Behind the Spin: Kwik Save

THE DILEMMA

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Last Updated: 31 Aug 2010

There isn't really much of a dilemma left for Kwik Save. Its ignominious descent into administration last month was a sad end to a company founded in 1959 that at one point boasted more than 1,000 stores. Yet not all is entirely lost. An £18m deal with new company FreshXpress will preserve 56 Kwik Save stores and 600 jobs. This won't be any consolation, however, to the 1,800 workers at the 171 stores that were closed. Sadly, employees worked without pay for six weeks to try to save the firm from administration. Only those working for the stores bought by FreshXpress will receive backdated pay - the others will have to apply to a government agency for recompense.

THE SPIN

In April, Paul Niklas, chief executive of Kwik Save, said breezily: 'Kwik Save has a great future.' It's unclear whether he'll be part of it.

THE STRAIGHT TALK

Just before Kwik Save's demise, Bryan Roberts of research firm Planet Retail said shopping at the chain had become a 'thoroughly depressing experience. The out-of-stocks were horrendous, particularly on basics such as bread and milk, and staff morale was visibly at rock-bottom. Obviously, the Kwik Save brand has been damaged beyond repair.' The company was founded with one shop in North Wales, and was floated in 1970, before being bought by Somerfield, which sold it to a new firm, BTTF, headed by Niklas, in February 2006. The chain slumped, with market share falling to just 0.2% this year, as pressure from big supermarkets and low-price foreign entrants like Aldi and Lidl increased. The firm is also accused of bad management - in fact, the retailer's only real asset seems to be these shabbily treated employees, who continued to work for free. Usdaw, the shop workers' union, said loyal and hard-working staff had gone 'way beyond what could be reasonably expected to keep the company afloat'.

THE VERDICT

FreshXpress, which is thought to be backed by Irish multi-millionaire entrepreneur Brendan Murtagh, already provided an emergency cash injection - reportedly for £50m - in Kwik Save in February, and Murtagh's son Alan joined the board in May. This is good news - with an insider's understanding of the business, there is every chance that Kwik Save's new incarnation as FreshXpress will rise phoenix-like from the ashes. But then again, do shoppers really need another low-priced, pile-'em-high supermarket experience?

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