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LONDON -- The Co-op and rival convenience store retailer Spar are to form a buying alliance to fight back against the growing might of the major supermarket groups, according to Guardian Unlimited.
They will initially focus on own-label produce including cooking oils, dry pasta, fruit juice, frozen foods and toilet paper and will jointly buy goods worth £200m, the report stated. The retailers explained that by pooling their own-label product buying they expected "valuable commercial benefits," although they did not put a figure on savings.
The Co-operative Retail Trading Group, which handles more than £5bn of food sales for the Co-op's 3,000 stores, will manage the alliance. Although at first small compared with Co-op's overall turnover and Spar's annual sales of £2.5bn, it will be extended to other products if it proves successful.
"With increasing consolidation in the sector it makes good commercial sense to build scale and improve our competitive position," said Guy McCracken, chief executive of Co-op's retail operations. "Spar are long-term players with integrity, and I'm convinced there are significant benefits for both of us through this initiative."
For Spar, which has more than 2,700 stores, managing director Jerry Marwood said there were "numerous synergies" with the Co-op and he believed the deal would be beneficial to both.
"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," said Marwood.