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INDEPENDENT AND CONVENIENCE UPDATE APRIL 2013

Costcutter and P&H combine in 5bn deal

Costcutter Supermarkets Group and Palmer & Harvey announced the launch of a new joint venture company that will

transform the convenience sector in the UK through its 5 billion negotiating and buying power. Called The Buyco, the new

company will be unique within the convenience sector, providing Costcutter Supermarkets Group with access to the largest

volume buying power in the sector, resulting in the most competitive prices for its members as well as an industry-leading

range of products and promotions at highly competitive prices.

As a joint venture business which will be 50% owned by both companies, The Buyco is being set up to allow Costcutter

Supermarkets Group to meet the needs of its independent retailers and all of P&Hs existing independent retailers. In order

to negotiate the best deals through maximum volume, The Buyco will also serve the buying needs of Palmer & Harveys

existing independent retail customer base.

Coinciding with the creation of The Buyco, Palmer & Harvey will be moving away from direct management of symbol group

convenience retailing to focus on its wholesale distribution strengths. The Mace, Supershop and Your Store brands,

operations and 800 stores will join the Costcutter Supermarket Group family of brands which includes the 1,600 plus

Costcutter and kwiksave stores. This transfer will come into effect on April 7th

2013.

In addition, Costcutter has signed a new eight year wholesale distribution contract with Palmer & Harvey.

Source: IGD analysis

Key elements of the tie-up:

Transfer of P&H symbol group

interests (i.e. brand franchise, store

fit, store offer, marketing) to

Costcutter (effective April 2013) The creation of a 50:50 joint-venture

company (The Buyco) to handle

buying for the combined symbol

store group, plus other P&H

wholesale customers

P&H awarded an eight-year

distribution contract to supply all

Costcutter symbol stores across all

fascias as of July 2014

UK: Booker Reports Rise In Sales, Makro Business Trading In Line

Booker said today that its recently acquired Makro business was trading in line as it reported a rise in group sales

in the quarter.

The company, which runs 172 cash & carry outlets, said total like-for-like sales were up 2.2% in the 12 weeks to

29 March compared to last year. Quarterly non-tobacco sales rose 4.2% on a like-for-like basis, while tobacco

sales were down 0.9%. It added that annual profits remain in line with expectations.

Booker has defied the downturn in the UK cash and carry market, managing to grow sales as Britons increasingly

shop at their local convenience store instead of supermarkets. Total sales for the year to 29th March 2013 were

4bn, up by 3.5% compared to last year and in line with expectations, boosted by rising internet sales. Like-for-

like non-tobacco sales for the year rose by 4.5%, while like-for-like tobacco sales increased by 1.3%. Sales to

caterers rose by 6.2% and retailers by 2.0%.

NamNews - Thursday 4th April 2013

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INDEPENDENT AND CONVENIENCE UPDATE APRIL 2013

Sit

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ALSO FRLeading Edge

Careers at IGD

Tesco To Trial Franchise Model For One Stop Chain

Tesco-owned convenience chain One Stop Stores has announced it is to trial a new franchise model with local

independent retailers.

The 640-store retailer said the concept will mean independent retailers continue to run their own businesses whilst

benefiting from One Stops successful brand, convenience expertise, support and investment, to help grow their

businesses. One Stop said that through the partnership, franchisees will also gain access to its low cost operating and

distribution model. For customers, it said this means they will benefit from competitive prices and a wide choice ofgood quality everyday essentials.

The move will pit One Stop against major players in the highly competitive symbol group market such as SPAR,

Costcutter, Nisa and Booker. The group will hope to benefit from the rising popularity of symbol groups which,

according to recent data from IGD, accounted for 40% of UK convenience store sales in 2012, compared to 22% in

2002. Symbol groups generated 13.6bn in sales last year, nearly three times the value they delivered ten years ago.

IGD predicts they will account for half of all convenience sales by 2020.

One Stop Chief Executive Tony Reed said: We and our customers want to see neighbourhood convenience shops

thrive. Our franchising concept is about helping good independent family businesses make an even greater success

of their stores. One Stop will talk to retailers about the new franchise concept in the coming weeks.NamNews - Thursday 4th April 2013

Aldi Opens First C-Store

Discounter Aldi has opened its first convenience store as it targets a slice of the rapidly

growing sector. .

The 7,000 sq. ft. outlet is located in Kilburn High Road, North London, on the site of a

former Peacocks store. Aldi usually targets sites of at least 10,000 sq. ft. that can offer

parking but this new compact format pitches the chain against other multiple rivals,

including Sainsburys and Tesco, which have been expanding their c-store chains on theHigh Street in recent years.NamNews - 4th April 2013

SO WHAT SHOULD WE DO?

Competition within the Convenience sector continues to grow, fuelled by the expansion of the multiples via new

stores, the Tesco franchise model and collaborations such as Costcutter and P&H.

Independent retailers need to offer greater value and professionalism if they are to survive and many more are

turning to retail clubs for this support.We can leverage this environment through our field teams to re-open and re-enforce conversations with

retailers about the benefits of a category approach for our clients products.

Sainsburys To Accelerate Expansion Of C-Store Chain In London And South EastSainsburys has become the latest major grocer to unveil an opening offensive of convenience stores in London, as the

attractiveness of the capitals retail economy shows no signs of abating. .

The group said yesterday that it will accelerate the expansion of its convenience store business in London and the South

East with plans to open 50 new stores by early 2014. This will add to Sainsburys estate of 150 convenience stores in the

two regions and mirrors similar opening programmes by its rivals, Morrisons, Tesco and Waitrose, in the capital.

Sainsburys convenience business is seeing strong growth with sales up 18% year on year growth with over five million

customers a week visiting its Local stores.

The new Locals will be located on high streets and in the heart of communities, providing access to healthy, quality food

at fair prices. They will also give a real boost for other retailers as they bring increased footfall and trade.In 2012/13 Sainsburys announced plans to open 1-2 convenience stores a week. So far the retailer has opened 87

convenience stores during the year. Sainsburys now has 523 convenience stores nationwide.NamNews - Tuesday 26th March 2013

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