ADM Londis, which has more than 200 Londis-branded shops in Ireland, has joined the Stonehouse purchasing consortium that also includes the Gala and Costcutter convenience store chains.
ADM Londis said the deal, which increases by a third the buying power of retailers with a combined turnover of €1.5 billion, will help to “protect our retailers’ margins and also lead to lower prices for consumers”.
Stonehouse's retailer members effectively band together to buy brands in bulk, so that they can better compete with bigger retailers such as Spar or Centra.
From January 1st, the “majority” of products supplied by ADM Londis to its network of stores will be bought through the consortium, Londis said.
It said its stores will continue to buy chilled goods outside of the consortium, after it recently spent €500,000 on a cloud-based ordering system for these products.
“We are looking at other possible areas of co-operation with Stonehouse,” said Stephen O’Riordan, the chief executive of ADM Londis.
As well as its network of Londis stores, which are all independently owned and operated, ADM Londis also acts as a wholesaler to about 40 other independent retailers, such as the well-known Morton’s supermarket in Ranelagh, Dublin.
Mr O’Riordan said these independent retailers will also source many of their products through the Stonehouse consortium, following the tie-up.
He also confirmed that there would be no job losses at ADM’s wholesaling operation as a result of the deal.
As well as operating as a buying consortium, Stonehouse also owns the private label brands including Homestead, which comprises more than 100 products from biscuits to pasta.
They are advertised using the well known marketing jingle: “Homestead, brings value home.”
Mr O’Riordan said it was “likely” that ADM’s network of stores would stock Stonehouse’s Stonehouse’s in-house brands.
ADM Londis recently reported 2012 sales for its wholesaling arm of €204 million, down 7 per cent. Its network of retailers have a combined turnover of about €500 million.
The group is owned by the majority of its retailers, having evolved from a co-operative format in recent years to become an unlisted PLC.
The group told its 140 or so shareholders earlier this year that it would not pay a dividend in 2013, but would instead launch a share buyback scheme so that retired members of its group could cash in their stakes.