Costcutter and P&H join forces to launch £5bn buying company

Costcutter Supermarket Group and P&H have announced a joint venture which sees the launch of The Buyco – a new group with an estimated £5bn buying power. The Buyco will serve over 1,600 Costcutter stores, along with P&H’s existing independent retailers. P&H’s 800 convenience stores will transfer to Costcutter.

As a joint venture business which will be 50% owned by both companies, The Buycosees the end of Costcutter’s historic link with Nisa. Costcutter says The Buyco will increase its buying power, allowing it to better serve its retail members, while it will also serve the buying needs of Palmer & Harvey’s existing independent retail customer base.

Coinciding with the creation of The Buyco, Palmer & Harvey will be moving away from direct management of symbol group convenience retailing to focus on its wholesale distribution strengths. The Mace, Supershop and Your Store brands, operations and 800 stores will join the Costcutter Supermarket Group family of brands which includes the 1,600 plus Costcutter and kwiksave stores. This transfer will come into effect on April 7th 2013.

In addition, Costcutter has signed a new eight year wholesale distribution contract with Palmer & Harvey.

Darcy Willson-Rymer, CEO of Costcutter Supermarkets Group, said: “We have been single-mindedly focussed on creating maximum value for our members and it became wholly apparent that without access to the proportionate benefits of our own buying power this could not happen. Through the creation of The Buyco with Palmer & Harvey, we will have unrivalled purchasing power within the UK convenience sector.”

Willson-Rymer said that he believed the convenience industry was on the brink of further major consolidation. He said: “Each company will play to its strengths in The Buyco and that will be better for retailers. I can see this as the start of a consolidation period for the symbol space. With the way supermarkets are moving into convenience what we will see are groups looking for better marketing support.”

Martyn Ward, CEO of The Buyco and current Managing Director, Commercial and Sales at Palmer & Harvey, added: “The Buyco’s sole reason for being is to create value through volume. We will be working closely with suppliers, both those already working with Palmer & Harvey and new suppliers that we will be bringing on board to meet the needs of Costcutter Supermarkets Group members and all of P&H’s existing independent retailers, to ensure we are providing not simply the largest range but the highest value range possible. This brings greater value for everyone, including consumers who will ultimately benefit the most from a strong independent convenience sector.”

Ward added: “The success of independent retail is an important part of the economy.”

Costcutter is also introducing a new, bespoke range, negotiated on its behalf by The Buyco. This will include an extensive chilled and fresh proposition, and a new three tier own label range. Willson-Rymer said he believed there was potential for the number of Costcutter stores to double, but with new symbols joining the company there would be a focus on maintaining each brand’s individuality. He said: “Under the Costcutter Supermarket Group we are now a multi-focussed single group. It’s important that each fasica group remains different – we’ll be looking at why people shop there and providing the best offer we can for each of them.”

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