The Co-operative Group says increased investment in promotions and discounts has hit short-term profit.
The Group, which includes diverse business divisions including food retail, insurance, and funeral care, reported a 5.8% slide in pre tax profit for the year to 31 December.
Sales across the Group increased 1% during the year to £13.3bn.
Like for like sales at its food retail business fell 2.4% during the year, but showed a marked improvement in the second half, the company says.
Peter Marks, Group CEO, says the performance is “creditable” in the face of what he calls the “toughest economic conditions” in 40 years.
He adds that promotions are part of The Co-op’s “duty in times of financial and job insecurity to help our customers make their money go further”, despite the impact on short-term profit.
The company outlined a number on continued long-term investments including work to unify marketing across the business so that it can “maximise the potential of the Co-operative brand”.
Pilot schemes have been introduced to provide The Co-op’s banking and electricals services within food stores so that customers have access to a broader range of its services in-store.
The Co-op plans to introduce 350 new product lines this year and will introduce contactless payment options at its stores within the M25 area ahead of the Olympics as a trial for roll out to the rest of the business.
Marks adds: “It is in times like these that a business shows its true colours; we have revealed ours by continuing to invest for the future … Looking ahead, I do not expect to see any significant recovery in the UK economy during 2012, with little hope of an improvement in disposable income for our customers. If anything, it is quite possible that things will get worse before they get better. In spite of this, I remain optimistic.”
The Group was this week named as the first consumer brand to be awarded a legal services licence under the new Legal Services Act. It will now proceed with its plan to move into the family law market later this year.
It has also delayed its agreement with Lloyds Banking Group to acquire the 632 branches being sold off by the high street bank. LINK
Group marketing director Gill Barr spoke to Marketing Week recently about the Co-ops marketing strategy. Read the full Q&A here: