Co-operative Group to close Somerfield HQ

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The Independent Online

Peter Marks, the chief executive of The Co-operative Group, has revealed that he plans to close Somerfield's head office in Bristol next year, putting hundreds of jobs at risk, and that it will take "at least two years" to convert more than 650 Somerfield stores to its own brand.

Speaking for the first time about his plans after the Co-operative's £1.57bn acquisition of Somerfield is completed next month, Mr Marks said that the UK's largest mutual retailer would run Somerfield as a "separate entity" for about 18 months while the integration of the two local grocery chains takes place.

Once this period is over, The Co-operative will close Somerfield's head office in Bristol, which employs 750 staff. Many Somerfield employees will be offered the opportunity to relocate to the grocer's headquarters 140 miles away in Manchester. The Co-operative plans to complete the conversion of Somerfield's fascias and in-store branding to its own in 2011.

The Office of Fair Trading is expected to give final clearance to the take-over early next month. The deal will create the UK's fifth-largest grocer with more than 3,000 food outlets and help it compete more aggressively with Tesco, Asda, Sainsbury's and Morrisons. The OFT said the acquisition – first agreed last summer – of the 800-store Somerfield estate would be good for consumers, but it forced The Co-operative to dispose of 133 stores in areas where it had concerns about competition. The Co-operative has already sold a large number of the stores to rivals including Morrisons and Waitrose.

The Co-operative achieved like-for-like food sales up by 6 per cent for the three weeks to 3 January.

The Co-operative is currently refurbishing its more than 2,500 food stores, as part of a wider £1.5bn rebranding exercise across the whole group. Over the last two years, it has refitted more than 60 per cent of its 4,300 retail outlets, which include The Co-operative Bank and The Co-operative Travel.

Meanwhile, the Co-operative Group – which also has interests in funerals, pharmacy, motors and legal services – will launch its new brand, The co-operative, tonight with a TV advertising campaign in the middle of Coronation Street. The two-and-a-half-minute advertisement uses Bob Dylan's song "Blowin' in the Wind". The Co-operative will spend a record £70m promoting its ethical credentials this year.

Mr Marks said: "We are currently witnessing a renaissance of The Co-operative. More than one million members have joined us since we reintroduced our famous dividend in 2006."

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