Costcutter claims to have turned a corner after annual sales drop

Accounts for the year ending 31 December 2018 show the group made an EBITDA loss of £4.2m on sales of £390m (2017: £512m). However, chief executive Darcy Willson-Rymer maintained that the second half of the year saw performance return to 2017 levels, and that year-on-year sales for January and February 2019 were up by 15%.

“It was a year of two halves,” he told C-Store. “The first half of the year was all about supporting retailers while we worked on new supply arrangements following the collapse of P&H. The second half of the year was about growing sales, attracting new retailers and welcoming back some retailers returning to Costcutter.

“The supply arrangement with the Co-op (which began in May 2018) took some time to bed in, but since the new Co-op offer has come on stream, from August onwards sales have recovered to 2017 levels.”

The availability of Co-op own brand has brought more shoppers into stores and increased basket spend for retailers, Willson-Rymer continued, while the three company-owned stores trialling the Co-op franchise model have seen sales increase by 50%. This format is now available to roll-out to independent retailers.

“We couldn’t be happier with the relationship with the Co-op as a partner. We are happy with the range, with the own-label and availability. Some of the case sizes were possibly too big in the beginning, but they have reduced the outers accordingly. We are working well with the Co-op.”

Recruitment is back in positive territory too, he maintained. “We continued to see losses of stores during the year, with a low point of 1,500 sites, but in the second half of the year we recruited 56 new or returning retailers and ended up at 1,560 stores, including attracting some larger stores back into the group.”

A new team has been established specifically to handle store recruitment, while an additional increase in the BDM team will see each manager looking after 25 stores instead of the 40 previously, meaning that each large retailer will have the services of a BDM for one full day per month. This function will be supported by a new account manager team who will support smaller stores, facilitated by technology such as video links.

“This is the highest level of support in our industry,” claimed Willson-Rymer. “Overall, we are not chasing numbers, but increasingly looking to recruit good retailers with bigger stores.”

Additional investment in technology will see the latest release of epos technology, and the further development of mobile order capture. The latest phase of the group’s Shopper first programme, which helps retailers to devise the right range and layout for their stores based on local demographics, will be unveiled at this week’s Costcutter Expo in Harrogate, along with a key focus on fresh food.

“Fresh is the fastest-growing category and is really important for the future,” Willson-Rymer added. “Our focus this year is on fresh and meal solutions, and we need to fully embrace fresh in order to drive shopper visits and basket spend. With our increased focus on the shopper we will work together with retailers to drive store standards and continue innovation to help transform the shopping experience in store.”