Cut above the rest

Costcutter and Nisa-Today's are hoping to rival big supermarket chains as well as cut costs.

The plan, which will lead to a new company being formed, must be approved by a shareholder vote in July.

Smaller retailers have suffered in recent years amid increasing competition from supermarket giants.

The UK's big four - Tesco, Sainsbury's, Asda and Morrisons - now control almost 75 per cent of the UK grocery market, a development that has prompted the Office of Fair Trading to investigate their dominance of the sector.

Founded in 1986, Costcutter has a franchise operation of 1,200 UK stores, 65 stores in the Republic of Ireland and a further 52 in Poland.

Nisa-Today's, which is based in Scunthorpe, operates like a co-operative, using the collective buying power of the group of members to negotiate deals with suppliers.