The Co-op and Costcutter Supermarkets Group (CSG) confirmed an agreement that will see Co-op become exclusive wholesale supplier to CSG and the 2,200 Costcutter, Mace, Simply Fresh, Supershop and kwiksave convenience stores across its network from Spring 2018.

The agreement follows the collapse of wholesale distributor Palmer and Harvey (P&H).

“The deal will also provide the opportunity for CSG’s independent retailers to become Co-op franchisees,” said the Co-op.

“Given the unexpected P&H announcement, The Co-op has also confirmed that it is looking at practical short-term ways it can support independent retailers within CSG, as part of a wider industry response, until the formal agreement begins in Spring 2018.”

Darcy Willson-Rymer, CEO of Costcutter Supermarkets Group, said: “With P&H no longer able to supply our stores, we have activated our contingency plans that will see our retailers supported by the Co-op and other suppliers in the run up to our deal with the Co-op.”

Jo Whitfield, Chief Executive of Co-op Food, said: “We are operating in a dynamic market environment and this deal, coming shortly after our Nisa announcement, shows how we are positively responding to the changes occurring within the sector.

“Our Food business is going from strength to strength in what is clearly a challenging retail market.

“We recently reported our 14th consecutive quarter of like-for-like sales growth and this agreement will further strengthen our ability to offer customers great products at great prices.

“Whilst our deal with Costcutter will start formally in Spring 2018 we are looking at practical ways we can support independent retailers during this busy trading period, in light of the news concerning P&H.

“It is essential that we maintain a strong independent retail sector and the Co-op is committed to playing its part, along with others in the industry, in ensuring this occurs.”