Costcutter’s recruitment pipeline “has never been stronger” CEO Darcy Willson-Rymer insisted this week, as its investment in a new supply agreement with Palmer & Harvey started to pay off.
In figures released by parent company Bibby Line Group, losses at Costcutter soared from £4.2m to £34.1m due to the switch. Sales at the convenience symbol operation fell from £806.7m to £789.6m.
Willson-Rymer attributed the majority of the lost revenue to the disposal of its Rhythm & Booze off-licence stores, though he admitted to “a small amount of volume loss through migration caused by supply chain issues” encountered by Costcutter during its switchover last summer.
However, investment in the P&H buyco joint venture, including the creation of the ‘Independent’ brand and new IT systems, and new systems to manage range, price and promotion for its 2,625 stores was “now translating into improved products, better availability and more competitive pricing.
“It took longer than we would have liked, resulting in higher transition costs than we anticipated, but we absolutely believe our strategy is the right one, and I am expecting us to return to normal levels of profitability this year.”
The pipeline of new members is really encouraging. Recruitment has never been stronger,” he added.
Bibby Line Group CEO Sir Michael Bibby told the FT at the weekend that more mergers were needed in the wake of fierce competition from the supermarkets in convenience shopping.
“We favour consolidation of the market. We need a smaller number of larger players to compete with the supermarkets.”
His comments followed the announcement by Booker last week that it had acquired the Londis and Budgens chains from Irish retailer Musgrave - a move that will boost Booker’s buying power to £6bn and add almost 2,000 stores to its convenience estate.
“Booker’s move is consistent with our belief,” Willson-Rymer told The Grocer. “For the independent retailer to compete over the long term, consolidation needs to happen, primarily to remove inefficiencies that exist within the sector.
“But sometimes the path forward isn’t necessarily a direct path. We needed to be in control of our range and promotions. We also wanted transparency in the value chain. All the moves we’ve made are about bringing control of our model in house so we are set up for success in the future.”
Willson-Rymer also promised to continue to evolve the range. “We have 10,000 skus in the range, so that’s comparable to the range under Nisa. We will continue to make sure that range is completely up to date and in line with the market.”