Hungry Costcutter aims to stride to next level

Executive chairman Colin Graves said he wants to add hundreds of new stores to the group's portfolio in order to grow the company in the coming months.

The York-based firm expects to report a 620m turnover for the financial year ending April 2010 and currently has 1,600 stores in its franchise network.

Mr Graves said: "When you get a business of this size, if you recruit the odd store it doesn't make a difference. You've got to do something exceptional to take it to the next level.

"We will be looking at acquisitions over this next year, whether it's buying small multiples, large independents, closed down stores, we will be on the acquisition trail somewhere."

He added: "If we can open 80 to 100 stores each year that keeps our growth growing at a sustainable rate without any problems. But if we can go out and acquire someone with 500 stores then it's a different ball game."

Mr Graves said he considered buying Thresher when its parent company went into administration last year. "We even got to a stage of nearly putting an offer in but we started to do some due diligence and it didn't stack up," he said.

He ruled out a third attempt to merge with Britain's biggest buying group for independent retailers Nisa-Today's after Nisa rejected a 51m takeover approach from Bibby Line Group, which owns a majority stake in Costcutter, last August.

The two firms previously held fruitless merger talks four years ago.

Mr Graves said: "I've tried twice before to pair up with Nisa-Today's. If Nisa shareholders don't want to go down that route, that's fine but I ain't going to waste any more time on trying to make it happen."

The group recently introduced a stricter recruitment policy for new stores after 80 closed down last year due to financial difficulties.

"We've recruited some very good stores but we've turned away a lot more than we've recruited. We are very, very careful who we take on board," said Mr Graves.

Despite the difficult climate, Costcutter's sales grew by 10 per cent between May and October last year after benefiting from more people shopping locally during the recession.

Mr Graves said the smoking ban in pubs also encouraged people to stay at home instead of going out to drink.

The firm spent about 2.5m on advertising last year and plans to increase its advertising spend by five per cent in 2010, including two TV adverts.

In recent years Tesco and Sainsbury's have moved into Costcutter's territory by opening local convenience stores.

"It would have been better if they hadn't come into the market place, without a shadow of a doubt," said Mr Graves.

"But at the same time it's made us improve and be better retailers."

He added: "There's still massive room for growth. There are 22,000-23,000 independent retailers out there."

As for the future, Mr Graves, 62, said he has no plans to sell the company and retire but he has not completely ruled it out.

"You never know, you don't know what's around the corner," he said. "It hasn't even crossed my mind at the present time. I still get a kick out of it and I still want to be part of it."

The road to the top

Colin Graves became an entrepreneur relatively late in life at 37 after a career in sales with the Spar chain of supermarkets.

The son of a Goole farmer he had always dreamt of becoming a PE teacher and it was a career he aspired to until he landed a place in Sheffield to study physical education and changed his mind.

He joined the Hull branch of Lloyds in 1967 but only lasted 18 months until Spar tempted him away with the prospect of a company car as a sales rep with the firm.

He stayed for 17 years, rising to sales director for the North before leaving to take a job as managing director of Sharpe's, a Manchester printing company.

After six months he returned to work as a consultant with a group of disgruntled Spar retailers.

Mr Graves bought the Costcutter name and set up a rival brand to Spar in 1986 when the group of retailers said they wanted their own name.

The group now has 1,600 stores in its franchise network.