Retailers ‘pushed out’ as Costcutter increases charges and minimum order requirements

Costcutter is to increase minimum order quantities and introduce a new delivery charge next month, penalising stores with smaller sites unable to meet the requirements.

The new terms, seen by Better Retailing, were sent to retailers on 19 June and come into effect from 20 July. Costcutter said the changes were being implemented to shorten delivery windows and drive higher store standards complaince.

Major changes include the increase of minimum order quantity for ambient products from 80 cases to 120 cases per delivery. Deliveries with fewer than 120 cases will not be delivered. Issues caused by the change are to be compounded by a new £55 ‘No Order Levy’ . The charge will be applied to any unused delivery slot, and retailers must cancel any slot they do not intend to use 48 hours in advance to avoid the charge.

A £6 weekly recycling collection fee will also be charged to retailers, billed at £78 plus VAT every quarter. Retailers have been opted into this automatically, but they have the choice to exit and arrange their own recycling collections.

Costcutter will also no longer pay rebates on spirit purchases. The group said this was: “part of our aim to place less emphasis on declining and low growth categories. However, with your spend on spirits still contributing towards your qualifying rebate spend, you are still able to reach our sector-leading maximum rebate of 6%.”

In return, Costcutter said it was looking into improving rebates for other categories. “We are already trialling an enhanced fresh rebate in Northern Ireland and assuming that trial meets its goals, we will consider a wider rollout,” it told partnered stores.

Retailers in the Mace brand, which is owned by Costcutter, said they felt like they were being pushed out of the group. Norfolk Mace retailer Steve Haines was one of several to contact Better Retailing about the changes. He commented: “These are really dramatic changes. We’re only a small store and it feels like they are trying to push us and other Mace stores out of the group.

“We are in a tourist area with very seasonal demand, so hitting 80 cases can be challenging at some points of the year. Missing a delivery drop and being charged £55 just isn’t an option. With separate chilled and frozen deliveries we could be left paying more than £100 a week in our low season. It seems we’ll have little choice but to move over to Booker.

“Considering everything small retailers are going through at the moment this is the very last thing we need.”

In the email sent to retailers about the changes, Costcutter CEO Darcy Willson-Rymer said: “We are constantly looking for ways to improve the delivery service you receive. Retailer feedback has been consistent about the need to improve the accuracy and consistency of delivery on-time windows.

“Having worked on the right solution for some time, we consulted retailers during our January 2020 Retailer Roadshows, where the principles of a solution were discussed and received enthusiastic support.

“By both charging retailers who do not use their delivery slots and maximising the efficiency of existing deliveries by increasing the ambient minimum order quantity, we will be able to settle down into a regular delivery pattern which in time will provide our supply partner with a greater opportunity of operating to their delivery time windows.

“With the vast majority of our 1,550 retailers already maximising both their orders and delivery slots, the changes we are making aim to support your efforts and improve the consistency of service you receive. This solution for delivery on-time is for the benefit of our entire community of retailers and there will be no cost impact for the majority of retailers.”