UK retail group the Co-op has confirmed an agreement to become the exclusive wholesale supplier to the Costcutter Supermarkets Group (CSG).
The deal, which will come into effect from spring 2018, will see the Co-op supply CSG's 2,200 convenience stores across the UK, including Costcutter, Mace, Simply Fresh, Supershop, and kwiksave.
The agreement comes following the collapse of wholesale group Palmer & Harvey (P&H) earlier this week, which had previously supplied around 90,000 outlets, including CSG's store network.
“With P&H no longer able to supply our stores, we have activated our contingency plans that will see our retailers supported by the Co-op and other suppliers in the run up to our deal with the Co-op,” said Darcy Wilson-Rymer, CEO of CSG.
The UK's wholesale industry is undergoing a number of significant changes at present.
The closure of P&H comes just one week after the merger between Booker and supermarket giant Tesco was provisionally cleared by the UK's Competition & Markets Authority.
However, last month, a number of UK wholesale companies expressed concern over the £3.7 billion merger, saying that the increased buying power would make it very challenging for other wholesalers to compete.
“Whilst our deal with Costcutter will start formally in Spring 2018 we are looking at practical ways we can support independent retailers during this busy trading period, in light of the news concerning P&H," said Jo Whitfield, chief executive of Co-op Food.
"It is essential that we maintain a strong independent retail sector and the Co-op is committed to playing its part, along with others in the industry, in ensuring this occurs.”
The Co-op currently provides wholesale services to 15 independent co-operative societies, as well as its own network of 2,500 stores across the UK.
Earlier this month, it was announced that the group's £137.5 million bid to acquire Nisa Retail had been approved by its members, increasing the company's presence in the convenience sector.
“We are operating in a dynamic market environment and this deal, coming shortly after our Nisa announcement, shows how we are positively responding to the changes occurring within the sector," added Whitfield.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.