Co-op boss says supply issues and product shortages pose a “huge challenge”

Co-op’s boss has warned that supply chain disruption continues to be a “huge challenge”, resulting in core product shortages including broccoli, lettuce and sunflower oil leaving gaps on the retailer’s shelves.

Interim chief executive officer Shirine Khoury-Haq – who will permanently replace Steve Murrells in the top job next month – said that that “price rises are a given”, with higher supply costs adding to an array of inflationary pressures.

The retailer’s full year results, released last week, revealed that it had invested £18 million in price reductions over the past year and will hold the price of around 1,000 popular products.

Co-op chair Allan Leighton added that inflation was currently “in the ballpark of 4% to 5%” as the retailer committed to keeping key food and grocery items affordable amid the cost-of-living crisis.

Ms Khoury-Haq said the business has to be prepared for “further volatility” and be well-positioned to react to further supply issues.

“These issues are not going to go away any time and it is very multi-faceted so we need to work hard to protect our customers and suppliers,” she said.

Read more: Co-op’s food sales fall back on last year

“The supply side of things is still a huge challenge globally.

“For example, flooding in Spain has impacted green vegetables like broccoli and lettuce so we have to switch those out in some products.

“Similarly, the situation in Ukraine has impacted sunflower oil and that is being replaced by rapeseed oil, so we recognise that things are still changing all the time.”

The news comes just days after the business reported a drop in pre-tax profits (£57 million last year, down from £70 million in 2020), after the supply crisis in the second half of 2021 led to increased costs.

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