It looks like Costcutter will be forging an alliance with Morrisons some time soon, and what a shake-up that will give the convenience industry.

In the nearly two years since Costcutter said it was considering its options about distribution arrangements after the current deal with Nisa expires in July 2014, executives from the group have had discussions with a number of different organisations, with a number of different scenarios about the cost and supply of goods to retail members being projected.

We understand that the discussions are on their final lap, and that Costcutter is within weeks of signing a new contract for 2014 and beyond.
Retail members can’t wait to find out; literally in some cases, as some have already decided to leave the group and throw their lot in with Nisa, perhaps encouraged by some reportedly juicy sweeteners to the deal.

The prospect of a joint venture between Costcutter and Morrisons, whether it takes the form of a buy-out or just a shared distribution operation, is intriguing. Is working with the enemy, as the multiples are usually portrayed in our industry, palatable? Or will it just come down to product, prices, margins and service? Many independent retailers tell me privately that they would boost their turnover overnight simply by hanging a multiple retailer’s fascia above the door.

Morrisons takes great pride in its fresh food offer, owns much of its production, has a tradition of no-nonsense prices, and already runs a couple of very impressive convenience stores, so it would tick a lot of boxes for progressive local retailers. But is it the answer? I can’t wait to find out.