Co-op launches £160m expansion plan for 2018
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- 02 Jan 2021
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The Co-op is intensifying its battle to win more shoppers with a £160m investment on 100 new food stores during 2018, creating 1,600 jobs.
The business, which is owned by its members, will also give major makeovers to a further 150 outlets in a bid to counter fierce competition from the budget grocers.
Last year the Co-op dropped to sixth position among the UK’s leading supermarket chains after being overtaken by discounter Aldi.
The German newcomer, which opened its first UK store in 1990, increased its share of the grocery market to 6.2% from 5.6%, over the same 12-week period the previous year, trumping the 6% share controlled by the Co-op, according to market research firm Kantar Worldpanel.
The Co-op plans to open more than 20 new stores in London, up to 18 in Scotland, 10 in Wales and others in towns and cities including York, Plymouth and Bristol.
Smaller convenience stores, and online sales, are the two big growth areas for the supermarket chains.
Shopping habits have changed in recent years as customers replace their weekly shop with more frequent visits in an attempt to prevent waste and save money. This has meant larger, more expensive-to-run supermarkets, are being replaced by smaller convenience stores.
The Co-op has been busy shrinking its store estate. It sold 300 shops to retailer McColl’s in 2016, and has also refocused on its own smaller convenience stores rather than bigger outlets. The food retailers have also been busy consolidating in a bid to cut costs.
Tesco’s £3.7bn Booker takeover was waved through by the competition regulator towards the end of last year. The Co-op itself has reached an agreement to become the exclusive wholesale supplier to the 2,200 Costcutter Group stores, and its deal to buy Nisa Retail is conditional on Competition and Markets Authority approval.
Jo Whitfield, chief executive of Co-op Food, said: “The Co-op is positively responding to the changes occurring within this dynamic sector. Our food business is going from strength to strength in what is clearly a challenging retail market.
“We have the ambition for our stores to be at the heart of local life, bringing communities together and offering our members and customers great quality products when and where they need them.”
The expansion comes after a torrid time for the group after a crisis at the Co-op Bank, which was saved from collapse in 2013 by a hedge fund rescue that reduced the former owner’s stake to 20%. The Co-op group sold its final 1% stake in the bank last year for £5m. It has also sold off its farms, pharmacies and travel agencies.
Allan Leighton, the Cop-op chairman, said at the time of the group’s half year results in September that the remaining businesses were “now in pretty good shape, growing sales and delivering profits and delivering for customers”. Co-op also operates funeral care, legal services and insurance businesses.
The group made underlying pre-tax profits of £14m in the six months to 1 July, down 48% on the same period a year before. However, the decline was largely the result of a £29m payout in discounts to member shoppers and nearly £6m to local communities under its revived membership rewards scheme. Excluding the member payouts, underlying pretax profits rose 59% to £43m.
