Lower margins on Co-op lines for Costcutter shops

Lower margins on Co-op lines for Costcutter shops
News RN Co-op Costcutter
Login or register to save this article

Costcutter retailers are being advised to sell Co-op own-label lines at lower recommended retail prices (RRP) than Nisa, while paying higher wholesale prices (WSP).

Analysis of both group’s RRPs and WSPs on 398 key own-label lines showed that 146 lines were cheaper at Costcutter, compared to 103 at Nisa. A basket of seven popular items showed Costcutter to be nearly £1 cheaper.

Nisa’s margins were 5% higher on average, while its wholesale pricing was nearly 1% lower than the rival symbol group’s, meaning Costcutter stores that conform to the recommended pricing strategy make nearly £4,000 less in gross profit on every £200,000 of own-label retail sales. This is before any rebates or surcharges are applied. Click here to see the full Co-op own label pricing comparison.

Commenting on the preferable WSPs, Nisa retailer Amrit Singh told RN: “It means Nisa retailers can afford to undercut Costcutter in certain categories.”

However, another Nisa retailer said the higher Nisa RRPs would harm shop owners that followed them. They explained: “Customers will eventually work out who’s cheaper and it will be the Costcutter retailer who will win.”

Rav Garcha, of Nisa Hockley in Birmingham, said it was Co-op’s RRPs, not Costcutter’s, that
mattered most. “Co-op’s pricing is often better than the RRPs advised to Nisa and Costcutter stores, so those with a Co-op nearby have to use a more tailored pricing strategy that gives very different margins.”

A Costcutter spokesperson told RN: “We price competitively within the marketplace, and the simplified pricing structure we introduced last May means our retailers easily understand their margins all of which is then supported by a rebate of up to 6%. For our Co-op Own Brand range, we deliver a 30% blended margin across the range with some excellent star lines.”

A Nisa spokesperson responded to RN's findings: "Our partners know that when comparing margin on products, they need to view the margin opportunity across a whole basket of products and not on individual items.  In addition, Nisa’s independent partners benefit from more than just strong margins on a leading own label offer, our excellent availability, rewarding rebates and first rate retail advice and consumer insights are all part of Nisa membership.”

All you need to know behind Co-op's own label

RN analyses the wholesale prices and RRPs available to Nisa and Costcutter retailers. Find out how your margins compare

Read more
By RN  Avatar
By RN 17 Apr, 2019

Comments

2 comments
  • By Observer 18 Apr, 2019
    Reply

    Surely its straightforward. Rebates and surcharges applied to each cost of goods.

  • By NisaRetailer 17 Apr, 2019
    Reply

    Utter rubbish article. As a retailer who has access to both pricing schemes, this is completely ill-informed and wrong.

    Costcutter have much better pricing when you try and take in to account Nisa's incomprehensible pricing model. Its simple and clear. Something Nisa should learn from and amatuer poor journalists shouldnt try and stir.

Have you seen a boost in own-label products in the past year?

Make the most of betterRetailing.com

You know your shop better than anyone. Now you can decide exactly what news, advice and retailer case studies that you want to see to help you improve your business.

Subscribe to personalise your content Already have an account? Login