Nisa chief executive Neil Turton has challenged members of the group to increase their loyalty in the wake of Costcutter’s decision to leave the group next year and sign a new distribution deal with Palmer & Harvey.
Speaking exclusively to C-Store, Turton said that there was a potential £300m that Nisa members are currently spending outside the group, primarily in cash and carries, that could go a long way to replace the £500m-worth of turnover accounted for by Costcutter.
“Until now, we’ve been growing so much that it wasn’t really an issue, but now is the time to refocus. The members own Nisa, and we want to see members use Nisa to its fullest extent.
“Internally, we’ve often complained that one member makes up 35% of our business. I want to be able to look back on this moment and laugh that we ever allowed it be so high.”
In addition to increasing members’ loyalty, Turton was also confident that Nisa could make up the shortfall through recruitment - from existing Costcutter members, other symbol groups and unaffiliated retailers - plus the signing of new deals with large-scale multiple groups. Trials are currently going on with Martin McColl and one other chain, which have the potential to lead to new business worth up to £250m, he revealed.
“We will invest to grow,” he continued. “Our five-year plan assumed the loss of Costcutter so there won’t be any depot closures or redundancies. We have three great strengths, namely our fresh range, the Heritage own-label and the Making a Difference Locally campaign. We’re going to increase investment in our retail offer, in price, and in a new store of the future format, and concentrate on service and availability.”
On the Buyco deal, which will see Costcutter and P&H form a joint venture buying organisation on April 7, Turton added: “We think it’s the wrong choice for Costcutter retailers. The recent history of the grocery trade is littered with buying alliances that didn’t work.”
“I’m not sure how Palmer & Harvey is going to be able to provide the service that Costcutter retailers are used to. I imagine a lot are going to jump ship to Nisa.”
Barlby Village Stores, Yorkshire
“I think it will benefit Nisa in the long run as a lot of the retailers with larger stores will leave if P&H can’t supply them properly. Potentially, it could be a massive gain for us.”
Nisa Northumberland and Tyne & Wear
“The deal is good news for Nisa retailers. We knew it was in the pipeline and we’ve got a strong business plan to take us forward. SomeCostcutter retailers may want to change to Nisa, but they’ll have to meet our minimum criteria.”
Rosherville Post Office, Gravesend, Kent