Costcutter retailers have demanded better service from their symbol group if it is to go ahead with a consolidation deal, as it proposed last week.

In a letter to members, Sir Michael Bibby, managing director of Costcutter owner Bibby Line, outlined the prospect of a deal to be announced shortly.

“When Tesco announced its acquisition of Booker back in January, it took the entire market by surprise. Since then, businesses across the grocery and convenience sectors have been open to having discussions that would not have seemed imaginable just one year ago,” he said.

“Bibby Line Group and Costcutter Supermarkets Group have been working together to ensure we are at the forefront of these conversations, exploring all available opportunities.”

He said any collaboration must resolve supply chain issues, continue to build volume through great prices and promotions, and strengthen the brand offering. However, it is a promise retailers are sceptical about.

Keith Tomes, of Costcutter & The Food Shop in Dorset, said: “Anything that does happen has got to be better than what we have now. At the moment, Palmer and Harvey (P&H) is only fulfilling about 80% of our orders.

“Something has to change or we will be on the move.”

Bolton-based retailer Baz Jethwa has switched two of his stores from Costcutter to Spar in recent weeks as availability issues started to affect turnover.

“Since the supply deal with Nisa ended a few years ago, things have actually got worse. Anything would be better, but equally they could just go from one problem to another.”

Meanwhile, Jayesh Parekh, of a Costcutter in Fallowfield, Manchester, is considering leaving the group when his contract runs out.

“P&H is not working well for us at the moment. It’s possible a merger may make things better if it improves the supply chain.”

A Costcutter spokeswoman said: “We are active in the market to explore all available opportunities. We will update our retailers when there is news to share.”