As reported in Convenience Store magazine, the 2018 accounts (to 31 December) for major symbol group Costcutter show the company's sales fell by 24% to £390m over the twelve months. This reveals the severe impact caused by the disruption of supply to member stores following the collapse of key supply partner, Palmer & Harvey, in late 2017.
Ended year with 1,560 member stores
As well as the ongoing supply issues throughout the first half of the year, Costcutter was also impacted by the defection of significant numbers of retailers moving to other symbol groups. The net decline of stores in 2018 was over 200, with numbers reaching a low of 1,500 before recovering slightly as the group's supply situation began to stabilise in the latter part of the year.
Supply agreement with Co-op seeing sales return
Once the replacement deal with the Co-op began to come on stream in the Summer, Costcutter's sales decline was effectively arrested. Then with the deal fully bedded in, from August the trend turned increasingly positive, recovering to 2017 levels. Sales in January and February 2019 are reported to have been up by 15%. To ensure support for existing retailers and ongoing recruitment of more, Costcutter has invested heavily in up-weighting its business development team, increasing the BDM (business development manager) to store ratio from one to 40, to one to 25.
Co-op franchise model now ready to roll-out
With the availability of Co-op branded products in Costcutter stores credited with bringing more shoppers into stores, Costcutter now also has three company-owned stores trialling the full Co-op franchise package. Achieving sales increases of up to 50% in these trial sites, Costcutter will now begin recruiting independent retailers, offering a significant new platform for future growth.