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.
“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