COMMENT: Somerfield’s Kwik exit
Somerfield's decision to lose the Kwik Save brand in Scotland will allow the retailer to concentrate on its Mace convenience stores, in line with similar moves by the giants of the grocery retail sector. As supermarkets see their margins tighten, because of intense competition in the sector, this diversification gives them a new growth area.
Around 400 jobs are estimated to go as Somerfield drops the Kwik Save brand in Scotland. Of the 51 stores, 29 will be converted into the Somerfield brand by the end of the year. The remaining 22 stores were not seen as economically viable after a recent business review.
The Somerfield Group has emphasized its commitment to both the Somerfield and Kwik Save brands and it will continue investment in both fascias. However, all resources in Scotland will focus on the Somerfield brand and investments in Kwik Save will only occur in England and Wales.
Kwik Save has been operating in Scotland since 1993. In 1994, Kwik Save acquired a number of Shoprite sites and it is thought that most of the 22 stores planned for closure come from these sites. Stores in Edinburgh, Glasgow, Dundee, Stirling, Dumfries, Oban, Kilmarnock, and Kirkcaldy are among those to be axed. When the 29 Kwik Save stores are converted to the Somerfield brand this will make a total of 83 Somerfield stores in Scotland.
The group also moved into convenience retailing earlier in the year when, along with the Aberness business, it acquired a number of Mace stores, and now operates 36 convenience stores under the Mace brand. The cessation of the Kwik Save brand in Scotland will allow greater investment into the Mace brand.
This move by Somerfield Group continues a trend that many other major grocery retailers have been following. With the supermarket and grocery retail sector pretty well consolidated with ever-tighter margins and little room for maneuver, the big players are turning their attentions to the convenience retailing sector; the recent sale of the convenience chain Londis saw a flurry of interest. The value of convenience store food and drink sales is increasing in the UK and across Europe so greater investment in this area is likely to produce lucrative results.
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