Co-op has unveiled a new food strategy despite reporting a sharp drop in interim profits as it continued to face supply chain disruption and higher costs due to wages and energy.
The new-look food strategy will have a renewed focus on convenience and commitment to offer greater value, led by a major £37 million investment to slash the price of over a hundred products. 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 group’s overall EBITDA slid from £248 million to £218m during the half year to July 2, driven down by “significant inflationary pressures”. The business recorded an operating loss of £20m though its total revenue remained almost unchanged at £5.64bn.
Co-op reportedly noted that it had faced global availability challenges exacerbated by the war in Ukraine and the cost-of-living crisis. The business saw a one percent increase in revenue to £3.91bn, mainly driven by higher fuel sales as prices spiked.
Absolute sales of food across all its store formats were down by 0.7 percent on a like-for-like basis, although convenience sales fared slightly better with a 0.4 percent rise. The group noted that food price inflation also led to reduced volumes and transactions, and shoppers trading down to value ranges.
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.”
Speaking about the new strategy, Khoury-Haq stated that convenience is one of the fastest-growing channels within the grocery market and “our refreshed strategy” aims to capitalise on the experience 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,” reports quoted Khoury-Haq as saying.