Somerfield

Somerfield
Company type	Public limited company (formerly)
Industry	Retail (Supermarket)
Predecessor	J. H. Mills, Gateway Foodmarkets
Founded	1875 (as J. H. Mills)
Fate	Acquired by The Co-operative Group in 2009; brand retired in 2011
Successor	The Co-operative Group
Headquarters	Bristol, United Kingdom
Area served	United Kingdom
Key people	Bob Willett (CEO, 1990), David Simons (CEO, 1994), John von Spreckelsen (Chairman, 2000)
Products	Supermarket goods, own-label ranges including 'So Good', 'Good Intentions', 'Makes Sense'
Number of employees	Around 225 (in Somerfield Direct at peak)

Somerfield () was a British supermarket chain operating primarily small to medium-sized stores. Its origins trace back to the 19th century as the grocer J. H. Mills, which later transformed through a series of mergers and acquisitions into Gateway. The brand underwent a significant rebranding initiative in 1990, adopting the Somerfield name. In 1998, Somerfield expanded by acquiring the discount food retailer Kwik Save. On 2 March 2009, The Co-operative Group completed a £1.57 billion purchase of Somerfield, elevating it to the position of the fifth-largest food retailer in the UK. By mid-2011, the Somerfield brand was fully replaced by The Co-operative Group's own branding.

Origins

The company’s roots lie with J.H. Mills, a grocer based in Bristol established in 1875, which introduced the self-service supermarket chain Gateway Foodmarkets in 1960. During the early 1970s, Gateway’s operations were concentrated mainly in southwest England, with some presence elsewhere. Expansion during this era included acquiring Ford and Lock stores and implementing S&H Pink Stamp loyalty programs, alongside launching its initial freezer centres. Gateway was subsequently acquired by Linfood Holdings, which also controlled Frank Dee Supermarkets—operating across northern and eastern England with 79 outlets by 1977—making it larger than Gateway at that time. In 1983, Linfood Holdings was renamed Dee Corporation, consolidating distribution through Frank Dee’s depots at Anlaby and Billingham and Gateway’s warehouse in Bristol.

Expansion through acquisitions

Under the leadership of Dee Corporation CEO Alec Monk, who successfully resisted a takeover attempt by Argyll Foods in 1981, the company pursued aggressive growth via acquisitions. Significant acquisitions included Key Markets Supermarkets from Fitch Lovell, International Stores from British American Tobacco in 1984, and Fine Fare from Associated British Foods in 1985. Additionally, the Dee Corporation took over the UK operations of French retailer Carrefour when it withdrew from Britain in the late 1980s. By this stage, Dee Corporation managed over 1,100 outlets with an almost 12% share of the market—approaching rivals like Sainsbury's and Tesco. Most stores were smaller high street locations, reflecting Monk’s conviction that well-managed traditional supermarkets could thrive alongside large out-of-town formats.

However, integration issues emerged by 1987, causing operational setbacks and prompting divestments such as selling off the Linfood wholesaling arm. In 1988, the Dee Corporation rebranded itself as Gateway Corporation and appointed an American retail executive to lead operations. Despite these efforts, investor confidence remained low, culminating in a £2 billion takeover offer in 1989 from the newly established Isosceles group; this transaction included a prior agreement to sell 61 Gateway stores to Asda.

Isosceles ownership

The Isosceles group, headed by David Smith and supported by major financial institutions, privatized Gateway in 1989 with plans to reorganize around "middle ground" stores sized between approximately and , positioned between large-scale out-of-town superstores and smaller urban shops. Their strategy focused on refining the store portfolio and preparing for a re-listing within three to five years as a competitive retail chain. Nevertheless, concerns arose over the high debt levels incurred during the leveraged buyout and whether sufficient capital would be available for necessary upgrades.

Financial pressure intensified due to delays in selling non-core assets, resulting in David Smith and several senior executives leaving the company in 1991.

Somerfield history

In 1990, following the appointment of Bob Willett as CEO, the company adopted the Somerfield name after a successful trial store in Burnham on Sea, Somerset. The brand expanded alongside the established Gateway and Food Giant chains, with several outlets relaunched under the Food Giant discount banner beginning in Nottingham in 1991.

By 1994, with David Simons at the helm as CEO, the firm rebranded itself as Somerfield plc. Despite facing significant difficulties, including a near-collapse due to heavy debt from a £2.1 billion management buyout by Isoceles in 1989, the company managed to recover. In 1996, Somerfield plc went public through an initial public offering valued at approximately £600 million. The funds raised were primarily used to settle debts owed to banks that had backed Isoceles. At the time of flotation, the company’s market share had fallen to 5.3%, but Simons focused on establishing Somerfield as the leading neighbourhood food retailer in the UK, aiming to benefit from a renewed consumer preference for high-street shopping.

