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The Co-op has announced the appointment of Ken Towle as Chief Executive of its newly acquired Nisa subsidiary.  The former senior Tesco executive has taken up the role with immediate effect, replacing Arnu Misra who stepped in as interim Nisa CEO in late 2017.  The announcement comes on the day that the Co-op's acquisition of the wholesale distributor gained final legal recognition.

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The Competition and Markets Authority has cleared the Co-op’s £137.5m takeover of buying group Nisa, saying "the proposed merger does not give rise to competition concerns”.  Co-op is now likely to take over the running of Nisa in May.

Competition between shops unaffected

Co-op, as a groceries retailer, and Nisa, as a groceries wholesaler, do not compete head-to-head. However, as Nisa supplies more than 4,000 grocery stores, the CMA said it had carefully considered the potential impact of the merger on competition between shops.

As part of the “phase 1” investigation, the CMA took into account that Nisa-supplied stores would still be free to set their own prices and decide which products to stock after the merger.  It concluded that the merged company would not be able to directly determine how they compete.

Stores and shoppers free to shop around

It also examined whether the merged company could raise prices or reduce service quality for retail or wholesale customers but found that existing retail and wholesale competition made this unlikely.  As Nisa-supplied stores are able to choose between several different wholesalers, they would be able to switch supplier if prices were to increase or the quality of service go down as a result of the merger.

As far as shoppers are concerned, the CMA felt there were enough local alternatives to both Co-op and Nisa-supplied stores to ensure that people could still shop around to get the best value.

In conclusion, it said that this all meant that the merged company would be unlikely to be able to raise prices or offer a worse service to either stores or to shoppers.

Co-op expects to start running Nisa in May

The decision not to send the deal to a ‘phase 2’ investigation means that the Co-op now expects to take over the running of Nisa in early May.

Sheldon Mills, senior director of mergers at the CMA, said: “Millions of people throughout the UK shop at convenience stores and supermarkets, and it is vital that they continue to have enough choice to get the best value for them. After careful consideration, we’ve found that there is sufficient competition in both the wholesale and retail sectors to ensure that shoppers are not worse off.

Co-op Retail CEO Jo Whitfield commented: “We’re delighted with the CMA decision and are really excited about sharing our plans for the future once we gain court sanction.”

Peter Hartley, chairman of Nisa, added: “Today’s ruling by the CMA is excellent news, and a significant step towards finalising the transaction that our members voted for last November. We are very excited about our future together which will help ensure that our members are best placed to serve their communities.”

 

IGD Convenience Retailing Summit 2018

26-27 September, London

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Co-op reports profit increase of 25% FY17
The Co-op has reported strong trading results for the year 2017.


Nisa Retail Q4 shows benefit of P&H demise
Wholesale distributor, Nisa Retail, has announced trading figures for Q4 of its 2017/18 year (13 weeks to 1 April), reporting total sales for the period up 26.1% to £377m.


Tesco completes merger with Booker
Tesco and Booker have confirmed that their merger has become effective as of 8am on 5 March 2018, following court approval.


Wholesale distributor, Nisa Retail, has announced trading figures for Q4 of its 2017/18 year (13 weeks to 1 April), reporting total sales for the period up 26.1% to £377m.  However, underlying growth was weaker, down 1.1%.  This is perhaps the last quarter that Nisa will report as an independent business, with its acquisition by Co-op expected to complete during Q2, following the Competition & Markets Authority inquiry now in train. 

Growth driven by customer gains from P&H

Nisa's performance was fundamentally enabled by a rapid increase in the number of the stores being serviced in the quarter, with 1,115 stores added in the course of the three months.  The substantial majority of these, 1,039 (including a significant number of Costcutter stores), were stores formerly serviced by competitor Palmer & Harvey, which fell into administration in November 2017.  The total number of stores within the Nisa supply network now stands at 4,797, up from 3,466 in 2016/17.

