Published: 19 January, 2012
The Co-op is expanding its reach in the food sector, with an emphasis on quality and convenience, and it is hungry for new sites
The Co-op is the UK’s fifth-biggest grocer by market share, but in terms of store numbers it is the largest with 2,900 outlets across the UK. And it is looking to grow this portfolio by more than 10 per cent – there is an active requirement for another 300 stores over the next three years according to Andrew Coles, national acquisitions manager at Co-operative Food Property.
The impressive reach of the portfolio – there is a store in every UK postal area – means the Co-op food can serve 17 million customers each week. And total sales grew by 6.2 per cent to £8.2bn in 2010.
And it is not just the scale of the operation that makes the Co-op stand out. It is also the UK’s largest farmer which means it can control the food chain from start to finish, giving it unrivalled quality control. This has been reflected in a host of food industry and consumer awards.
Equally, it can claim to be the UK’s greenest grocer. The estate is 100 per cent powered by green electricity, wind and hydro and the Co-op even owns two wind farms of its own. It has also opened the UK’s first food store to be 100 per cent lit by LED. All this has allowed it to achieve a 35 per cent reduction in CO2 emissions since 1996 and it is on target for a 50 per cent cut by 2020. “Green is part of our DNA, and has been for many years,” says Coles.
The biggest step-change came with the £1.57bn acquisition of Somerfield in 1998. Coles says the store conversion programme is virtually complete, which means the Co-op is freeing resources to concentrate on new acquisitions again.
He says the new stock is most likely to come through individual deals, although he does not rule out portfolio deals as well. Indeed, only this month the Co-op bought Scottish convenience retailer, David Sands, which has 28 food stores located in Fife, Kinross and Perthshire.
The expansion programme will also see the Co-op moving into new locations such as city centres and transport hubs. For instance a new store has recently opened on The Strand in central London.
And Coles says the Strand store epitomises the flexibility of the Co-op’s format. “Unlike our competitors we’re not modular-driven,” he says. “The Strand store was actually two shops knocked together and its shape wouldn’t suit the competition. But it works for us.”
And because the Co-op Food concentrates on food, rather than incorporating general merchandise, it can trade from smaller units than its competitors. “We like stores of under 3,000 sq ft, because it avoids the Sunday trading rules, but we can trade from anything from 2,000 to 18,000 sq ft,” Coles says.
To cope with the increased pace of new acquisitions, the Co-op Food has reorganised its property team on a regional basis. Eight regional acquisition teams have been set up covering all of the UK and Northern Ireland. “It makes it easier to build relationships and respond to opportunities,” explains Coles. “Propositions only go to the head office in Manchester once we’re fairly certain there’s going to be a positive decision.”
And despite the exacting target, he’s confident the new property team can meet the Co-op’s growth aspirations. “We’ve become very acquisitive,” he says. “We’re already finding we’re winning bids in competition with our rivals.”