Nonetheless, doubts persisted regarding Somerfield’s capacity to maintain growth amid fierce rivalry from discount retailers and larger supermarket chains.

In 1997, Somerfield introduced its website, offering customers access to promotions, services, recipes, and online shopping through a complimentary Home Delivery option.

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, Somerfield purchased the Kwik Save chain for £473 million, resulting in Somerfield shareholders holding 62.5% ownership of the combined entity. Although presented as a merger of equals, integrating the two businesses proved difficult due to their differing operational models and Kwik Save’s fragmented store network stemming from earlier acquisitions.

The initial plan was to convert most Kwik Save outlets into Somerfield stores; however, many locations were unsuitable for conversion because of their size, positioning, and outdated interiors necessitating major refurbishment. As a result, only larger Kwik Save stores were transformed into Somerfield outlets; others were either sold off or closed. Kwik Save continued as a trading arm within Somerfield Stores Ltd, sharing supply chain logistics and administrative systems. Meanwhile, Food Giant discount supermarkets were rebranded under the Kwik Save name.

With over 100 Somerfield and Kwik Save stores located near one another, internal competition intensified during a period when consumers increasingly favored out-of-town shopping centers. By late 1999, amid operational challenges and criticism, CEO Simons announced intentions to dispose of one-third of the combined 1,400-store portfolio and subsequently stepped down.

Somerfield Direct

At the start of 1999, Somerfield initiated Somerfield Direct, a home shopping pilot based in Bristol that processed orders via call centers and fulfilled them from warehouses. To broaden its service area, Somerfield acquired Supermarket Direct for £3.25 million in April 1999, extending home delivery capabilities into London.

While competitors were adopting online ordering platforms early on, Somerfield initially relied on printed catalogues and telephone orders due to CEO Simons’ skepticism about internet adoption among typical shoppers at that time. Internet ordering was introduced in July 1999 under the new brand "Somerfield 24-7." At its peak operation, this division employed around 225 staff across three distribution centers.

Despite these efforts, the home shopping initiative suffered heavy losses in 2000 and was described as an unsuccessful venture. Development ceased in June 2000 as financial pressures mounted.

John von Spreckelsen

Appointed chairman in April 2000, John von Spreckelsen, formerly the chief executive of convenience retailer Budgens, directed a strategy that maintained Somerfield and Kwik Save as distinct entities while integrating shared services such as IT and corporate finance. By the midpoint of 2002, halfway through a five-year turnaround initiative, Somerfield had returned to profitability and reinstated dividend payments after a two-year pause, although challenges in market positioning remained.

Somerfield's growth was largely the result of opportunistic acquisitions driven more by financial structuring than by a clearly defined market strategy. Its emphasis on mid-sized high street supermarkets was primarily a practical approach to managing a varied collection of stores obtained through multiple takeovers.

New formats

In 2002, Somerfield introduced a refreshed logo featuring a more contemporary look and launched new store concepts including Somerfield Essentials and Somerfield Market Fresh. The company bolstered its brand portfolio with own-label ranges such as the premium 'So Good' line, the low-fat 'Good Intentions' range, and adopted the advertising slogan "Good Food Made Easy," which underwent subsequent evolution. To rival competitors’ budget brands like Tesco Value, it introduced the low-cost 'Makes Sense' label. For a period until 2009, certain outlets also stocked products from the German brand Tchibo.

Safeway Compact

In October 2004, Somerfield expanded by acquiring 114 Safeway Compact stores from Morrisons, rebranding them under the Somerfield name. This transaction was subject to review by the Competition Commission, which mandated the sale of 12 stores. Although Somerfield appealed this decision, the process was delayed due to a takeover bid and ultimately dismissed by the Competition Appeal Tribunal in February 2006. As a result, Somerfield proceeded with divesting the required 12 outlets. The February 2006 disposal of Kwik Save likely helped reduce overlap between these locations.

Acquired by private equity

Retail investors John Lovering and Bob Mackenzie made two unsuccessful attempts to purchase Somerfield in 2003. In 2005, interest was shown by Icelandic private equity firm Baugur along with United Co-operatives and London & Regional Properties; however, they eventually withdrew their bids.

On 21 December 2005, a consortium comprising Apax Partners, Barclays Capital, and the Tchenguiz Family Trust acquired Somerfield plc for £1.1 billion, resulting in its rebranding as Somerfield Ltd. The new ownership sought to streamline operations and enhance customer appeal by discontinuing the Saver Card loyalty program in May 2006 and implementing more prominent promotional pricing. Somerfield refreshed its three own-brand ranges: 'Makes Sense' became 'Simply Value', 'Good Intentions' was renamed 'Healthy Choice', and 'So Good' was rebranded as 'Best Ever!'. A new slogan, "Giving you what you want," was introduced to embody this direction.

