Rivals form alliance to challenge Tesco

Convenience store rivals Co-op and Spar joined forces today in a bid to take on the increasing power of supermarket giants such as Tesco.

Co-op and Spar formed a “buying alliance” which will allow the two groups to drive down costs by buying goods in bulk.

It will be focused on the shops’ own-label products such as toilet roll, cling film, cooking oils, fruit juice, sauces and pickles, canned vegetables and eggs.

The deal follows the agreed merger of Nisa-Today and Costcutter earlier this year as smaller operators fight back against the supermarkets which have gobbled up market share by opening their own convenience stores on the high street.

Guy McCracken, head of food retail at the Co-operative Group, said: “With increasing consolidation in the sector it makes good commercial sense to build scale and improve our competitive position.

“Spar are long-term players with integrity and I’m convinced there are significant benefits for both of us through this initiative.”

The tie-up involves more than 3,000 Co-op stores with annual food sales of more than £5bm (€7.4bn) and 2,742 Spar stores with £2.5bn (€3.4bn) of food sales each year.

Spar managing director Jerry Marwood said: “The synergies between Spar and the Co-op are numerous, which gives us confidence that this alliance will be mutually beneficial.

“Spar is committed to the development of its own brand and this alliance will only enhance our position and enable us to compete more effectively in the marketplace.”