Blog: Marriage of convenience

Chris Brook-Carter | 15 May 2006

The news on Friday that two of the UK’s leading independent food retailers, Costcutter and Nisa, are to join forces topped off an extraordinary week for the country’s retail sector.

The deal is a marriage built for survival in the face of the damaging march by the likes of Tesco and Sainsbury’s into the high street convenience sector. 

The face of convenience store retailing has changed dramatically over the last decade. I read one analyst’s quotes this week that said it was the “Wild West” of retailing. This is no longer the case.  The major retailers have been moving into the sector fast. As a consequence, scale and buying power suddenly count.

Colin Graves, the chairman of Costcutter said last week: “The time is right to get the ball rolling in the independent sector. It is all about scale in this business. Tesco can buy better because they have 30% of the market. Someone has to show leadership on this issue and that is what we are doing.”

The merged entity combined business will be the largest convenience store operator in the UK, with around a 6% market share, or 6,000 independently owned stores. In comparison Tesco has close to 5.4%.

But the announcement of the deal was also another chance for more politicking, coming as it did in the same week as the news from the OFT that it was referring the supermarket sector to the Competition Commission.

Neil Turton, Nisa’s founder and executive chairman, said: “Nisa-Today’s is delighted with the OFT’s decision to refer the market to the Competition Commission for investigation.  Although there is still much to do before we achieve our objectives, this decision opens the door to the fairer grocery market we have been campaigning for and is positive news for our members.”

Chris Brook-Carter, group news editor and acting editor of just-food