Analysis of Failed Company - Kwik Save

3034 words 13 pages
1. Introduction

Kwik Save was the first and once the most successful serious limited-rang discounter in the United Kingdom (Drive, 2011). It was regarded as a soft discounter (with 5-10% discounts), compared to hard discounters (with 20% discounts) (Colla, 2003). In the zenith of its business, the company had more than 800 stores nationwide (Tedlow and Jones, 1993). Nonetheless, it was taken over by Somerfield in 1998 and eventually went into administration in 2007. To investigate Kwik Save’s failure, this paper exams the operations strategy of the company which includes external market analysis and internal operations analysis. It would be followed by identifying Kwik Save’s order qualifiers and winners. Finally, recommended strategies
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Therefore, they were easily attracted towards the low prices and switch from one brand to another with very low switching cost.

(Competitive rivalry: Kwik Save enjoyed a relative ease competitive environment during its early expansions, when other operators focused on their own development of superstores and explored their stores in the out-of-town areas. However, the intensity of competitive rivalry became higher since late 1980s (Tedlow and Jones, 1993). Kwik Save was attacked front and rear. Leading multiples such as Tesco, Sainsbury and Safeway started offering low prices coupled with superior service and more attractive shipping experiences. On the other hand, foreign hard discounters such as Aldi and Netto joined in and provided lower prices than Kwik Save could achieve.

3.2 Operation Analysis
The basic idea behind the Kwik Save retail operations was simple: satisfy customers by offering basic goods at very competitive prices. Kwik Save’s early success was built on its tight control of operations. Firstly, products and services were very limited. The stores only provided about 600 product lines and goods were sold from manufacturers’ boxes (Sparks, 1990). Stores positioned in low-cost regions, they were average about 5700 sq ft, and equipped with least decoration and minimum staff (Sparks, 1990). Secondly, Kwik Save applied centralized distribution and extensive computerization in its inventory management. Sophisticated