Total sales across the Co-op’s Food and Wholesale business fell during 2021 after the society felt the impact of “significant” supply chain disruption and struggled against tough comparatives with the previous year when demand for groceries surged during the Covid lockdowns.
Over the 52 week period ended 1 January 2022, the Food and Wholesale divisions generated revenues of £9.1bn, down from £9.3bn the previous year. However, the group pointed to strong underlying demand, with two-year like-for-like growth of 3.3% and more than 9% in Wholesale.
Despite the supply chain disruption to its business in the second half of 2021, the Co-op continued to invest in new buying and supply systems. This supported its drive to expand its e-commerce activities with revenues in its online business more than doubling to £200m through its website and partnerships with Amazon, Starship and Deliveroo. E-commerce operations are now available across 1,600 Co-op stores, making them accessible to over 55% of the population.
The society opened 50 stores during the year and refitted a further 87. Its expansion plans have also included introducing vending machines and micro-supermarkets in a range of locations including offices and hospitals.
Meanwhile, the Co-op rolled out its new Honest Value range and expanded its GRO vegan offering. The society noted that it had absorbed supplier inflation on key lines in protein and dairy to protect prices for customers.
In Wholesale, the business recruited 546 new stores to be serviced by its Nisa unit and launched the refreshed Nisa Reward Scheme during the period.
For the Co-op group as a whole, total revenue slipped from £11.5bn to £11.2bn due to the weaker performance in the Food business, as well as in its Funeralcare division. Underlying operating profit fell from £235m to £100m, reflecting increased investment in the businesses and the supply chain impacts.
“The past year has been a challenging one for our Co-op, but we continued as planned with our investment strategy to strengthen our Co-op’s future state,” said chair Allan Leighton.
“The economic headwinds look stark and will be tricky to navigate but through our continued planned strategic investments our Co-op is well placed to ride out the storm and prosper beyond.”
Shirine Khoury-Haq, who is due to take over the CEO role from Steve Murrells in May, added: “The difficult operating environment disproportionately impacted our Food business, given its focus on the community convenience market, with an operating model that is more reliant on flexibility in the supply chain.
“The Co-op remains uniquely positioned. We continue to be driven by our vision of co-operating for a fairer world and have a platform of businesses in the right markets to drive change, and get closer to our members, customers and communities. The significant investment we have made across our business in recent years now provides the basis for us to move forwards in a more efficient manner.”
She concluded: “As we look ahead, our focus must be on accelerating growth in our Food business through our four routes to market, whilst expanding our Life Services businesses, from Funeralcare to Insurance and Legal Services.
“We must also ensure our businesses are there for our members, customers, communities and suppliers who are experiencing the effects of the cost-of-living crisis, as we continue to focus on our Honest Value range in Food and affordable services across Life Services.”
NAM Implications:
- The key issue for suppliers has to be the extent to which their Co-op business compares with these stats…
- …in order to ensure they achieve their fair share of sales and investment.
- (whilst asking themselves to what extent is the Co-op capable of optimising the turmoil that lies ahead?)
