Costcutter terms package in Co-op deal starts Nisa row

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The publication of new trading terms for Costcutter members as a result of the new supply deal with the Co-op has kicked off a row within Nisa, as some members believe they could be unwittingly subsidising the deal.

The completion of the society’s takeover of Nisa means that Costcutter retailers will now be supplied via Nisa on a permanent basis. Retailers from both symbol groups will be ordering from the same product catalogue, but unlike previous supply deals there will be no surcharges for Costcutter retailers under the new terms, effective from May 28. In addition, a ‘spend and save’-style rebate programme will also return up to 6% of spend to Costcutter retailers who remain loyal.

Nisa retailers will be receiving rebates based on trading, as well as a number of fixed payments, over the next three years in return for selling their shares, but will not be receiving additional loyalty payments.

The new arrangements have led some to question whether Costcutter retailers will be benefiting disproportionately from the arrangement. Nisa retailer Kishor Patel told C-Store: “If there are different terms for Costcutter retailers, then us Nisa retailers will be paying for it, which I’m not happy about. I’ve heard it’ll be like the previous Costcutter contract with Nisa, but with extra over-riders, no surcharges and extended credit.”

Another Nisa retailer said: “Nisa is now the wholesale arm of the Co-op, whereas Costcutter just has a wholesale contract, so they are separate, but the Co-op has to understand the behaviour of Nisa retailers. We don’t know the Costcutter prices, so they will need to reassure members.”

Co-op Retail ceo Jo Whitfield said: “Costcutter is its own business and will have its own pricing and can invest its own terms as its chooses. They will bring additional scale, and we are looking forward to a great relationship with them.”

The new Costcutter terms

The new Costcutter trading terms, seen by Convenience Store, are designed to make the group “stand out in the symbol sector”.

From May 28, there will be no surcharges for deliveries, and Costcutter retailers can earn up to 6% rebate on goods ordered through the central distribution network.

Levies for no- and low-orders will be discontinued, although those orders placed below the minimum threshold will not be processed.

The new minimum drop levels are 80 cases of ambient goods and 30 for chilled and frozen.

Retailer views

“I can’t see why retailers are getting upset by Costcutter. Those stores will still be going through a middle man. Co-op will be hoping to retain Nisa members, so it’s in their interests to make it attractive to us. ”

Emma Jenkins, Milverton Stores (Nisa), Somerset

”The deal for Costcutter retailers is one of the best - 6% of spend is a big number. It’s nice to be looking forward.”

Chaz Chahal, Costcutter and Simply Fresh stores, West Midlands

Readers' comments (66)

  • It's a pity Mr Kishor Patel did not wake up and smell the roses earlier.
    He was openly campaigning to vote in favour of the sale to the CoOp, he can't start whinging now.
    My suggestion, join Costcutter.

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  • Unless the CoOp at least match Costcutters terms, at the roadshows they are holding in June for Nisa customers, then the only option is to move to Costcutter.
    There will be no loyalty to Nisa going forward, we are customers plain and simple.
    It is no longer our company. They are now just another supplier that unless they quickly sort their act out will lose a lot of business.

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  • A quick tot up demonstrates that on my current turnover with Nisa the Costcutter terms would deliver exactly the same in direct cash benefits over 3 years as I would receive in qualifying rebates from Nisa.

    So in simple terms a Costcutter retailer can earn the same rebate as a Nisa retailer has been paid for giving up heir shareholding.

    What a farce.

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  • Talking to a Costcutter Retailer - To get the 6% you have to be spending a lot of money. Most of the Costcutter retailers left won’t earn any rebate as you need to spend £3.5k per week to earn 1%. They don’t have New Era, dev fund or anything else in place so not as clear cut as it appears! Booker are paying upto 6% so nothing new.

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  • Nisa Retailer come on, most Nisa Customers spend that a week without even blinking.
    To achieve everything that Nisa currently offers you have to tick so many boxes and jump through so many hoops that often they unobtainable.
    Several years ago we asked for simplification of terms and Mr Leach spent many hundreds of thousands hiring consultants and holding focus groups and he delivered squat, which reflects his tenure as a Director of Nisa.
    Costcutter come along and in one fell swoop provide simple terms with large benefits.
    No surcharges and associated delivery costs alone a worth a fortune to Nisa retailers.
    Let us see if they can better it or Costcutter may be the way to go.
    Nisa delivery excellence, CoOp own label, all at a much lower cost.
    It’s a no brainer.

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  • Agree that no surcharge is the elephant in the room. They need to pull something out to keep us happy or they have just paid a lot of money and won’t see the reward. I still can’t believe it’s all gone back to the beginning!

    Let’s see what the new management brings...

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  • Nisa retailers aren’t shareholders any longer, so what do they expect? The Costcutter Group must now be the Co-Op’s biggest customer, so of course they’ll be offered the best prices. Welcome to the sad reality of no longer owning Nisa.

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  • May I make a suggestion to Costcutter. Have a van on the car park at each of the Nisa Partner Roadshows so we can come and have a chat after we hear what the CoOo have to offer us.
    You might sign up a lot of retailers.

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  • "most Costcutter retailers don't spend £3.5k per week" - errrr hello, get with it, most Costcutter retailers will be earning the 6% rebate no problem. Bookers pay upto 4%. So actually it is all new.

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  • nisa retailers - so cocky for 5 minutes, now falling back into line, tail between their legs.

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