Self-styled ethical retailers fire allegations over the takeover of former Somerfield stores
A vicious case of "store wars" has broken out between two of the country's self-styled ethical retailers with legal writs and allegations the Co-op is trying to drive its smaller rival, Haldanes, out of business.
The bust-up follows the purchase by Haldanes from the Co-op last year of 26 former Somerfield stores that had been acquired by the Co-op 12 months earlier. The Co-op was forced to sell the stores by the Office of Fair Trading.
Haldanes claims the shops are not up to the standard they expected and says that other retailers who bought similar ones from the Co-op are also out of pocket. The under-performing shops, said Haldanes chief executive Arthur Harris, "have severely damaged the [Haldanes] business ... causing it significant financial loss. If we had been made fully aware of the true trading picture from the outset, we would not have done the deal". He added: "The Co-op has a real interest in driving Haldanes out of business."
Haldanes, which boasts of sourcing much of its food locally and building close links with the local community, has refused to pay rents owed and is facing legal action by the Co-op while issuing its own counterclaim. Harris says the Co-op has repeatedly refused to meet to discuss the issues and claims he has had to pump £2m into the business to ensure staff wages can be paid: "Six hundred jobs are at stake here, all ex-Co-op employees, and the Co-op appears to have no regard for these people whatsoever.
"It is true that Haldanes owes the Co-op rent," said Harris. "But the rent owed is just a percentage of the claim we are making. If the Co-op was so concerned about its rent why not have a meeting with us to understand our position and why we are making the claims?
"It has also been well documented that a number of well known and well-respected retailers who purchased other stores from the (Somerfield) divestment programme have also suffered similar problems and in quite a number of cases have had to close those stores down. We are in contact with and have the support of a number of those retailers," he said, though he did not name these.
The Co-op, which owns 3,000 stores compared with Haldanes's 44, denies the allegations made by its rival but confirms it is trying to seek repossession of some of the outlets due to non-payment of rent.
The store owner, a part of the wider Co-operative Group which also owns pharmacies and funeral parlours, said it had not received legal papers from Haldanes yet but would contest them if it did.
In a formal statement it said: "The Co-op has acted in good faith ... and categorically refutes all allegations of impropriety. The original transaction was subject to full due diligence on the part of Haldanes ... The Co-operative Group has complied with all our competition undertakings and, at the same time, has been pleased to support the Haldanes business financially through its start-up phase."