Co-op to increase focus on loyalty scheme following £130m revenue boost in food
The uplift follows the launch of the group’s new food strategy in September, which included a £37m investment in price.
Co-op has set a new target to attract one million active new members to its loyalty proposition over the next five years, after reporting growth in the Co-op Membership scheme for the first time since 2017.
The programme now has 4.41 million active members, according to its latest earnings report. An “improved” loyalty proposition is due to roll out in the first half of this year, as CEO Shirine Khoury-Haq promises “ambitious plans” to put membership at the “heart” of the business.
Revenue in Co-op’s grocery business grew by £134m in 2022 to £7.81bn. The number of transactions a week increased by 5% to 16.4 million.
The uplift follows the launch of the group’s new food strategy in September, which renewed its food and grocery division’s focus on convenience, ecommerce and value after reporting a £27m dip in underlying operating profits to £41m.
The strategy included a £37m investment in price, which took place across the fourth quarter. The prices of more than 120 own-brand products, including pizzas, pasta, fruit and vegetables, were slashed by as much as 36%, with prices “locked in” into 2023.
Meanwhile, Co-op has continued to expand its online food business through its website and delivery partners, with revenues up 24% to £222m. Online delivery services, including Uber Eats, Deliveroo and Amazon, are available in more than 1,800 individual food stores and could reach 81% of the population by the end of last year.Co-op revives chief customer officer role with hire of N Brown Group’s Kenyatte Nelson
Co-op’s funeral care business also experienced growth, with overall revenue up by £7m to £271m. Likewise, its legal business grew revenue by 19% to £46.3m. However, its insurance business struggled, with overall income down by £10m to £24m.
Across the group, revenue grew by £0.3bn to £11.5bn. After achieving £101m in cost savings and selling its petrol forecourt business, it achieved a group profit before tax of £247m, up from £57m in 2021. However, without the £319m in profit contributed by the sale of the forecourt business, the Co-Op Group would have made a loss.
The business expects inflationary pressures to continue to take their toll next year and warns of dampened profitability in the short term.
“It’s clear that our early action to significantly reduce our debt, improve our cash position, and tighten cost controls, has made a significant difference to the financial strength of our Co-op and has enabled us to look forward with confidence, despite continuing market uncertainty,” says Khoury-Haq.
“We now have an even better foundation upon which to grow our businesses. We’re also looking to grow our membership, putting membership at the heart of our Co-op, with ambitious plans to both attract new members, and deepen relationships with our existing members.”
In January, the business revived its chief membership and customer officer position with the hire of experienced retail marketer Kenyatte Nelson, more than 18 months after the departure of predecessor Matt Atkinson.
Co-op’s former customer and community director Ali Jones had led on marketing since Atkinson’s exit, but she herself left the business in October, three months after it announced plans to cut its head office marketing and customer roles by a fifth.