Colin Graves’ resignation from the board of Nisa-Today’s has brought the long-standing feud with Costcutter back to boiling point, says Beth Phillips

As resignations go, it couldn't have been more public.

Two weeks ago Costcutter chairman Colin Graves chose the retailer's annual conference in Barcelona to sensationally step down from the board of Nisa-Today's after 20 years before launching a blistering attack on the buying group.

This week, he backtracked somewhat, claiming the resignation was not necessarily permanent (see News p10) while thorny issues such as the renewal of the pair's distribution agreement are thrashed out.

"Costcutter still has the right to appoint a director, but there are no current plans to do this," a spokeswoman says.

But with such damaging accusations flying around, has irrevocable damage been done to the relationship between the buying group and its biggest member?

Relations have been deteriorating since last August when Nisa-Today's rejected two offers from Costcutter's owner Bibby Line Group and then awarded its distribution contract to rival DHL, but Graves' outburst undoubtedly marks a new low for the pair.

At the heart of the dispute lies the renewal of Costcutter's 10-year contract with Nisa-Today's, which runs out in 2014.

A new contract is currently being discussed, which, says Turton, is one of the reasons why Graves was asked to step out of certain board meetings. Costcutter is understood to be on lucrative terms under its existing contract, and Costcutter, understandably, wants to keep them.

"We have put a very attractive new contract in front of them, which improves their rebates, even at current volumes, and simply asks them to order efficiently under the same rules as any Nisa member," maintains Turton.

With the new contract being ­negotiated in the strictest confidence, it's hard to establish who's in the right. Nisa-Today's members believe Graves' outburst is so that he can secure the best possible deal. As one Nisa member puts it: "I think it is more posturing than anything. Colin is negotiating through the press."

The danger with such tactics is that they can backfire. Turton makes it clear Nisa won't be pushed around. "I make no apology for saying Nisa will be run with the interests of 1,000 members at heart, not just the loudest and most demanding," he says.

If Nisa doesn't kowtow to Costcutter, the two could go their separate ways, something that would hit both because most Nisa members agree "Nisa and Costcutter are stronger as a pair". The financials back this up with both companies posting a storming year. Results filed at Companies House this week reveal Costcutter's sales grew 7.4% to £609.5m in the year to 23 April, with pre-tax profits up 10.8% to £10.6m.

In July, Nisa reported an 11.9% rise in sales to a record £1.42bn in the year to 28 March. It would lose a third of its sales if Costcutter left, but Turton insists it would remain strong. "We are a sustainable organisation with or without Costcutter," he claims. "Our Costcutter business isn't the best economically as it is characterised by lots of small deliveries. We wouldn't be opening new depots if we were not confident about the future."

A split would force Bibby Line Group, meanwhile, to hit the acquisition trail something it is already attempting to do if rumours it is eyeing CTN and c-store chain Martin McColl and forecourt operator Murco are true.

Most observers believe the pair will resolve their differences. "Time is a great healer," points out one retailer. "We've got until 2014." Turton is equally upbeat: "There is a place for Costcutter in Nisa; a positive one."

As one retailer neatly puts it: "As independent retailers what we need more than anything is to be working together."