Independent convenience operator Costcutter and distribution giant Palmer & Harvey have inked a deal to create the UK’s second-largest convenience chain and form a buying joint venture.

The deal, announced yesterday (13 March), will see Costcutter takeover 800 Mace, Supershop and Your Store outlets as P&H quits retailing to focus on its distribution business. The pair will also form a joint buying group that spends around GBP5bn annually.

Commenting on the move, Costcutter CEO Darcy Willson-Rymer described the news as “the biggest shake-up of the GBP34bn convenience sector in years”.

Willson-Rymer insisted that through the buying organisation – called The Buyco – the enlarged group would have “unprecedented buying power” that would allow it to compete with the UK’s supermarkets on price.

Costcutter is made up of independent retailers that pay a fee to gain access to the firm’s marketing and purchasing capabilities.

“This will ensure we have a thriving independent sector alongside the supermarkets. But it is also about consumer trends: people want to shop locally,” Willson-Rymer said.

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By GlobalData