Co-op Food provides a glimmer of hope amid ‘disastrous’ 2013

The Co-op Food’s strategy of focusing on price, convenience and digital and a ‘successful’ marketing campaign for its revamped own brand range helped the supermarket post like-for-like sales growth in the second half, a slither of positive news amid what the Group admits was a “disastrous” 2013 that saw losses hit £2.5bn. 

The Co-op

Much of that loss came from its banking division, as well as legacy write-downs resulting from the 2008 acquisition of Somerfield.

Group sales fell by 4.5 per cent to £10.5bn for the 52 weeks ended 4 January as the business was hit by a number of scandals.

Co-op’s interim chief executive Richard Pennycook, standing in following Euan Sutherland’s resignation last month, admits the business now stands at a “crossroads”, with 2013 the culmination of a number of years of poor performance due to weak governance, mis-management and a lack of understanding of the “fundamental purpose” of the Co-op.

The group launched its Have Your Say poll earlier this year, with 180,000 people responding to the call to give their opinion on the future of the business.

Pennycook says these results are still being analysed and more will be revealed about the Co-op’s future strategy at its annual general meeting on 17 May. However, he does say that the Co-op plans to revitalise its purpose, improve commercial operations and rebuild belief in the Co-op, although he doesn’t reveal how.

“We still enjoy the goodwill of the nation and they are urging us to succeed. We have a huge job ahead of us – transforming this organisation will take at least four years and the path will not always be smooth. This country needs a strong Co-op and that is what the management team and I are determined to deliver,” he adds.

One area where the Co-op has begun that transformation is in its food business, announcing its “True North” strategy in March last year. That has seen the supermarket focus on value, streamlined promotions, developing its own label range and refreshing its stores, with an increased emphasis on new store formats.

While sales at stores open for more than a year were down 0.2 per cent for the year, in the second half sales were up 0.6 per cent. Like-for-like sales at its core convenience chain increased 1.6 per cent for the year and 5.3 per cent in the second half.

The Co-op cites “successful” multichannel marketing campaigns as part of the reason for a boost to own brand sales following the launch of the “Loved By Us” line of ready meals, pizzas and pies. It has also launched more relevant promotions, including “smart coupons” issued at the till, coupons for 10 per cent off transactions and a mobile app to highlight the best deals. 

The group announced plans to double the size of its convenience store estate and invest in price, own-label food and store refurbishment last month. 

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