Costcutter stores serviced expected to increase, though offset by McColl's departure

The agreed supply deal between Co-op and Costcutter ensures that going forward all Costcutter stores will be serviced through Nisa, once that deal is formally activated.  However, as Nisa on-boards more Costcutter stores, McColl's stores will be dropping out of supply, as they progressively shift into that retailer's contract with Morrisons.  To date, it is understood that 264 McColl's stores have switched into Morrisons supply.

Arnu Misra, interim Chief Executive, Nisa Retail commented:

'Following a very strong Christmas period, our sales and recruitment numbers have continued to perform strongly, giving Nisa positive momentum as we enter our new financial year.  I am also pleased to report that during a quarter of increased store growth, we were able to generate cash without significantly impacting service to our existing members.'


 

IGD Convenience Retailing Summit 2018


 

26-27 September, London

 

Check out the evolving speaker line-up and book early bird tickets.


Find out more »

 

 


UK competition regulator launches Co-op/Nisa enquiry
The UK Competition and Markets Authority has now begun its preliminary investigation into the potential effects of the proposed acquisition of wholesaler/distributor Nisa by the Co-operative Group.


Co-op reports profit increase of 25% FY17
The Co-op has reported strong trading results for the year 2017.


Tesco completes merger with Booker
Tesco and Booker have confirmed that their merger has become effective as of 8am on 5 March 2018, following court approval.


The UK Competition and Markets Authority has now begun its preliminary investigation into the potential effects of the proposed acquisition of wholesaler/distributor Nisa by the Co-operative Group.

Decision on Phase 2 by 23 April

Launched on 23 February, the CMA will report on 23 April whether it needs to take its investigation to a more detailed Phase 2 enquiry.  In the absence of material concerns it will be expected that no Phase 2 will be required, and that then the acquisition may progress to completion shortly after.  However, should Phase 2 be deemed necessary, completion may be delayed by several months more.

Tesco/Booker precedent suggests Phase 2 unlikely?

In the light of the approval granted to the Tesco/Booker merger in December 2017, it would seem likely that the CMA will not find significant cause for concern in the Nisa acquisition.  Like the Tesco/Booker deal, Co-op/Nisa is a 'vertical' merger (i.e.  merger of retailer and wholesaler) where the two businesses are not viewed on the same competitive plane (unlike two retailers).  While Nisa does provide support to retail customers it is purely a wholesale concern, with no direct control at the retail level.  Moreover the scale of the Co-op/Nisa merger is significantly smaller in national terms than Tesco/Booker.

Progressive Nisa on-boarding of Costcutter expected to continue

With Costcutter having signed a wholesale supply deal with Co-op in the wake of the collapse of Palmer & Harvey, it seems that the Nisa distribution network will be the obvious platform to service this once Co-op has acquired Nisa.  In the meantime Nisa has already stepped in to provide interim support to some Costcutter stores, and it seems likely that this will continue, and be extended, even while the CMA enquiry is ongoing.

IGD Convenience Retailing Summit 2018

26-27 September, London

Register your interest now to be the first to hear about the speaker line-up and for your chance to get early bird tickets.

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Presentations

11/05/2018
An essential summary of trading priorities, latest developments, and other key commercial insights for Nisa.
24/04/2018
We look at elements of the proposed (now approved) deal, and what each of the parties can bring to an enlarged organisation.
09/04/2018
Our guide to a sample of the best stores in Northern Ireland
View all presentations

Key presentation

This in-depth guide to the United Kingdom explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

An essential summary of trading priorities, latest developments, and other key commercial insights for Nisa.

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26-27 September 2018, London
Convenience continues to outpace big store formats. This year we have launched a two-day Convenience Retailing Summit to help you explore every opportunity, possibility and future trend to boost your business.

We've developed a single, universal methodology for calculating food and consumer goods retail data, supported by our programme of primary and secondary research. This makes Retail Analysis the most reliable and robust source available for data of this type. 

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