Costcutter/Co-op deal "distinctive and competitive"

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Costcutter will have a “distinctive and competitive” offer for retail members once the new supply deal with the Co-op takes effect from April, chief executive Darcy Willson-Rymer has pledged.

The group’s new wholesale supply partnership is “an opportunity that simply did not exist four years ago”, said Willson-Rymer, adding “it gives us access to the full Co-op range, and the ability to work with the Co-op to add to the Costcutter range. And it allows us to be distinctive.”

Roadshows to brief member retailers are ongoing, with more detailed one-to-one meetings to follow next month, before a full transition in April. Work is underway on a new retail PLOF and associated support materials such as category and merchandising guidelines, and the Independent own-label is being phased out in advance of the arrival of the 2,000-sku strong Co-op own-brand range. Costcutter will be recommending retail prices, and there will be a ceiling that retailers will be allowed to charge for own-label lines. A set of retail standards has also been agreed with the Co-op.

The fact that Co-op own-brand products are available in-store will be a key part of the group’s communication to shoppers, with recent research indicating that 43% of shoppers would be more likely to visit a Costcutter store when Co-op own label is stocked. A trial Co-op franchise is being set up in a company-owned Costcutter store in Guiseley, near Leeds, although the group was keen to stress that this project was less of a priority than making sure the new supply deal worked for retail members.

Willson-Rymer continued: “We promised our retailers that in 2018 we would fix the supply issues and put it to bed. The onus is on us to demonstrate that we have fixed the problem of availability, and this deal does that.”

The new arrangement means that the Co-op Group will become the main distributor to more than 6,000 convenience stores this year, as the Costcutter portfolio is added to the existing network of national and regional Co-op stores supplied by the group.

Some of the direct-to-store arrangements will be combined, but Willson-Rymer was unable to clarify in detail what the distribution network would look like following the Co-op’s successful takeover of Nisa last year.

“We have agreed service levels with the Co-op, but we will have to wait and see what the CMA says about the Nisa takeover first. After that it will be up to the Co-op to work out the best way to service our stores,” he explained.

Willson-Rymer also refused to be drawn on how many members had exited the group as a result of the collapse of P&H, pointing out that a final reckoning could not be made until the new permanent supply deal replaces the temporary arrangements currently in place.

A total of 11 different wholesale suppliers were used by Costcutter after the collapse of contracted distributor P&H last year. Currently, the group is trying to distribute as much as possible via Nisa, but Willson-Rymer paid tribute to those who stepped in on an interim basis in the immediate aftermath.

“It was a fantastic effort that the industry came together to make sure independent retailers got stock,” he said. “We are very grateful for the hand of friendship from all those who helped, especially Co-op, Nisa, Bestway and Musgrave.

“The convenience market will continue to evolve and consolidate and, bearing this in mind, the Co-op is the right partner for us,” added Willson-Rymer.

Readers' comments (16)

  • Sounds like the same promises made when the P&H deal was done. If I was a Costcutter retailer I would be concerned that Wilson-Ryder has no idea how the Ci-op is going to service Costcutter stores.

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  • Call me daft if you like but I don't understand what Costcutter is for. Supplies from the Coop, Coop own label. Presumably promotions organised by the Coop.possibility of Coop franchises. Where does Costcutter fit in other than taking an unnecessary bite of the cherry?

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  • Here Darcy goes again, he’s going to create another great brand and be competitive.. He said this when leaving Nisa 4 years ago!

    You would hope that he has learnt that the old cliche does exist in retail in that ‘the devil is in the detail’... The fact he doesn’t know how the Co-Op plan to deliver and he is working on a PLOF now when he plans to transition in approx 6 weeks.. Oh dear - I hope the Costcutter retailers left (I hear all the good ones have gone to Nisa direct or Budgens, spar leaving the tail end) are ready for a very bumpy road ahead!!

    If Costcutter were in a bad position before when with Nisa (Nisa taking all the good retailers) and they ‘had’ to leave and create their own path - then they are heading for a much worse place this time!!

    I give it 18 months - RIP Costcutter! I feel sorry for all the Costcutter staff!

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  • How has this man been allowed to keep his job. Clueless at every level and massively over reliant on the Bibby coffers. If this was a normal business that had a knowledabgle shareholder and a bank to appease, it would have been sectioned long ago.

    Its really very sad how a once respected company in such a short time can fall so far from grace. Costcutter stores currently supplied direct through the Co op since the demise of P&H look like they are closing down; there is just no stock on the shelf. Promotions are woeful (according to the store managers) and the introduction of Co op own brand is confusing to consumers as there is zero point of sale to explain why its there. Can't believe Co op has allowed this to happen.

    Suppliers have no idea what's going to happen next. Many are just ignoring the plans as they just don't have faith in management to deliver them.

    Ultimately when this new venture fails again I can only see the Co op buying Costcutter for a £1 to save it. That said, Darcy and management walk off into the sunset with their salaries and benefits while poor old retailers are expected to pick up the pieces.

    Please wake up Bibby and sort this mess!

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  • Also interesting to see that the image of the store used in this article is in the process of moving to Budgens. Ooops!

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  • I think you sum up the situation well Brian but what would there be for the Co-op Group to buy? I agree with Jeremiah in that the Costcutter organisation has no purpose.

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  • Mr Wilson-Rymer, more lives than a cat..

    How does he manage to kill so many businesses and keep his job? He’s attacking retailers that left Costcutter due to no supply (as they had no contingency in place) and claims they are the retailers friend.. How can he lead a company with so little respect!

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  • Costcutter ,so the rumour goes are on the verge of losing nearly all their North Of Ireland stores to the competitors they used after the P&H collapse.

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  • I think we can all agree Darcy is the wrong man to lead this business (along with his so called management team). I do wonder what Bibby is planning in all this as MB cannot be this stupid.. surely not?!

    Bibby group lost circa £65m last year - I hope the family have some more ships they can sell as they will need lots more cash to pump into this dream..

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  • I agree with Brian and the Professor, I am not sure the need for the continued existence of Costcutter. How the executive have survived this calamity is beyond me. It looks like Co-op are setting the retails, working out whats best in terms of delivering to stores, no doubt a heavy hand in terms of promotions...why do you need Costcutter?

    Nice to see Seasufer1 not trying to defend the indefensible

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