retailer. In March 2007, the £50 million deal was finalised, and Paul Niklas returned as managing director of the company. The holding company changed its name from BTTF to Kwik Save Limited.

Store closures

Closed branch of Kwik Save in Warrington, 13 July 2007

FreshXpress Fawdon during the rebranding

On 29 May 2007, Kwik Save announced plans to close 79 stores with immediate effect. By 30 May 2007, all stores affected were closed. Kwik Save's market share fell from 1.2% in the twelve weeks to April 2006 to 0.2% in the same period in 2007, according to TNS Worldpanel. BBC News also reported that Arla Foods UK stopped delivering fresh milk to the Kwik Save chain in the week beginning 21 May 2007, due to "payment problems".^[19]

On 14 June 2007, Kwik Save announced plans to close a further 22 stores with immediate effect in order to protect them from the danger of administration. The group had now closed a third of its stores across United Kingdom, leading to up to 700 job losses.^[20]

On 21 June 2007, Kwik Save announced to the Union of Shop, Distributive and Allied Workers that it would not be paying staff, who were expecting to be paid the following day.^[21]

On 6 July 2007, the company was placed into administration. Kwik Save was left with 56 stores, which were transferred to a new company called FreshXpress, run by Irish retail entrepreneur Brendan Murtagh.^[22] Under the deal all 56 stores stayed open, saving around 600 jobs.^[23] Most employees of Kwik Save were unlikely to be paid, having to join other creditors to claim money they were owed from the Official Receiver, unless they were part of the 56 stores going to FreshXpress.^[24]

Relaunch as convenience store brand

In April 2012, the Kwik Save brand was relaunched by its new owners Costcutter as a more budget-oriented fascia offering for members of its symbol group of independently-owned convenience stores.^[4][5] The first new store opened in Little Lever, Bolton, and the company is continuing to expand.

Operations

Brand image

Kwik Save stores were primarily aimed at the lower end of the food market, a position which was maintained throughout the company's history, except for the introduction of some non-food lines during the Somerfield era.

The firm always traded on no frills, value pricing, with utilitarian shop fittings, basic checkouts and charges for carrier bags. In the early years, when the company had little in the way of effective competition, this was a clear recipe for success among the millions of people who might have found the mainstream supermarkets expensive, so the brand was highly regarded.

The company's quirky image suffered over the years, with increased competition from other discount chains, such as Farmfoods, Iceland and foreign chains Aldi, Lidl, Netto, as well as from larger chains, such as Asda, Tesco, Sainsbury's and Morrisons, which introduced their own 'value' brand ranges. Kwik Save was seen for many years as the poor relation of Somerfield, consisting only of stores which were considered unsuitable for conversion to the more upmarket fascia, resulting in a further dilution of brand strength.

In July 1994, Kwik Save reduced the price of its No Frills Baked Beans, to 7p for a 425g tin, in response to British pricing by Aldi and Netto.^[25] In April 1996, Kwik Save again reduced the price of its No Frills Baked Beans, to 5p for a 425g tin, again in response to British pricing by Aldi and Netto, and by Tesco.^[26]

Store formats

Traditionally, Kwik Save stores had warehouse style wooden shelving, laid out in a traditional style familiar from most early supermarkets.

In an effort to modernise the Kwik Save brand when under Somerfield ownership, the company undertook a programme to renovate its stores, which included new staff uniforms (a black and white chequered shirt which replaced the red T-shirts), new "Asda style" shelves to replace the wooden warehouse racking (referred to as "boards and beams"), new floors, checkouts, colour schemes and lighting.

Renovated stores devoted more space to fresh foods, introduced new features, such as bakeries, and removed the requirement for customers to pay for carrier bags which, for many years, was symbolic of the Kwik Save business model. Around a third of the Kwik Save estate was transformed, with each store having between £300,000 and £1,000,000 invested in the improvements.

Sales figures from renovated stores suggested that the public did respond positively to the new look, although the profitability of these stores still did not meet that of unrefurbished Somerfield fascia stores.

The off-licence sections of many Kwik Save stores were in a separate department known as Liquorsave. Up until the late 1990s, the fruit and vegetable sections and butchery counters were usually run by local franchisees, usually under the name "Colemans". Some stores also rented out space to non food retailers. This format had been reduced since the Somerfield takeover, and concessions were phased out in all stores converted to the Somerfield fascia.

During the 1980s, some Kwik Save stores incorporated a frozen foods section, which traded under the name Arctic Freezer Centres.

Own-brand goods

In the 1990s, the chain launched a No Frills brand, offering cheaper generic products, an idea that has since been taken up by all of the major supermarket chains. This was replaced by the "Simply" range shortly after the merger with Somerfield. In March 2006, the new owners of the chain announced that it would no longer sell own-brand goods, switching instead to well known household brands at discount prices.^[27]

Advertising

In the 1990s, Kwik Save used adverts featuring Michael Barrymore promoting the Kwiksave Freephone Helpline, which people could call if they wanted to report prices cheaper elsewhere. They ended with the slogan "Kwik Save – Because we're cheap, you're cheerful!"^[28] One advert featured Ryan Stiles, best known for directing Whose Line Is It Anyway?.

References

External links

• Somerfield Ltd press release announcing sale of Kwik Save