Co-op has unveiled a new food strategy as half-year profits drop by almost 40% while the group battles to cut costs in the face of supply chain snags and higher costs.
The new-look food strategy will have a renewed focus on convenience and commitment to offer greater value, led by a major £37m investment to slash the price of over a hundred products.
The group’s core convenience grocery arm posted an underlying operating profit of £41m, some 39.7% down on last year’s figures. Food sales increased by 1% to £3.91bn during the 26-week period.
Grocery sales grew period-on-period throughout H1 2022, driven by an increase in shopping frequency. The group also said food availability improved during the second quarter as it returned to “pre-pandemic levels”.
The “first phase” of Co-op’s new food strategy will see prices being slashed across more than 120 Co-op own-brand products and locked in throughout the Christmas period, until at least 2023.
The revised strategy will also see Co-op aiming to more than treble its existing portfolio of franchise stores within three years while growing its ecommerce business by developing partnerships with Uber Eats, Deliveroo and Amazon. It will also take a renewed focus on loyalty and driving up basket spend.
Co-op chief executive Shirine Khoury-Haq said: “Against a highly challenging economic backdrop, we have made significant progress in strengthening our balance sheet while continuing to support the needs of our colleagues, members, customers and the communities in which we operate.
“Our clear focus on developing our businesses, while controlling costs, improving our cash-position and reducing debt is paying dividends.”
On the new food strategy, she stated: “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.
“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, added: “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.”
The Co-op culled 400 head-office jobs and cut back on its transformation project spend in a bid to cut costs earlier this year, while just last month it agreed a £600m deal to sell all of its 132 petrol forecourts to Asda.