The latest from Nisa-Today’s and Costcutter is that, following board meetings on August 10, all directors unanimously agreed, subject to due diligence, to proposals to combine the two organisations, thus creating a new company.
You will know, if you have been anywhere near either of these convenience symbol groups, that there has been a big hoo-ha over this proposed merger.
There is a rebel group within Nisa’s membership, which wishes to keep the group mutual. Under a new agreement they would only own 60% (which is better than the 51% being proposed last month). Critics claim that the merger would come with a huge debt, largely Costcutter’s, and reckoned to be around £150m although Nisa-Today’s website claims that the debt will be "considerably less than has been speculated".
Also criticised are the directors, who will profit handsomely from the deal.
There has been a ’special relationship’ between Nisa and Costcutter for some time as Huw Griffiths, who runs two forecourts in Wales, has reminded me. He first contacted me in late 2004. Both his sites, Petrostore at Bridgend and Llantwit Main at Cross Nin near Ponty Clun, had been supplied by Costcutter. Llantwit Main was knocked down and redeveloped so his contract with Costcutter had finished.
Huw took up a new contract with Nisa-Today’s for the rebuilt site and liked the goods, the service, pretty well everything. "Llantwit Main’s turnover is just touching £36K a week," he told me. "Nisa has been good for me." He tried at the time to take his Bridgend store into Nisa-Today’s as well but found he could not switch for six months because of what was effectively a gentleman’s agreement between Nisa and Costcutter in that Costcutter wouldn’t let him out of the contract and Nisa wouldn’t let him in.
"I couldn’t understand this as neither store was branded Nisa or Costcutter, it was just a supply agreement as far as I was concerned."
He waited the six months, took Bridgend into Nisa’s and says he will not vote for the group to merge. He believes that, as his cost of goods is cheaper under Nisa, then it will go up if the merger goes ahead.
There will be a vote before it can happen. Ian Hunt, who runs Philco Supermarket and is treasurer for the Nisa Members’ Association, tells me that there has been a good response from members via a number of roadshows held to put the case against the merger. "Out of 900 Nisa members, we have 300 signed up to vote against. It will be enough to block it," he adds.
When I theorised last month on a possible synergy between the forecourt industry and the travel trade, the last thing I expected was feedback. But then I was emailed by Chris Wardle, who wrote: "I was born into the garage/petrol industry and as a youngster ’lived off the pumps’. Then as an adult I worked for around 20 years as a retail travel agent."
He confirms that there are indeed similarities between the two: "The travel trade is the only part of the retail sector that I am aware of that strives towards a single-figure margin. In forecourts, petrol is our biggest line and where we make the least."
Even the cost of computerisation for both types of business are equally punitive.
He adds: "The product can’t afford the price of the system. Mention wet stock and the price of any system doubles. With the travel agency it was the same, the cost was horrendous."
His father Doug Wardle started the family forecourt business 46 years ago. He added the travel agency 22 years ago and they built this up to a chain of 50.
"But after 9/11 the bottom fell out of the market," says Chris, "and when the consumers came back they were buying differently. We got rid of the business and concentrated on forecourts."
I spoke to Doug Wardle, who confirmed that he was glad to be out of the travel business. He says petrol retailing is preferable insofar as at least you have a choice of where you buy and at what price you sell. "A travel agent does not buy his product. His strings are pulled by the supplier and the price is fixed. He can only control his costs."
For once, it seems, the grass is not greener.
HAVE YOU TRIED LOCAL ADVERTISING?
Richmond retailer Subhas Patel is looking for feedback from others who have had dealings with SD Media which puts together local ads to show on screen in post offices, doctors’ surgeries and so on.
I’ve been contacted by six retailers so far who complain that SD Media signed them up for trial periods but then filled in the direct debit for payments ranging up to £900. The retailers also claimed they couldn’t find the ads in the locations promised.
If you have had any experiences with this company (even good ones) please contact me. Or you can ring Subhas direct on 020 8940 0803.