The Competition and Markets Authority (CMA) has identified 107 breaches of the Groceries Market Investigation (Controlled Land) Order 2010 by Co-op, raising serious concerns about the retailer’s compliance with competition regulations.
The breaches, detailed in an open letter published on Wednesday by the CMA, relate to land agreements that restricted competition by preventing rival supermarkets from opening nearby. The Order was introduced to prevent large grocery retailers from using such agreements to limit consumer choice and stifle market competition.
Following a previous case involving Tesco in 2020, the CMA had instructed all large grocery retailers, including Co-op, to review their compliance with the Order.
The CMA’s investigation into Co-op confirmed that 107 breaches had occurred since the Order came into force, with three still remaining unresolved at the time of the letter’s publication.
Despite the significant number of breaches, the CMA acknowledged that “Co-op has proactively taken steps to address the root causes of these breaches, has cooperated with the CMA to date and is now working with the CMA to take further remedial action to address the breaches identified.”
Additionally, the retailer will now provide annual compliance reports to the CMA to ensure future adherence to the regulations.
However, the CMA expressed strong concerns over the scale of the breaches, stating that they demonstrate “significant failures in compliance for a business of Co-op’s size, resources and standing,” particularly given that the Order has been in force since 2010.
The CMA now expects Co-op to promptly rectify the remaining breaches.
Since it launched its probe in 2020, the regulator has forced Waitrose to re-write anti-competitive land deals, secured agreements from Morrisons and Marks and Spencer to stop using such land agreements, and warned Sainsbury's and Asda over the use of these agreements.
Supermarket chain Morrisons on Monday (24) announced that it is shutting down its 17 convenience stores and 52 cafes as a part of its second year of its programme of renewal.
A wide-ranging review identified a number of areas where the costs of operations are significantly out of line with usage, volumes or the value that customers place on them.
As a result, Morrisons is proposing a number of changes over the next few months, specifically the closure of 52 Cafés, all 18 Market Kitchens, 17 Convenience stores, 13 florists, 35 meat counters, 35 fish counters and four pharmacies.
Although the significant majority of colleagues affected by these changes are expected to be deployed in suitable roles elsewhere in Morrisons, there will be a total of around 365 colleagues at risk of redundancy.
Rami Baitiéh, Chief Executive of Morrisons, said, “The changes we are announcing today are a necessary part of our plans to renew and reinvigorate Morrisons and enable us to focus our investment into the areas that customers really value and that can play a full part in our growth.
“Although these changes are relatively small in the context of the overall scale of the Morrisons business, we do not take lightly the disruption and uncertainty they will cause to some of our colleagues.
"We will of course take particular care to look after all of them well through the coming changes.”
Reacting on the reports, Darren Matthews – Usdaw National Officer says, “We have been informed by Morrisons about their restructuring plans.
"Usdaw will be supporting our members through the one-to-one consultation process, our priority is to keep as many employed in the business as possible.
"We welcome Morrisons’ early indication that the majority of staff affected by the changes are expected to be deployed to roles elsewhere in the business.
“Usdaw is also maintaining regular talks with the company on these proposals where we’ll be able to raise concerns, challenge and ask serious questions about the company’s business case.
"Usdaw reps are providing our members with the support, advice and representation they need through this period of uncertainty.”
The old-fashioned big trolley shop is resurging back in popularity as Brits return back to office, resuming their pre-Covid lifestyle.
Speaking with Sunday Times, Simon Roberts, the chief executive of the supermarket Sainsbury's, stated, "People are back in the office much more, so people are short of time again … and that’s one of the reasons why we’re seeing this resurgence [in] the big weekly trolley shop."
“If you can go to one store and be certain you can get Monday night’s tea for the family for under £5 and something [nicer] for the weekend … more and more customers are making a decision to do that.”
Under Roberts, who is closing in on five years in the top job, Sainsbury’s has refocused on food and, he argues, is now reaping the benefits. Since he took over, Sainsbury’s has increased its market share from 14.9 to 15.7 per cent.
“Five years ago, we couldn’t fill up our supermarkets, our costs were high, volumes were going backwards and we were losing market share.
"Now we are gaining share and putting more volume through our supermarkets because customers are doing more of their big trolley shop here,” he said.
Roberts also stressed on the importance of value deals, saying that customers make decisions every day based on the price on the shelf and that’s never changed.
"If you’re not super sharp on price customers will go somewhere else”, he said.
In the coming years, Sainsbury's plans to refurbish 180 supermarkets, which will see less floor space for clothing and non-food items, an
Sainsbury's plans to open 40 stores in the coming year — 20 supermarkets and 20 convenience stores.
Roberts also criticised government for burdening the businesses with increased costs at multiple fronts, including hikes to employers’ national insurance announced in the budget.
“It is a major challenge. It was unexpected and … there was very little time to plan for it. Everyone recognises that the government had difficult choices to make, but my very strong position has consistently been that we should have phased this over a period of time,” he said.
“What’s significant [about these costs] is that it’s coming in supply and retail at the same time. If you add up the national insurance impact, the wage impact, the regulatory impact, then it’s not going to be a very low level of inflation [for shoppers],” Roberts warned.
Giving an insight on how Sainsbury's is cutting its costs, Roberts revealed how the supermarket has begun using artificial intelligence to automate demand forecasting, a task that was performed by a team of people a few years ago.
