Rumours of the Co-Op's demise have been greatly exaggerated..
27 May 2014
With the Co-Operative trying to harmonise the Somerfield business whilst leaks to the Independent (hmmm...) stated sales were down, complaints up and things generally weren't great. They did make some good decisions.
For example - typically when a retailer takes over another, its a 'hatchet' job as a retailer imposes their methods and operations on the taken over business. (Morrisons / Safeway?)
However, the Co-Operative realised their systems, both in store and ordering were behind the times, subsequently taking on the Somerfield SMART system and various in store systems too.
These measures added a level of consistency to the ordering process, improving availability (dependent on routines being followed!) and saving on wastage.
As the Co-Op started to convert basic Somerfield stores with a generic offer with their own look and feel, the expectation was that sales would follow but this wasn't the case.
In some respects, sales went backwards and the Co-Operative grappled with falling sales, higher CAPEX via an enlarged store estate with refits not coming cheap.
The harmonisation and store refits came to a natural end, with the focus then shifting to enhancing return and returning the chain to growth.
The group needed fresh impetus to transform the enlarged chain, Steve Murrells was brought in from Tulip, the Danish Meat supplier.
Murrells has an impressive CV, with time spent at Sainsbury's and Tesco (latterly running their cloaked One Stop chain) which gave him exposure to the fast growing convenience channel.
He immediately set about revamping the top team, with a number of departures, but crucially, a number of senior hires from Morrisons and Asda. Outside input was desperately needed.
Whilst a slightly larger store (and a while ago!) what were the ranging principles? It is 'range everything?'. Excessive.
It took Murrells a while to grapple with the challenges but where his predecessors didn't move much on price, he did.
The first noteworthy campaign from the Co-Operative under Murrells saw a price campaign launched. Low key and no press but it included a 'refresh' of a store being accompanied by a raft of price cuts across the store.
The ongoing work has been mightily impressive, a 'fresh format' store in Didsbury saw a focus on premium ranging and 'offer' to appeal to the well heeled customers.
A smart move, the Co-Op typical core appeal is older customers, distress / top ups, those with no other option and indeed the narrow band of ethical customers who passionately care about each individual coffee bean.
The work in Didsbury underlined the theory that the Co-Op was maybe, finally starting to get to grips with their estate and the differing missions and demographics that exist within.
They have some wonderful locations, a really strong estate that needs each local store to match it's prime location.
The 'other' Didsbury store was the site for the launch of 'Gen2', the new store format for the Co-Operative launched in November.
The ranging and layout is dictated to by the mission - shop for now? Top up shop? Crucial as the Co-Op aims to differentiate itself from the rivals.
There are tweaks to the model of course; as the store format has evolved, work needs to be done on the 'inspiration' tables and at Glossop, moving the Bakery nearer the store entrance has pushed LfL sales up to c. 40% on this category alone.
Add 'Fair & Square' pricing and some of the great work on own label under 'Loved by Us' and it's fair to say, Co-Operative food is quickly becoming the flagship area of the business.
That's arguably the biggest praise for Steve Murrells, cynics could say its 'the best of a bad bunch' but that would be unfair. The exciting thing for the Co-Op is they're not far through the 'True North' plan and strategy.
Genuine growth from Kantar will see further accreditation for the strategy and we hear so much about convenience being a 'growing' channel.
It's high time the Co-Operative benefited from this.
From the Grocery Insight newsletter archive, first sent to subscribers on 27 May 2014. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.