for the suburb in new zealand see somerfield new zealand . somerfield stores ltd former type private industry retail fate defunct purchased by co op food operations and rebranded founded 1875 defunct 2011 headquarters bristol england uk 1875 2009 manchester england uk 2009 11 products groceries revenue 4.221 billion 2007 2008 1 net income 226 million owner the co operative group number of employees 50 000 parent the co operative food slogan good with food website corporate site customer site somerfield originally gateway was a chain of small to medium sized supermarkets operating in the united kingdom . the company also previously owned 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 name was phased out and replaced by the co operative brand in a rolling programme of store conversions ending in summer 2011 . 3 4 5 contents 1 gateway history 1.1 the early years 1.2 acquisitions 1.3 isosceles era 2 somerfield history 2.1 kwik save purchase 2.2 john von spreckelsen 2.3 new formats 2.4 safeway compact 2.5 acquired by private equity 2.6 kwik save sale 2.7 store rationalisation 2.8 takeover by the co operative group 3 operations 4 references in popular culture 5 stores 6 see also 7 references 8 external links gateway history edit a gateway supermarket in skegness lincolnshire in 1992 . the early years edit the company has its origins in a bristol based grocer known as j h mills which was founded in 1875 and which developed a self service supermarket chain named gateway foodmarkets in 1960 . 6 during the early 1970s gateway foodmarkets operated primarily in the south west of england with a few stores elsewhere . ford and lock stores and s & h pink stamp acquisitions took place during the period when loyalty stamps were prevalent and the first freezer centres were deployed . gateway foodmarkets was taken over by the linfood holdings a consortium which already owned the frank dee supermarkets who were based all over the north & east of england . at the time frank dee supermarkets & the larger dee discount stores were a business larger than gateway at the time and had a chain of 79 supermarkets in 1977 . 6 in 1983 linfood holdings was renamed the dee corporation . 6 initial plans were proposed to utilise the distribution depots from three main sites . the thriving frank dee s purpose built facilities in anlaby & billingham and invest in the existing gateway warehousing site in bristol . acquisitions edit alec monk chief executive at the dee corporation having escaped a takeover bid from argyll foods in 1981 7 decided to create his own supermarket empire . three of the biggest acquisitions were of key markets from fitch lovell international stores 6 bought from british american tobacco in 1984 and fine fare 6 bought from associated british foods in the following year . the company also purchased the uk arm of the french retailer carrefour . by this time the dee corporation had over 1 100 stores and it had nearly 12 % of the market not far behind sainsbury s and tesco . 8 most of the dee corporation s outlets were small high street stores . monk argued that there was a future for well run conventional supermarkets as well as the large out of town stores . however by 1987 the dee corporation ran into problems mainly because of the difficulty of integrating so many disparate businesses . some disposals were made in that year including the linfood wholesaling operation . in 1988 the dee corporation changed its name to the gateway corporation 9 and a new retailing chief was recruited from the us . investors remained sceptical and in 1989 the company was the subject of a 2bn takeover bid from a newly formed company isosceles ; the deal was partly financed by a pre arranged sale of ninety gateway stores to asda . 8 gateway also took over some of the former carrefour hypermarkets when the french retailer exited britain in the late 1980s notably the store at the merry hill shopping centre in the west midlands in 1988 and also a store in caerphilly mid glamorgan although this lasted just two years before the store was sold on to asda . isosceles era edit when isosceles a newly created financial group led by david smith and backed by several big investing institutions bid successfully for gateway in 1989 and took the company private the plan was to restructure the business and refocus it on what were called middle ground outlets falling between the larger out of town superstores and smaller inner city neighbourhood shops ; the average size of the stores was between 5 000 sq ft 460 m2 and 10 000 sq ft 930 m2 . the promoters of the isosceles bid believed that after this disposal and extensive restructuring of the rest of the portfolio gateway could become a viable competitor ; the intention was to re float the company on the stock market within three to five years . however the bid was highly leveraged and it was not clear that the new company would be able to fund the necessary modernisation of the business . 10 some of the planned disposals of non core businesses took longer than expected to complete . financial strains led to the enforced departure of david smith and other executives in 1991 . 10 somerfield history edit a somerfield former safeway in oakwood leeds 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 . 6 two years later yet another chief executive david simons was in command . in may 1994 the company changed its name to somerfield plc. 6 according to the guardian 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 bigger chains somerfield could generate adequate growth in sales and profits . 10 kwik save purchase edit further information kwik save in 1998 the company took over the rival kwik save 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 . the initial plan was to convert most of the kwik save stores to the somerfield fascia but the group continued to suffer from a disparate store portfolio the result of numerous ill digested acquisitions by kwik save prior to the somerfield takeover . 13 at the end of 1999 simons facing strong criticism from the city announced plans to sell a third of the company s 1 400 stores . he admitted that the group had underestimated the difference between somerfield and kwik save and had failed to support and maintain the kwik save brand . 13 the original plan to transfer all kwik save stores to the somerfield fascia was quickly abandoned after it became clear that many outlets were not suitable for conversion either due to size or location . also the downmarket wooden shelving and poor quality fittings used by kwik save meant that every conversion required a full refurbishment of the store simply changing the signage and uniforms would have risked dragging the carefully developed somerfield brand downmarket . instead the larger kwik save stores were converted some were sold or closed and the chain became a trading division of somerfield stores ltd sharing its supply chain and back office systems with somerfield . for some years the own brand products in kwik save stores were somerfield although this policy was reversed once it was decided to keep the brand . it was clear that more than a hundred somerfield and kwik save stores were within a mile of each other and directly competing also customers were switching from high street to out of town shopping . 14 john von spreckelsen edit a few months later simons resigned and john von spreckelsen formerly chief executive of budgens the convenience food retailer was brought in as chairman . 13 the new strategy was to keep somerfield and kwik save as separate businesses while sharing common services in such areas as information technology and corporate finance . by mid 2002 half way through what was seen as a five year recovery programme the company announced a return to the black and dividends were resumed after a two year break although the positioning issues remained unsolved . 13 somerfield was the product of opportunistic acquisitions driven more by financial engineering than by any conception of where the company should be positioned . the focus on medium sized high street supermarkets was largely a matter of making the best of a very difficult job ; the main problem which had not been solved by the end of the 1980s was to make some sense of the heterogeneous collection of stores which it had acquired through its numerous takeovers citation needed . new formats edit a somerfield in east cowes on the isle of wight . somerfield changed its logo when from a rectangular shape to a more contemporary design and opened a number of store formats including somerfield essentials and somerfield market fresh . it further changed its brand image by introducing newer own brand lines including the premium so good range the low fat good intentions and a new advertising strapline giving you what you want . a low price own brand label called makes sense was introduced to compete with rival low cost brands such as tesco value . 15 safeway compact edit in october 2004 somerfield acquired 114 safeway compact stores from morrisons which were subsequently re branded under the somerfield name . 16 this deal was referred to the competition commission . after completing its investigation the commission instructed somerfield to sell twelve stores . 17 in september 2005 somerfield announced its intention to appeal against the decision a process delayed by a takeover bid for the chain . the competition appeal tribunal upheld the commission s decision in february 2006 . 17 somerfield therefore had to proceed with sale of the twelve stores . however the sale of kwik save in february 2006 is likely to have removed the potential clashes between some of the offending stores . acquired by private equity edit retail entrepreneurs john lovering and bob mackenzie made two failed bids to take over the company in 2003 . 18 then in 2005 icelandic venture capital group baugur made an