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Trade: pandemic boost to shopping local

Author: ICAEW Insights

Published: 24 Jan 2022

“During the pandemic we benefitted from the convenient location of our stores,” says Neil Robinson, CFO at Central England Co-operative. The challenge now is to keep those new customers close to home

Labour shortages, supply bottleneck, and widespread staff absences due to the Omicron variant are just a few of the recent trading challenges that businesses have had to tackle. These issues are not going away any time soon, but amid all the chaos and confusion trading is proving less problematic in some sectors.

Central England Co-operative is one of those retailers that has not only survived during the pandemic but has grown and innovated. The chain of more than 400 convenience stores, trading in 20 counties across the centre of England, reported like-for-like food sales up 12% in the year to 23 January 2021. This year’s interim report (to 7 August 2021) revealed total sales (which also include funeral and property businesses) up 4.3% compared to pre-pandemic levels.

Neil Robinson, CFO at Central England Co-operative, says: “From a trading point of view during the pandemic we benefitted from the convenient location of our stores close to people’s homes in residential areas, with less exposure to areas like city centres or university campuses. We worked hard to keep all of our stores open, and saw strong trading over the last two years, up until the last few months due to the supply chain challenges that everyone is facing.”

Robinson says more people shopped with them during the pandemic that hadn’t before, so the big challenge for the convenience stores this year is to retain those new customers.

Central England Co-operative is part of the wider co-operative movement, and should not be confused with The Co-operative Group, which is a separate business. Historically, the UK used to have thousands of co-operatives across the country. Over time, many of them have merged. Central England Co-operative was formed by the merger of Midlands and Anglia Co-operatives and is one of the largest independent retailers in the UK.

The difference with the co-operative model is that members own the business and enjoy benefits ranging from cheaper products and free online delivery to cookery classes and local funding. Over the past two years, