Co-op buys Nisa for £143m

Rapid consolidation in the UK convenience store sector has continued apace with news that NISA shopkeepers have voted to agree a takeover from the Co-op.

The takeover deal is fundamentally about enhancing the buying power of NISA shops (they operate a franchise model). This article in the Guardian provides some handy background. Here is a telling quote:

"Nisa said the deal gave the combined group seven times the buying power of Nisa. Shopkeepers will be able to choose how much they buy from the Co-op."

Customer preferences are changing quickly. Fewer people tackle the epic weekly shop at an out-of-town hypermarket preferring instead more frequent trips to small-sized outlets offering the core essentials. The Sainsbury Local, Tesco Express and Little Waitrose roll-outs are examples of how the major grocery chains are responding to this.

NISA has over 3,000 independently-run stores - the NISA wholesaler business is jointly owned although stores do not necessarily have to buy from it.

In a related news story, Tesco's £3.7bn takeover of wholesale food seller Booker has been provisionally cleared after the Competition and Markets Authority says it does not raise competition concerns.

Graham Watson writes:

The Nisa - Co-operative Group merger isn't a mega merger by any means, indeed the opposite is true, in that it reveals how some of the peripheral firms within the sector are having to compete in the face of large incumbents and the rise of online retailing.