After two years of turmoil and infighting at Nisa-Today's, chief executive Neil Turton has a new board. His hope must be that it gives him the backing he needs to tackle a very different set of challenges.

While still contending with the ongoing issues the controversial failed merger with Costcutter was designed to resolve, Turton is mulling over some major strategic decisions. He must consider the group's entire supply chain and find new members to drive volume in a consolidating marketplace.

The private equity clout of Icelandic bank Kaupthing, which held a 20% stake in Costcutter at the time of the proposed merger, would have given the new company the spending power the current set-up could only dream of. The collapse means Nisa doesn't have the funds to finance major acquisitions and risks falling behind the likes of Palmer & Harvey McLane and Booker.

"It's frustrating to see Booker and Palmer & Harvey buying other wholesalers," says Turton. "For the time being the acquisition game is a spectator sport for us."

Turton is candid about Nisa's health. As a buying group it is not measured in The Grocer's Big 30 wholesalers, but its members are. If it were, Turton says it would be eighth with sales of £1.15bn, but its profit margin of just 0.2% would be well below the industry average of 1.8%.

The difference between Nisa and a pure wholesaler such as Booker is that Nisa isn't there to make money for itself. As a mutual company it is owned by, and run for, its members. Profit goes against the ethos of Nisa, which was set up to pool retailers' resources to get better terms from suppliers. Indeed, Turton says with two months of 2007 to go, the group was ahead of its predicted profit and ploughed the surplus back into price to give retailers a better chance of competing over Christmas. In total, £4m will have been paid back to members since last April, twice the amount the previous financial year.

"The thing that has often been forgotten in the past few years is that the group is doing well," he says. "This will be our 13th consecutive year of growth. If you consider the retirement of our founder Dudley Ramsden, the problems with the merger and the politics that followed, people may believe the company is at the point of failure. We have to keep showing how well run the company is."

Turton is aware the company has reached a watershed. Nisa's distribution contract with Bibby Line, the company that, ironically enough, took a controlling stake in Costcutter last September, is one issue on the horizon. Bibby's deal to handle Nisa's distribution and supply runs out in 2011 and Turton says this gives him the chance to plan for what the company will look like from then on.

The company operates a national distribution model supplying all members throughout the UK directly from its distribution centre in Scunthorpe. For the most part, says Turton, this is an effective model, but it isn't flexible enough to handle smaller accounts. Last year Nisa was forced to introduce a minimum order levy for retailers purchasing less than set amounts of chilled, frozen and ambient lines to make the supply chain more efficient.

But as a result of consolidation in the independent sector over the past 10 years, smaller c-stores and newsagents are becoming more important to buying groups and wholesalers. This has impacted on Nisa as much as anyone. Bells, Jacksons, Anglian Convenience Stores and Smile are just a few of the companies Nisa used to supply before they were bought out.

The fact others are already eyeing smaller players is adding to Nisa's worries. Following a review, rival P&H has just revealed a flexible strategy allowing it to provide a better service to its c-store retailers and smaller CTNs. "We just can't service smaller accounts at the moment," says Turton. "This is definitely something we have to look at."

While these decisions are yet to be made, Turton hints at a change from the national model. Setting up some regional facilities will improve Nisa's ability to offer multi-temperature deliveries and help grow its presence in the south in particular.

Whatever strategy he decides on, the Scunthorpe warehouse is still likely to play a significant part, which should comfort the Nisa rebels who blocked the merger believing the facility, known as Project Vision, was to be sold off and leased back to help fund the deal.

However, the facility - which is still running well below capacity - is a concern. While it processes 1.2 million cases every week it could handle 1.8 million. The significance of this for Nisa retailers is brought to bear when you consider that a drop of just 50,000 cases translates to retailers having to pay 10p more for every case they order.

This need to drive volume has prompted a massive recruitment drive for new members. Last October, Turton told delegates at the group's conference in Sorrento that he was looking to recruit 300 new members, each with annual sales of more than £1m, during the next year.

He insists Nisa is on track to meet this target, but of course nothing with Nisa is that simple. When Chalfont Foodhalls sold up to Midcounties Co-op in October, Nisa had to recruit 20 new members to fill the void, he reveals. Nisa has actually added 120 members with combined sales of about £107m but it has also lost £65m of sales through members leaving.

Turton is concerned by a potential wave of acquisitions of independents by the big four after the Competition Commission appeared to give the green light for new deals. Sainsbury's has already bought two supermarkets owned by Nisa member Curley's in January. "It is becoming harder to find new members and grow this volume," he says.

Turton is keen to explore new opportunities and is looking to crack the Republic of Ireland. Nisa has been supplying an unnamed retailer there on a trial basis for five months, he reveals. The contract represents about 6,000 cases a week and could easily be the vanguard of a much bigger operation in the future.

"We are sending 180,000 cases a week to Northern Ireland, so it is not a problem to send a few more thousand cases across the border," he says. "We have recruited a business development manager for the north and south of Ireland and are working to evaluate opportunities."

He has also suggested he may be willing to offer the use of its supply chain to other wholesale or retail groups, but says any agreement would need to be worked through thoroughly before going ahead.

The business plan Turton will present to the board in May could be the most crucial in the group's history, but it is clear the company is moving in the right direction. As well as growing sales and returning profit to members, there are plenty more reasons to be cheerful. The group's New Era Trading Terms (NETT), aimed at getting members to buy a higher percentage of goods through Nisa's central distribution network, continue to grow sales. While group sales are up 5%, those members signed up to NETT have recorded a 9% like-for-like increase. The new terms were not universally welcomed when introduced two years ago, but Turton says the results are making it more attractive for those not yet signed up.

The group's net assets grew £2m in the past year while investments in technology and infrastructure have helped reduce stock holding by a day.

But it's clear there are some tough decisions ahead as Turton looks to transform Nisa into a "modern, sustainable company". It's easy to see why he is hoping for a quiet year on the political front to give him a chance to get things done.nsnapshot

Name: Neil Turton

Age: 41

Education: Joined Marks & Spencer's management training scheme at 18 after doing his A levels at Barnsley 6th form college. "My exam results were good and I probably should have taken the opportunity to go to university, but the lure of retail and the training was too good to miss."

Career to date: Spent six years at M&S before joining Nisa in 1991 as own brands controller because he wanted to move into buying and opportunities were closed at M&S. He has worked his way up, doing virtually every job at the company over 17 years.

What do you like doing in your spare time?: "Most of my spare time is spent acting as a taxi driver for my children, James and Emma. I am also a primary school governor. I work all the time really and am secretly having an intense relationship with my Blackberry."

How are you enjoying Barnsley's FA Cup run? "It's wonderful. I can't believe we were 1-0 down with five minutes to go at home to Blackpool in the third round. I'll be at Wembley for the semi-final with three generations of Turtons. My dad has been watching the Reds since 1938. The last time Barnsley won the cup they had a collection for the victims of the Titanic at half time, so perhaps it's time we had a bit of luck."

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