Costcutter agrees major new deal with Palmer & Harvey

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Costcutter has agreed a new tie-up with wholesale giant Palmer & Harvey, signalling its intention to quit Nisa.

The Grocer understands that the new deal will see Costcutter, which is owned by Bibby Line Group, taking over the management of the P&H symbol group Mace, while P&H will handle the distribution for both Costcutter and Mace.

Costcutter is currently supplied through Nisa, but its contract with the Scunthorpe-based buying group is set to expire in July 2014.

Negotiations had been ongoing regarding extending this contract but for many industry experts Costcutter’s departure from the buying group was on the cards ever since Nisa opted to award a major distribution contract to DHL in April 2011 rather than Bibby which had previously handled its ambient distribution.

Bibby had also previously tried to buy Nisa around the time it took its initial 51% stake in Costcutter. It took the remaining 49% in November 2011.

Costcutter’s sales force are believed to have been informed of the move already while P&H employees and customers are due to be briefed next week.

For more details on this story see this weekend’s issue of The Grocer.

Readers' comments (14)

  • I'm a Costcutter retailer all I can say is what a bad deal p&h what a joke. Seasurfer was saying Costcutter was going to shake the retail industry well joining p&h it won't I bet nisa members are laughing at us. If this does happen I think I will be joining Nisa.

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  • Bad news for Costcutter then, P&H will let them down and you will see Costcutter members leave in droves

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  • I'm a costcutter retailer and this agreement sounds like a step down from the current nisa one. There going to announce it to retailers in Birmingham next week. Lets hope they can convince us.

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  • Nothing Official yet as far as I can see just a leak and rumours --- 14:00hrs 07/03/13. Clearly no announcement yet from Costcutter or Bibby. I still think though that Costcutter will leave Nisa and CC will become a formidable force in convenience retailing, and it will be the end of nisa. Why? They will lose over 50% of their volume.

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  • The writing is on the wall !!! . The symbols will have to accept consolidation soon rather than later if they were to stand any chance of remaining in the Convenience sector. Symbols are famous for inefficient logistics and other infra structure which has been a contributory factor in their high cost base. I am sure you will all agree that there is more consolidation in the pipe line to come, hopefully for the betterment of "our" convenience sector . We need more competitive suppliers not dinosaurs waiting to drop. Bit harsh but we live in a very difficult market place .

    Arjan Mehr Londis Bracknell

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  • No seasurfer1 Nisa will not lose 50% it be about 35% have check before you say 50% Nisa without Costcutter will survive why cause people like me and 7 of my friends trade as Costcutter say if p&h deal goes ahead we will join Nisa and I'm sure others will follow.

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  • Nisa are trying to tell us that all is ok, but with 40-50% of their volume linked to CC, it's a dark time in Scunthorpe. They are taking on more stores to try and fill the gap, but they won't manage to get enough and jobs will no doubt go at the DC

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  • If I were the bosses of Nisa - who ever they are because it is a Mutual - which means everybody is Boss - I would be eating humble pie and knocking on the doors of Costcutter and putting a vote to its members and offering itself for sale to Costcutter - because they are not going to be as profitable as they were without Costcutter - and that is if CC are leaving - and possibly buying P&H. With Bibby Logistics which ran Nisa - CC will sweep the market with its buying power and logistical expertise - and who knows until it is official- who else has Costcutter bought in the deal - Musgraves of Eire and the P&H there with all the Spars joining CC - WOW what an Empire.

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  • In response to Seasufer1 & Derek Smalley’s comments, I feel I should make some clarifications as your estimates are grossly out.

    As mentioned in a previous post, Costcutter represents only around 35% of Nisa’s business, not the fictitious 40, 50 and 50% plus mentioned – Nisa’s own symbol group now accounts for more of the total business than Costcutter and the group also has considerable other independent fascia members.

    It also generates small profits in comparison to its turnover by choice, due to it investing in price and promotion for members benefit. You’ll perhaps also have noted the much publicised £4.6million surplus payment to members, a common theme in Nisa history.

    As is mentioned in this weekend’s issue of The Grocer magazine, Nisa aims to make money for its retailers not out of them.

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  • We're a mace retailer and if the rumours are true and mace does come under costcutter management it would create a formidable force in conveince more than enough to stop the march of the multiples if we unite behind it.

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