Last week's announcement of a potential £30m refinancing package for Kwik Save will bring welcome relief to a long-suffering business.
It has been a difficult few years for Kwik Save, in its many guises, but refinancing presents it with a real opportunity to re-establish itself in the market and it would benefit the whole grocery trade if what is probably Kwik Save's last chance, were to succeed.
The supermarket has been a feature of the industry for many years and has enjoyed some very successful times. In the early 1980s it was an iconic brand. The business model was built on an efficient supply chain before such things were fashionable. Efficiency was achieved by offering a limited branded range and few, if any, promotions.
Customers liked the great prices on well-known brands together with fresh produce and meat supplied by concessionaires renowned for value for money and great customer services. In the 1980s KS had the best return on investment in the sector. This successful proposition led to a rapid growth of store numbers but the group has been in decline for a number of years following the launch of value packs in the major multiples and Aldi and Lidl's entry to the UK. A succession of strategic relaunches failed. In particular, efforts to widen ranges led to a lack of focus and increased complexity in the supply chain. Promotions became more important than prices and Kwik Save lost its way.
Its acquisition by Somerfield led to an acceleration in its decline. The best locations were given a Somerfield fascia but the remainder became the poor relation of the group and, at the time of various bids for Somerfield, Kwik Save was viewed as a problem, not an opportunity.
When BTTF acquired Kwik Save, its new management had to effectively start a new business. They deserve great credit for creating a new head office, an IT infrastructure and logistics network from scratch.
There have been teething problems, particularly with availability, but I anticipate the new financing will help solve them. This, and the added scale from an additional 40 Somerfield stores, could stabilise the business, enabling the new team to re-establish Kwik Save as a force in the UK. It is a brand with strong customer loyalty, particularly in Wales and the North West, and there is room for a focused discount operator. I wish them every success.
It has been a difficult few years for Kwik Save, in its many guises, but refinancing presents it with a real opportunity to re-establish itself in the market and it would benefit the whole grocery trade if what is probably Kwik Save's last chance, were to succeed.
The supermarket has been a feature of the industry for many years and has enjoyed some very successful times. In the early 1980s it was an iconic brand. The business model was built on an efficient supply chain before such things were fashionable. Efficiency was achieved by offering a limited branded range and few, if any, promotions.
Customers liked the great prices on well-known brands together with fresh produce and meat supplied by concessionaires renowned for value for money and great customer services. In the 1980s KS had the best return on investment in the sector. This successful proposition led to a rapid growth of store numbers but the group has been in decline for a number of years following the launch of value packs in the major multiples and Aldi and Lidl's entry to the UK. A succession of strategic relaunches failed. In particular, efforts to widen ranges led to a lack of focus and increased complexity in the supply chain. Promotions became more important than prices and Kwik Save lost its way.
Its acquisition by Somerfield led to an acceleration in its decline. The best locations were given a Somerfield fascia but the remainder became the poor relation of the group and, at the time of various bids for Somerfield, Kwik Save was viewed as a problem, not an opportunity.
When BTTF acquired Kwik Save, its new management had to effectively start a new business. They deserve great credit for creating a new head office, an IT infrastructure and logistics network from scratch.
There have been teething problems, particularly with availability, but I anticipate the new financing will help solve them. This, and the added scale from an additional 40 Somerfield stores, could stabilise the business, enabling the new team to re-establish Kwik Save as a force in the UK. It is a brand with strong customer loyalty, particularly in Wales and the North West, and there is room for a focused discount operator. I wish them every success.
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