The Co-op and Costcutter Supermarkets Group have signed a five-year deal under which the mutual will become the exclusive wholesale supplier to the symbol group.

The arrangement came in the wake of the collapse of Palmer & Harvey, which was the supplier to Costcutter.

Costcutter, which operates 2,200 eponymous, Mace, Simply Fresh, Supershop and Kwiksave convenience stores, said the deal will take full effect from spring next year.

Independent Costcutter retailers will also be given the opportunity to become Co-op franchisees and the Co-op said it is “looking at practical short-term ways it can support CSG’s [Costcutter Supermarkets Group] independent retailers as part of a wider industry response until the formal agreement begins.”

Costcutter chief executive Darcy Willson-Rymer said: “With P&H no longer able to supply our stores, we have activated our contingency plans that will see our retailers supported by the Co-op and other suppliers in the run-up to our deal with the Co-op.”

Co-op Food chief executive Jo Whitfield said: “We are operating in a dynamic market environment and this deal, coming shortly after our Nisa announcement, shows how we are positively responding to the changes occurring within the sector.

“Our food business is going from strength to strength in what is clearly a challenging retail market. Whilst our deal with Costcutter will start formally in spring 2018 we are looking at practical ways we can support independent retailers during this busy trading period, in light of the news concerning P&H.

“It is essential that we maintain a strong independent retail sector and the Co-op is committed to playing its part, along with others in the industry, in ensuring this occurs.”