“It might be 5C in the north today but 11C here,” Roberts explained. “That makes a difference to what kind of food people are going to want to buy.
“We can now more and more accurately predict that … availability has got better, waste has gone down and customers are getting more of what they want.”
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Asda Express stores offset sales dip at the supermarket
Asda on Friday reported a decline in its annual sales for the 2024 financial year, but the retailer has seen profits rising on margin gains.
The supermarket chain said its total revenue for the year to 31 December 2024 declined by 0.8 per cent to £21.7 billion, while like-for-like sales (excluding fuel) were lower by 3.4 per cent.
Asda grew adjusted EBITDA after rent by 5.8 per cent to £1.14bn during the year, driven by improved gross margins, particularly in non-food reflecting the strength and scale of its George business, as well as a full year of profit from the 356 Asda Express convenience stores and forecourt sites acquired from EG Group.
“Everyone is focused on making Asda the number one choice again for busy hard-working families who demand value. This is what’s driving all of our actions across pricing, ranging, merchandising and every part of the business,” Allan Leighton, Asda’s executive chairman, said.
Since the year end, Asda stepped up its investment in value by bringing back its Rollback to Asda Price proposition. Launched at the end of January, with an average reduction of 25 per cent across 4,000 popular products, Rollback has now been expanded to roughly a quarter of Asda’s entire range.
Asda said it will add thousands more products to Rollback at regular intervals during the year as part of its strategic shift to move its entire product range to a new low ‘Asda Price’ by the end of 2026.
Asda delivered £0.6bn in free cashflow during FY24, which helped reduce net leverage to 2.9x (FY23: 3.0x). The retailer said this enables it to invest in new value propositions like Rollback and Asda Price.
During the year Asda refinanced the vast majority of its 2025 and 2026 maturities of £3.2bn, including paying down £0.3bn from cash. This pushed out all the remaining maturities into the next decade.
“Looking ahead we still have plenty of work to get our business firing on all cylinders again,” Leighton said.
“While regaining customers’ trust will take time, we will undertake a substantive and well backed programme of investment in price, availability and the shopping experience to deliver this. This will materially reduce our profitability this year, which we expect to reverse as our market share recovers and improves over time.”
Supermarket Asda has announced the joining of Jo Whitfield in its board of directors as a Non-executive Director to support its turnaround plans.
Whitfield previously spent eight years at Asda from 2008 onwards, holding a number of senior positions in operations, e-commerce, commercial, general merchandise and money & mobile.
She then joined the Co-op, where she was Chief Executive of Food for five years from 2017. Until last year, she was the CEO at Matalan, leading a business turnaround strategy.
Asda noted that given her breadth of experience in the convenience market from her time at the Co-op, she will have a particular focus on supporting the growth of the group’s Express c-store chain.
In recent weeks, Asda’s new Chairman, Allan Leighton, has made several changes to the struggling retailer’s management team to support his strategy to return the chain to its traditional focus on value.
He is also reported to have restarted the group’s search for a Chief Executive, having operated without a permanent leader since the abrupt departure of Roger Burnley in August 2021.
At the end of January, Asda announced that it was cutting prices on over 4,000 products as part of a move to re-establish its value credentials and win back shoppers after a slump in its market share over the past year.
Commenting on his latest appointment, Leighton said, “Jo is one of the UK’s most experienced retail leaders and has a deep knowledge of the food retail, convenience and fashion markets.
"She also understands Asda’s DNA and the role this business plays in delivering value for hard-working families. We are delighted to welcome her back to Asda.”
Whitfield, who will join Asda shortly, added, “Asda is one of the biggest names in retail and plays an important role in the daily lives of millions of customers and communities throughout the UK.
"It is a business that I have a strong affinity with and I look forward to working with Allan and the rest of the leadership team to help Asda get back on track.”
Morrisons has announced its trading update for the fourth quarter (Q4) and full year 2023/24, showcasing a robust performance marked by significant operational and financial improvements.
The supermarket chain reported its strongest quarterly like-for-like (LFL) sales growth in nearly four years, alongside a notable increase in underlying EBITDA and total revenue.
For the 52 weeks ending 27 October 2024, Morrisons achieved a 4.1 per cent increase in Group LFL sales, with Q4 LFL sales rising by 4.9 per cent - the highest quarterly growth since early 2021. Underlying EBITDA surged by 11.2 per cent to £835 million, while total revenue climbed 3.8 per cent to £15.3 billion for the full year. Q4 revenue also saw a strong uptick, increasing by 4.8 per cent to £3.8 billion.
“This has been a year of urgent reinvigoration and positive progress for Morrisons. Customer transactions increased, market share grew from Q2, and we saw positive switching from our competitors,” Rami Baitiéh, chief executive, said, adding that improvements in availability, pricing, promotions, and the loyalty scheme have driven the financial performance.
The Morrisons More Card has been a standout success, with linked sales growing to 68 per cent at the year-end and reaching 76 per cent by the time of the update. “The More Card is firmly established as a customer favourite after a stunning year,” Baitiéh noted, with 3.5 million Morrisons Fivers redeemed during the two-week Christmas period.
Morrisons expanded its convenience store estate to over 1,600 stores and acquired 36 convenience stores in the Channel Islands in November 2024.