Resignation shakes bedrock of retail chain co-operation

The public spat began when Colin Graves, executive chairman of Costcutter, used a conference speech to announce his immediate resignation from the board of Nisa Today's.

Mr Graves claimed he had been excluded from board discussions at Nisa in recent months over "a conflict of interest" between the two companies and told the Yorkshire Post he was "extremely annoyed" about the situation.

York-based Costcutter operates a franchise operation with more than 1,600 convenience stores through the UK and is a large customer of Nisa Today's.

Nisa Today's is Britain's biggest buying group for independent retailers and in recent years started building a convenience store business, with plans to put its branding on 1,200 shops over the next two years.

Costcutter has a contract for ambient food products with Nisa Today's distribution centre until 2014, which accounts for around one third of the centre's sales.

Mr Graves said he intended to honour the contract, reassuring retailers it would be "business as usual".

But he said he would consider all options in his vision to grow Costcutter into "the largest and most efficient and cost effective symbol group in the UK" with backing from Bibby Line, the Liverpool-based shipping, logistics and finance group.

Bibby Line acquired a 51 per cent stake in Costcutter in 2007 and tried to buy Nisa Today's last year, resulting in a bid worth 51m that was rejected by management as being a "very significant undervaluation" of the business.

Mr Graves pointed out that Bibby Line has a distribution business, while other options include the creation of a new buying, warehousing and distribution system or acquiring an existing operator.

He said Costcutter might negotiate a contract extension with Nisa Today's "if it's right".

Nick Ivel, managing director of Costcutter, said: "Our retailers are 100 per cent behind us and see a good future for Costcutter."

Mr Ivel said the group had turnover of 607m on the year ending April 2010, with record sales growth of 7.7 per cent on the previous year.

In response, Neil Turton, chief executive of Nisa Today's, told the Yorkshire Post he was "incredibly disappointed" about Mr Graves' public attack.

He said that after the Bibby Line bids were received "it became clear that these could not be properly discussed in a board meeting with Colin present due to a conflict of interest as Costcutter is, in effect, a Bibby subsidiary".

This, he said, amounted to a "situational conflict", which continued in certain board discussions, particularly after Bibby Line said during bids it wanted to split Costcutter from Nisa Today's if its takeover was unsuccessful.

Mr Turton said: "How could, for example, the chief executive of a Bibby subsidiary sit in a board process reviewing a 500m distribution tender and making a decision when Bibby themselves were a shortlisted bidder?"

He added: "It is not in the interests of Nisa or its members and retailers for us to get into a public heated discussion with Costcutter or Colin."

Nisa Today's achieved turnover of 1.42bn for the year ending March 2010, up 11.9 per cent on the previous year.

It has 765 retail members, operating from 5,000 stores, and 228 wholesale members, which operate from 270 depots.

'Exciting times' head for franchise group

Costcutter held its biannual conference for retailers and suppliers in Barcelona, Spain, last weekend.

Executive chairman Colin Graves, above, told delegates: "This is a very exciting time for Costcutter and I, personally, am ready for the challenges ahead.

"At the heart of everything we do, now and in the future, is the provision of expert support to new and existing retailers and we are already formulating our strategy to ensure we do that post 2014."

Mr Graves bought the Costcutter name and set up a rival to Spar in 1986. He was 37 and had spent 17 years with the supermarket chain.

He is also chairman of Yorkshire Country Cricket Club.