Given where we were on 27 November, we are in remarkably good shape,” says Costcutter CEO Darcy Willson-Rymer. He believes the symbol group is not just getting back to normal after the P&H crisis, but ready to move on the front foot, to compete again with other symbols.
On the date in question, Costcutter’s supply partner went bust with an immediate halt to deliveries, after a prolonged period of poor availability. The next day, Costcutter announced a supply deal with the Co-op - due to kick off in the spring. Ironically Costcutter’s plan to switch was the final nail in the coffin for P&H.
The upshot, however, was that it left the symbol group scrambling around to get stock into stores from a range of wholesalers including Booker, Bestway, Nisa and Dhamecha. It even hired a fleet of 40 vans so its business development managers could make runs to local cash & carries on behalf of Costcutter retailers.
The turmoil took a heavy toll on the group in terms of store numbers. It lost 200 before the wholesaler’s demise, largely due to the availability issues and a further 200 in the immediate aftermath as according to Willson-Rymer “they couldn’t wait for our new arrangements to be put in place”.
This reduced the size of the group by almost 20% - it ended 2017 with 1,776 stores compared with 2,200 the previous year. Its retailers have been targeted by rivals - Bestway claimed to have signed up 60 ex-Costcutter and Mace retailers in February alone. However Willson-Rymer says its own recruitment remains strong, with 100 stores joining in the period between P&H’s demise and the start of the Co-op deal on 28 May.
So why is Willson-Rymer so chipper? There are two key reasons - the opportunities presented by the Co-op deal and that it is now back in a position to push ahead with its Shopper First model, which provides tailored store refurbs and ranging advice based on detailed data.
Arguably the most important element of the Co-op deal is that all Costcutter stores are now using the Co-op-owned Nisa supply chain, which Willson-Rymer claims has largely ended the availability crisis that has dogged it over several years.
Retailers will be able to get their hands on the first 800 Co-op own label products from 16 July. These are being rolled out over the next 12 weeks, with 1,200 further lines to follow.
There will also be the opportunity for Costcutter members to become Co-op franchisees. The Grocer revealed in February that it had been testing a Co-op franchise at its company-owned store in Guiseley and Willson-Rymer revealed this week that sales there were up 67%, ahead of its 30%-40% target.
More trials are set to follow over the next couple of months before independent retailers can take on the franchise.
At the commencement of the Co-op deal, Costcutter updated its terms for retailers. This was primarily around rebates and margins. That Costcutter members can now achieve up to a 6% rebate caused a stir among Nisa members, who have always only had up to 5%. However, the new Costcutter rebate includes all of the various pools of cash symbol groups offer retailers, including store development funds that would typically be dished out separately.
“We wanted to make it so retailers could work out their rebates and margin in their heads. We think this now makes us one of the easiest symbol groups to work with. We don’t have any surcharges or levies and we won’t be bettered on our rebate,” he boasts. “All this combined with the support we offer retailers puts us in a really good place.”