Kwik Save sale

In 2005, Somerfield closed 22 out of its 51 Kwik Save stores in Scotland and rebranded the remaining outlets, effectively removing the Kwik Save brand from that region. Following acquisition, the new management discovered that Kwik Save was incurring annual losses of £40 million, which offset approximately 40% of Somerfield’s overall profits. This revelation accelerated the conversion of Kwik Save locations.

On 27 February 2006, Somerfield Stores Ltd sold the Kwik Save brand along with 171 stores to BTTF, an investment company led by Paul Niklas, for an undisclosed amount. Subsequently, Somerfield rebranded the remaining 102 Kwik Save outlets under its own banner while divesting 77 others—likely acquired by Netto and Aldi—thereby concentrating exclusively on the Somerfield brand. Later on, BTTF purchased an additional 19 Kwik Save stores, including some involved in the Competition Commission’s Safeway Compact investigation.

Store rationalisation

In August 2006, Somerfield's new management revealed plans for a series of store closures as part of their ongoing restructuring efforts. This initiative targeted underperforming Somerfield outlets as well as former Kwik Save locations that had failed to meet expectations following their 2006 conversions.

Certain stores were divested to other retailers, including Sainsbury's, which took ownership of five sites, while others were permanently shut down.

By October 2006, 40 stores—predominantly low-performing former Kwik Save branches—had been sold off. The following month, a further 12 stores were transferred to Marks & Spencer to be operated under the M&S Simply Food banner, with locations among them in Blackheath, Dundee, and Hampshire.

Following the acquisition of 140 Texaco petrol stations in 2007, Somerfield significantly expanded several shops, increasing their size threefold and converting them into convenience store formats with updated Somerfield branding.

Takeover by the Co-operative Group

On 16 July 2008, it was announced that the Co-operative Group intended to purchase Somerfield for £1.57 billion, subject to approval from the Office of Fair Trading.

This sale came after the private equity owners decided in late 2007 to place Somerfield on the market. With an estimated value exceeding £1.5 billion, Somerfield engaged Citigroup to oversee the sale process, favoring a complete business sale over a fragmented approach. Four bids were reportedly submitted; however, only the Co-operative Group publicly acknowledged negotiations, aiming to complete due diligence on all approximately 900 stores by the third quarter of 2008 and planning to divest certain locations afterward.

By late June, reports suggested the transaction might conclude at around £1.7 billion. While Morrisons chose not to bid for Somerfield outright, it showed interest in acquiring stores sold as part of post-merger disposals. Other leading supermarket chains also expressed interest in acquiring these outlets.

The acquisition by the Co-operative Group resulted in the formation of the UK's fifth largest supermarket chain. The Office of Fair Trading granted approval on 20 October 2008 but imposed conditions requiring the divestment of 126 stores. This process extended into 2009, with many shops transferring to retailers such as Lidl.

In February 2009, The Co-operative Group announced intentions to close Somerfield’s Bristol headquarters and consolidate operations at its Manchester base, seeking to relocate employees where feasible to reduce job losses. The takeover was finalized on 2 March 2009. The rebranding of Somerfield stores into Co-op outlets took just over two years and was completed by summer 2011.

Legal case

Somerfield had contracted ParkingEye Ltd. to manage car parks at its stores, offering customers complimentary parking periods while permitting ParkingEye to charge and retain fees from those who overstayed. Although the agreement was intended to last at least 15 months, it was terminated after only six months, leaving ParkingEye—who had invested in installing the parking enforcement system—with reduced revenue. Somerfield alleged that parts of ParkingEye's approach were misleading, asserting that customers were incorrectly informed they owed money directly to ParkingEye when their obligation was actually to Somerfield, and that threats of legal action were falsely implied. Somerfield sought to rescind the contract on grounds of illegality due to deception; however, in 2012 the Court of Appeal ruled that these misrepresentations did not justify contract termination. The court emphasized that earlier requests for amended debt communications might have resolved concerns and reaffirmed legal distinctions between deliberate serious breaches and minor or inadvertent misrepresentations.

Operations

By early 2007, Somerfield operated as an independent entity and ranked as the sixth largest food retailer in the UK, managing 977 outlets after divesting Kwik Save and closing or selling off underperforming stores. Its share of the UK grocery market stood at 3.8% in 2007, a decline from 4.5% in the previous year, making it the fifth largest privately owned company within the country.

The grocery sector was predominantly controlled by five major retailers: Tesco, Asda, Sainsbury's, Morrisons, and The Co-operative Group. Among these, the top four concentrated on expansive superstore formats, whereas the Co-operative Group led in convenience stores and smaller supermarket formats, positioning itself as the foremost community-focused retailer. In early 2007, Somerfield was momentarily overtaken in size by Waitrose.

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