Costcutter and Palmer and Harvey’s joint negotiation company The BuyCo is to shut, the companies have announced.
Established in 2013, the BuyCo was designed to combine the volumes and align the terms of Palmer & Harvey (P&H) and Costcutter after the latter split from Nisa. However, no other large groups joined the organisation, and feedback from suppliers both directly and via the industry-recognised Advantage survey was that the presence of the BuyCo made the execution of plans in the sector too complicated.
The BuyCo’s negotiating responsibilities will continue within both P&H and Costcutter on an in-house basis, with P&H planning to restructure its category team following a period of consultation. Both organisations were keen to stress that price negotiations will still be based on the combined buying power from all of P&H’s customers and partners and the terms that retailers benefit from will remain unaffected by the closure of the BuyCo.The decision does not affect Costcutter’s supply agreement with P&H either.
P&H managing director Martyn Ward told C-Store: “The marketplace is ever-changing and suppliers want us to be easier to do business with, and more approachable. BuyCo was an entry point for net terms, but for specific implementation suppliers have to speak to Costcutter and P&H as well and, while we wanted these conversations to run in parallel, we often ran out of time.
“Closing the BuyCo is a supplier-facing efficiency to make things simpler and easier, and we will get better engagement as a result. But it has absolutely delivered what we expected in terms of harmonisation of terms and stronger promotions, and we now have a structure of range, price and promotions that wasn’t there before.”
Costcutter Supermarkets Group chief executive Darcy Willson-Rymer added: “The case for consolidation in the marketplace is as true today as it was four years ago but, given all that has happened, consolidation is not happening at the buying level so the BuyCo is not the vehicle that it could have been.
“But the point about ‘value for volume’ has been established and we can continue to achieve this. We have also built up considerable expertise in negotiating special offers in the last four years, which we were never able to do before with Nisa.”