A significant announcement on Costcutter’s future supply deal is expected within days, with Asda the latest multiple retailer to be linked to the group.
The current contract with Nisa expires in the summer of 2014, and C-Store understands that there are two options left under consideration: a renewed deal with Nisa, or a strategic alliance with a multiple operator, thought to be Asda.
Earlier discussions with Morrisons are believed to have foundered because the multiple wanted to acquire Costcutter’s company-owned stores, whereas owner Bibby Line Group plans to retain and ultimately increase the size of the estate. An alliance with Asda would be more workable as it is the one large multiple yet to commit to building a c-store division, and could provide low-cost product sourcing while Bibby handled the delivery logistics.
What they said:
“Convenience retail suffers from duplicated distribution costs and diluted buying power. There is a massive opportunity to work with other players in the industry to deliver growth.”
Sir Michael Bibby, Bibby Line Group md, speaking after the acquisition of Costcutter in November 2011
“What we’ve got lined up will definitely make us the symbol group of choice, with better prices, better promotions and a service equal if not better than currently experienced.”
Nick Ivel, former chief executive, Costcutter
“The development and expansion of our company-owned store portfolio is a key objective and I look forward to working with the team to progress this.”
Darcy Willson-Rymer, chief executive, Costcutter
In contrast, a renegotiated deal with Nisa would be unlikely to deliver substantial cost savings compared with the existing arrangement, although Nisa may be able to offer an increased level of bonus payment in return for improved loyalty.
Retailers are expected to be updated on the situation at Costcutter’s annual exhibition on September 17, where they will meet new chief executive Darcy Willson-Rymer for the first time. The former Starbucks UK and Clinton Cards chief has replaced Nick Ivel, who will remain on a consultancy basis to search for acquisition targets.
Against this backdrop, Costcutter and Nisa are continuing to target and recruit each other’s members, with Nisa retailer Atul Amin converting two stores to Costcutter’s Kwiksave format, while the Redorange group has returned to Nisa membership after a brief alliance with its Yorkshire rival.
However, one of Costcutter’s biggest members, Simply Fresh, is staying put. Director Kash Khera told C-Store that the group will remain part of Costcutter at least until 2014.
“Sir Michael Bibby is moving the company in a more corporate direction and we support that,” he said. “Our biggest competitor, Tesco, is very corporate, so we have to be prepared to go that way too.”