Competition in the independent retail sector has significantly increased in recent years with a series of what are known as "symbol group" chains establishing themselves in the Republic. These are franchise operations targeted at small independent retailers who pay for the use of the group's brand name and buy from one central wholesaler.

Costcutter is joining already established symbol groups like Supervalu and Centra, which are owned by Musgraves, the wholesale group and Spar, which is owned by BWG Foods.

The alliance between Vantage and Costcutters will pose direct competition to these two companies.

The Belfast-based Hendersons group is also planning to open up several outlets in the Republic under its brand-name, Vivo.

BWG recently introduced a chain of outlets under the brand name, Nearbuy, and another large wholesaler, the National Wholesale Grocers' Alliance, is planning a separate set of stores.

The increased competition is partly explained by rumours about the possible sale of the ADM Londis chain, which franchises about 100 stores.