As the Cooperative Group makes a major push to become the UK’s leading convenience retailer, divisional managing director Matthew Speight explains exclusively to Produce Business UK why fresh produce is centre stage in the company’s future plans
After several years of less positive media coverage, the Cooperative Group has been in the news during recent weeks for all the right reasons. The group’s grocery retail arm returned to growth last month for the first time since July 2014, achieving a 1% sales increase and recording an extra 133,000 shoppers visits in the 12 weeks ended July 19, 2015, according to figures from Kantar Worldpanel.
The positive figures come at a time when the Co-op is investing in transforming its existing stores. More than 250 stores will receive a major makeover this year and the group is actively pursuing the addition of 100 new c-stores by the end of 2015.
Recent months have also seen the Co-op invest £125 million towards pruning the price of over 100 lines, while launching a revolving ‘Fresh three’ offer, which puts three popular fresh fruit and vegetables items on promotion every week.
Matthew Speight, divisional managing director at Cooperative Food, is responsible for around a third of the Co-op’s 2,800 food stores, covering an area from Wales across to Sheffield, Norfolk and as far south as Stevenage.
Speight first trialled the fresh produce price reduction strategy at stores in Wales and the pilot proved to be so successful that it has since been rolled out UK-wide.
Well-received by shoppers, the promotion drove double-digit growth in fresh produce, a trebling in growth of the selected ‘Fresh three’ product lines and, says Speight, it provided a halo effect across the store portfolio.
“We did a trial in Wales in February after receiving feedback from our customers that they felt we weren’t keeping up with their demands and we weren’t giving them a fair price,” he explains.
“We wanted to bring a brilliant offer to our stores, so we brought together the managers of our 143 stores across Wales and got them to focus on fruits and vegetables.”
Running through to May, Speight says the promotion rapidly achieved a positive uplift in volume sales, driven by the ‘Fresh three’ offer, where packs of kiwifruit, stonefruit, citrus and more were sold for as low as 49p.
“We change the ‘Fresh three’ all the time, with the seasons, but also to make sure we have a cracking market-leading offer,” Speight adds. “We recognised we had to help our customers reappraise our offer and we have to make sure we stay focused on that.”
At the same time as re-launching its fresh offer, the Co-op is looking to recruit more than 1,000 new staff in order to, it says, ensure its stores are at their best even at their peak times and to take advantage of changing buying habits, with shoppers buying smaller amounts, more frequently.
Such initiatives, says Speight, are helping the company move towards its ultimate ambition – to become the UK’s number one convenience retailer by 2017.
“We’ve invested in our refit – fridges, fixtures and fittings and more in the stores – and at the same time our ambition is to grow footfall wherever there is a need for a convenience store,” he says. “It’s a really exciting place to be at the moment.”
This growth is equally being driven, according to Speight, by changing shopping habits and consumer lifestyles. “People don’t want to do a big weekly shop anymore,” he points out. “But if a local store has a good selection and fair prices, you will want to shop there.
“We’re not going to be the cheapest, but we want to be on the podium – we want to be a very high quality, fresh convenience store.”
Fruits and vegetables are king
Fresh produce is seen by the Co-op as key to its expansion drive and Speight believes success in the category could act as a catalyst for the continuing success of the rest of the business. “The category that is always the first one to get right is fresh produce because it’s unbranded and goes off first,” he explains.
In general, Speight says the revamped convenience stores will feature a greater emphasis on fresh, with a more extensive range and a substantial investment in prepared fruits and vegetables.
The retailer, he says, has also committed to maintaining its ‘Fresh three’ offer indefinitely.
“Is ‘Fresh three’ the right move?,” Speight asks. “We think it is and we’re happy to have three great lines that drive footfall into our stores. We’re increasingly confident in our ability to compete in the marketplace.”
Speight is also keen to counter ‘the perception’ that Co-op stores have a problem with long queues; a perception that he claims does not fit with reality. However, he does concede that the firm’s desire to attend to customers in person, rather than them using self-service solutions, has negatively affected some stores.
“We are absolutely working on it,” he says. “Our customers tell us they enjoy the personal service, but we have to get the balance between speedy service and personal contact right.”
Although the Co-op now has more stores than its rivals, Speight says the company is confident about its prospects for increasing its market share and becoming the UK’s leading convenience retailer by 2017.
“We’re not complacent, but we will give it our best shot and I think we can do it,” he concludes.