Kwik Save

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This article describes the UK-based chain. There are also several unrelated shops of the same name in the United States.
Kwik Save
Type Public company
Industry Retail
Groceries
Founded 1959
Headquarters Rhyl, Denbighshire (1959–2006)
Huddersfield, West Yorkshire (2006–2007)
York, North Yorkshire (2012 -)
Key people Albert Gubay (Founder)
Paul Niklas (Director, 2006 – 2007)
Products Groceries
Parent Somerfield (1998–2006)
BTTF Ltd (2006–2007)
Costcutter (2012 -)
Website www.kwiksave.com

Kwik Save is a discount supermarket chain, originally Welsh, with stores across the United Kingdom. It went into administration in 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 in the 21st century as superstore operators such as Tesco and Sainsbury's introduced their own budget brands, and other discounters such as Lidl and Aldi (who both 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 but 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]

The Kwik Save brand name is now, as of April 2012, owned by convenience store operator Costcutter.[4][5] Kwik Save came back in a convenience store format, with the first store opening in the Little Lever area of Bolton, and is continuing to expand.

History[edit]

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

Foundation[edit]

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 formally 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[edit]

In 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 went on to announce the closure of 107 under-performing stores in 1996.[9]

Somerfield merger[edit]

Kwik Save became part of the Somerfield group in 1998 when it and Somerfield merged,[10] operating as a trading division of Somerfield Stores Ltd. Following the merger Somerfield's Food Giant discount supermarkets were re-branded as Kwik Save.

Originally 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 original plan was abandoned and the best Kwik Save stores were cherry-picked for conversion, based on location and market demand, receiving a full refurbishment.[11]

Sale of stores to BTTF[edit]

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]

It was announced in October 2006 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[edit]

Closed branch of Kwik Save in Warrington, 13 July 2007
A closed branch still yet to have been converted by September 2010 in Harehills, Leeds.
FreshXpress Fawdon during the rebranding

On 29 May 2007, Kwik Save announced plans to close 79 stores with immediate effect. All stores affected were closed by 30 May 2007. Kwik Save's market share fell from 1.2% in the 12 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 the UK, leading to up to 700 job losses.[20]

On 21 June 2007, Kwik Save announced to USDAW 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]

Operations[edit]

Brand image[edit]

Kwik Save stores are primarily aimed at the lower end of the food market, a position which has been 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 Aldi, Lidl, Iceland and Netto, as well as from larger chains, 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. Kwik Save reduced the price of its No Frills Baked Beans in 1994 to 7p for a 425g tin, in response to British pricing by Aldi and Netto.[25]

Store formats[edit]

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 does not meet that of un-refurbished 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 of 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 of Arctic Freezer Centres.

Own-brand goods[edit]

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.[26]

Advertising[edit]

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!"[27]

References[edit]

  1. ^ a b "Why Kwik Save couldn't be saved". The Grocer. 9 June 2007. Retrieved 30 October 2009. 
  2. ^ "FreshXpress limps on as nine stores". The Grocer. 7 April 2008. Retrieved 30 October 2009. 
  3. ^ "The last FreshXpress store closes its doors". The Grocer. 10 January 2009. Retrieved 30 October 2009. 
  4. ^ "Costcutter hatches plan to bring back Kwik Save fascia", The Grocer. 6 June 2011
  5. ^ "Costcutter celebrates with fascia revamp", The Grocer 14 September 2011
  6. ^ a b c d e f "Strategy in Retailing: the Development of Kwik Save Group plc, Page 5". Dr Leigh Sparks). 30 November 1988. Retrieved 30 November 2008. 
  7. ^ Finch, Julia (5 July 2007). "The slow demise of Kwik Save". The Guardian. Retrieved 25 June 2012. 
  8. ^ a b "Albert Gubay, The World's Richest People". Forbes. Retrieved 30 November 2008. 
  9. ^ a b c Gilbert, Mervyn (9 November 1996). "Bowler says focus was wrong as 107 stores go". The Grocer. Retrieved 30 October 2009. 
  10. ^ "Kwik Save weighs heavily on Somerfield results". FoodAndDrinkEurope.com (Decision News Media SAS). 9 April 2003. Retrieved 5 May 2007. 
  11. ^ "Somerfield reaps benefits of refits". The Grocer. 9 July 2005. Retrieved 30 October 2009. 
  12. ^ "Somerfield sells Kwik Save stores". BBC News. 27 February 2006. Retrieved 5 May 2007. 
  13. ^ "Somerfield sells off Kwik Save". The Grocer. 10 October 2006. Retrieved 30 October 2009. 
  14. ^ "BTTF begins Kwik Save makeover". PR Week. 21 April 2006. Retrieved 30 November 2008. 
  15. ^ "Kwik Save buys Somerfield stores". icHuddersfield. 16 October 2006. Retrieved 5 May 2007. 
  16. ^ Laurance, Ben (3 December 2006). "Kwik Save seeks quick fix". The Times (London). Retrieved 30 May 2007. 
  17. ^ "Kwik Save hit by out-of-stocks". The Grocer. 22 July 2006. Retrieved 30 October 2009. 
  18. ^ "Kwik Save to be saved". Manchester Evening News (website). 29 January 2007. Retrieved 5 May 2007. 
  19. ^ "Kwik Save to close down 79 shops". BBC News. 29 May 2007. Retrieved 29 May 2007. 
  20. ^ "Court delays Kwik Save decision". BBC News. 15 June 2007. Retrieved 17 June 2007. 
  21. ^ "Our City Staff" (22 June 2007). "Kwik Save fails to pay staff wages amid refinancing battle". London: The Independent on Sunday (independent.co.uk). Retrieved 1 July 2007. Workers at the supermarket chain Kwik Save were told yesterday they will not be paid in full as the company tries to finalise a refinancing package for its remaining 145 stores 
  22. ^ "Admininstration Move For Kwik Save". BBC News. 15 June 2007. Retrieved 17 June 2007. 
  23. ^ "Kwik Save shops sold in £18m deal". BBC News. 6 July 2007. Retrieved 6 July 2007. 
  24. ^ "Administration plan for Kwik Save". BBC News. 6 July 2007. Retrieved 6 July 2007. 
  25. ^ Hosking, Patrick (24 July 1994). "Beans means price war as Kwik Save cuts cost of no frills tin to 7p". The Independent. Retrieved 25 June 2012. 
  26. ^ "New own label encourages KS". The Grocer. 12 April 1997. Retrieved 30 October 2009. 
  27. ^ "Somerfield looking to revive slowing' market". The Grocer. 19 September 1998. Archived from the original on 29 September 2011. Retrieved 30 October 2009. 

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