INSIGHT: Co-op upbeat amid c-store, ethical rivalry
The Co-operative Group, the UK retailer, today (13 October) insisted it can withstand growing competition on two of its key battlegrounds - the convenience channel and ethical consumption.
The company, which yesterday booked buoyant half-year sales and profits, has a strong position in the UK's fast-growing convenience sector, a presence that has been expanded through the GBP1.6bn (US$2.53bn) takeover of fellow UK retailer Somerfield.
The Co-op has also looked to set itself apart as the UK's "ethical" grocer through a series of initiatives on Fairtrade and animal welfare.
However, on both trends, the Co-op is facing growing competition from food retailers and suppliers, most notably Sainsbury's - which has repeatedly outlined its ambitions to expand in the convenience sector - and Cadbury, with the UK confectioner's recent moves on Fairtrade.
Nevertheless, Tim Hurrell, MD of food retail at the Co-op, told just-food that his company can continue to thrive in an ever-more competitive sector.
On the convenience channel, Hurrell said: "We're already in a very strong position in terms of locations and we have a great deal of experience in running convenience stores. And we will be expanding our convenience operations."
The Co-op executive acknowledged that Sainsbury's ability to marry its twin strategies of value and values amid the downturn. "Sainsbury's has done extremely well in balancing the premium nature of their brand with their value proposition but then again so have we," Hurrell said.
"We have strong ethical credentials," he continued. "We are owned by members but we also want to be in the Premier League of retailers, so getting the fundamentals right in terms of product, range, price have all been things that we've worked on in the last two or three years and that's now showing in the results."
Hurrell added that the likes of Cadbury had "followed the Co-op's lead" on issues like Fairtrade. "It's a good thing and also when we've made changes like all of our chocolate going to Fairtrade, the product categories have responded very well in terms of sales and profit. Such a move by Cadbury is absolutely a complement to our business."
Following last week's warning on falling food prices from Sainsbury's chief executive Justin King, Hurrell said the Co-op's like-for-like sales growth slowed in the second quarter of its fiscal year.
However, Hurrell said the Co-op's food sales were "constantly ahead" of the IGD. "While like-for-likes are slipping, we're still quite pleased with the way the business is performing," Hurrell said.
The Co-op yesterday reported that half-year pre-tax profits climbed 17% but did not give a specific profit figure for its food business. Hurrell, however, refused to give further detail on the Co-op's food profits.
"The food profit performance has been very, very good. And if the overall group is 17% and food is very big part of that, then clearly food had a very good first half," Hurrell said.
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