The CEO of UK-based retailer the Co-operative Group said today (30 March) that it has “no immediate plans” to offer an online grocery service.
Peter Marks said building an online grocery service has “not been a priority” as it has been “building our bricks and mortar estate and integrating Somerfield,” which it acquired in March 2009.
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He added that the retailer is “nearer to our customers than any other retailer”, with stores in every postal area in the UK, which means that “people can actually walk to us”, which has meant that online hasn’t been “that much of a priority”.
While he said that “we’re not saying that it won’t ever happen,” but added that “we have no immediate plans to go online”.
The comments came as the retailer’s food division booked a 33.3% increase in full-year operating income to reach GBP382.6m (US$614.8m), despite like-for-like sales falling by 2.5%.
Marks attributed the decrease in like-for-like sales and the loss of market share to the disruption caused from changing the Somerfield stores over to the Co-op banner and to the store disposals demanded by the Competition Commission before it approved the acquisition.
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By GlobalData“The Competition Commission said you have to get rid of 134 stores, and that’s the biggest impact in terms of market share,” he said, adding that the food market is a “very tough market at the moment” which has gotten worse towards the end of the year.
Speaking about the disruption the transition has caused in its stores, Marks said: “At the height of the integration, we were converting 25 stores a week, and when you convert a store you’ve got to close it for around a week. So we disappointed customers because the store they used was closed, and that impacted on sales. And that will continue into this year as we change our systems and our logistics.”
Describing the shift in consumer behaviour, he said that people “are looking for value” and he told just-food that the Co-op is now seeing promotional levels at around 50%.
“People really are looking to maximise the amount of money they can spend on groceries, and we’re helping them to do that by giving them lots of promotions and great deals.”
He said that consumers have a budget that they’re used to spending on food, and “despite inflation being at 4-5%, they’re saying that’s the amount I’m prepared to spend, and that’s what they’re doing”, so “there is no growth in food volumes at all”.
Marks said that it is working to get a “balance” in its funding of promotions with suppliers and that it is trying to give its customers and members the “best deal we can” but “without destroying the bottom line”.
“We are talking to suppliers and working with them to protect the customer as much as we can from the impact of inflation,” he said.
