Somerfield

Somerfield was a chain of small to medium-sized supermarkets operating in the United Kingdom. The business started life in the 19th century as grocers J. H. Mills, and after a series of buyouts and mergers, the company became known as Gateway. A major rebranding to the newly-created Somerfield brand started in 1990, and in 1998 the company purchased the Kwik Save chain of discount food stores. The company was taken over by the Co-operative Group on 2 March 2009 in a £1.57 billion deal,[2] creating the UK's fifth-largest food retailer. The Somerfield name was replaced by the Co-operative brand in a rolling programme of store conversions ending in summer 2011.[3][4][5]

Gateway history

The early years

Somerfield history

net income	£226 million

num employees	50,000

In the following year, a new chief executive, Bob Willett, was appointed and a decision was taken to rebrand the company's operations as Somerfield after a successful pilot scheme in 1990 with a new store and the first Somerfield store in the country being built in Burnham on Sea, Somerset, and the company then built its success upon the new brand alongside the existing Gateway and Food Giant chains.[6] A small number of stores were also relaunched under a new Food Giant discount brand, with the first store opening in Nottingham in 1991.

Two years later, a further chief executive, David Simons, was in the post. In May 1994, the company changed its name to Somerfield plc.[6]

According to The Guardian newspaper, the holding company almost collapsed in the 1990s under a "mountain of debt".[11] In 1996, Somerfield plc was floated on the stock market in an initial public offering, after the recovery had reached the point where flotation became feasible with a market value of around £600M, and the proceeds were used to repay banks that had lent to Isosceles.[11] At the time of the flotation the company's market share had fallen to 5.3%, its lowest level for two years, but Simons claimed that the company was now clearly positioned in the market, and that the business would benefit from what he saw as the trend back towards high-street shopping. The aim was to become the UK's strongest neighbourhood food retailer.[10]

Questions remained about whether, at a time of intense competition both from discounters and from the larger chains, Somerfield could generate adequate growth in sales and profits.[10]

In 1997, the Somerfield website was launched, which gave customers access to viewing online content such as offers, services and recipes, as well as online shopping via the chain's free Home Delivery service.

Slogans

"Savings that add up" (1995–1997)
"Shopping in the real world" (1997–2001)
"Good food made easy" (2002–2004)
"Somerthing Different" (2004–2005)
"A great deal going on" (2005–2006)
"Giving you what you want" (2006–2007)
"Pop in to Somerfield" (2007–2010)
"Good with Food" (2010–2011)

Kwik Save purchase

In 1998, the company took over the Kwik Save chain in a £473 million transaction. Although the deal was billed as a merger of equals, Somerfield investors owned 62.5% of the enlarged group.[12]

Observers questioned whether putting together two very different businesses would solve either's problems.

Takeover by the Co-operative Group

On 16 July 2008, it was announced that Somerfield would be acquired by the Co-operative Group for £1.57 billion, subject to approval from the Office of Fair Trading.[35]

The build-up to this announcement began in late 2007, when the parent private equity consortium, that had acquired Somerfield in December 2005, put the chain up for sale.[36] News reports valued the chain at over £1.5 billion.[37]

Somerfield appointed Citigroup to manage the sale, and a preference to sell as a going concern rather than on a piecemeal basis was reported.[36][37] It emerged that four provisional bids were made. Only the Co-operative Group, the UK's largest co-operative, publicly announced purchase talks, aiming to complete due diligence for the entire estate of 900 Somerfield stores in the third quarter, but would be expected to sell a minority of stores.[36][37][38] On 24 June, a Thomson Reuters newswire reported sources indicating that the Co-operative Group's acquisition of Somerfield could be finalised at the start of July, in a final deal worth £1.7 billion.[39] Earlier in June, Morrisons confirmed that it was not bidding for Somerfield, but would consider the purchase of any stores that are sold after the acquisition.[40] Newspaper sources said that other major supermarket chains are also interested in such purchases.[41] In July 2008, the Co-operative Group announced a deal to purchase Somerfield for £1.57 billion, creating the fifth largest supermarket chain in the UK. It was confirmed on 20 October 2008 that the Office of Fair Trading had approved the sale of Somerfield under the condition that 126 stores must be sold. This process continued into 2009 with many stores changing ownership, for example to Lidl.[42]

In February 2009, it was announced that The Co-operative Group planned to close the Somerfield head office in Bristol and relocate all operations to its existing head office in Manchester. The Co-operative said that it would try to relocate as many staff as possible to other areas of the business or to its head office in Manchester, to try to avoid redundancies. The takeover was officially completed on 2 March 2009.[43] The conversion and rebranding of Somerfield stores into Co-op stores took just over two years and was completed by summer 2011.[44]

type	Private
parent	The Co-operative Food
foundation	1875
fate	Brand retired in favour of parent's "The Co-operative" brand
defunct	2011
location	Bristol, England, UK (1875–2009) Manchester, England, UK (2009–2011)
industry	Retail
products	Groceries
revenue	£4.221 billion (20072008)‡R1R‡

Gateway history

The early years

Acquisitions

Isosceles era

Somerfield history

Slogans

Kwik Save purchase

Operations

See also

External links

References

Somerfield Direct

John von Spreckelsen

New formats

Safeway Compact

Acquired by private equity

Kwik Save sale

Store rationalisation

Takeover by the Co-operative Group

Legal case