// Co-op unveils new food strategy with a major multi-million pound investment as it slashes the prices on 120 Co-op own-brand products
// The group’s profit fell 84% to £7m as it continued to face supply chain snags and higher costs amid rising inflation
Co-op has unveiled a new-look food strategy with a renewed focus on convenience and commitment to offer greater value, led by a major £37m investment to slash the prices of over a hundred products.
Reporting its interim results, group revenues of £5.6bn were flat compared with the same period a year ago, despite delivering a “robust sales performance.”
The group, which owns funeral homes and insurance as well as supermarkets, said pre-tax profit slumped 84% to £7m in the six months to July 2. Underlying operating profit tumbled 64.7% to £18m, down from £33m.
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While unveiling its new food strategy it has also “set out an ambition to make it the largest convenience retailer in the UK”, promising the biggest shake-up in its near 180-year history with growth plans built on a large-scale network of franchise stores.
The community retailer is looking to more than treble its existing franchise stores within three years and grow its online business by building on its tie-ups with Uber Eats, Deliveroo and Amazon to support its own direct to consumer website.
In a response to the cost-of-living crisis, the group is lowering prices and said that more than 120 Co-op own-brand products have been reduced in price by as much as 36%, with savings averaging over 13%.
Everyday favourites, from pizza, pasta and burgers to fruit and vegetables, have been lowered in price and ‘locked in’ into 2023 as the business looks to help its members, customers and communities.
The revised strategy focuses on channels and partnerships to boost scale with a capital-light expansion programme, value and range through its new price investment strategy and loyalty, where improved Co-op member offers will help drive loyalty and grow shopping baskets and trips.
“Convenience is one of the fastest growing channels within the grocery market and our refreshed strategy aims to capitalise on the experience we’ve gained in the market over the last decade,” said chief executive Shirine Khoury-Haq.
“As we face into a cost-of-living crisis we are determined to make life fairer for our members, customers and communities in these extraordinary times and lowering prices for shoppers is the first-step in our strategy.”
Co-op Food MD Matt Hood, said: “This inflation beating multi-million pound investment will reduce prices on everyday items at a time when consumers face even higher household bills and kick starts our new-look food strategy to extend our scale and reach through capital light opportunities, focusing on launching new stores with great franchise partners.”
Shirine Khoury-Haq said: “Against a highly challenging economic backdrop, we have made significant progress in strengthening our balance sheet, whilst continuing to support the needs of our colleagues, members, customers and the communities in which we operate. Our clear focus on developing our businesses, whilst controlling costs, improving our cash-position and reducing debt is paying dividends.”
Co-op chair Allan Leighton said: “The first six months of the year have been a time of challenge for us – as they have been for all businesses. I was delighted that we were able to confirm Shirine Khoury-Haq as our permanent CEO during this period. Her energy to move decisively on improving our financial position, focusing on core business development, whilst still delivering on our vision commitments, is helping us move forwards with pace and purpose.
“We know that the current testing conditions will not ease in the second half, and we will continue to face into the challenges, by remaining focused and by building upon our incredible co-operative heritage. I would like to thank all our colleagues for their hard work and dedication in these extraordinary times.”
Looking ahead, Co-op said it “expects to face continued challenges during the year, given the persistent inflationary pressures, which is likely to prolong economic uncertainty amongst consumers and businesses alike.”
However, the business said that due to the management actions taken in the first half of the year, it was “better equipped to weather the effects of these immediate pressures”, saying it was equally confident in its underlying business strength and longer-term prospects.
“The Board remains confident in the strategy, with a focus on driving growth through our established routes to market, maintaining financial discipline and continuing to deliver against our vision of co-operating for a fairer world,” it said in the update.
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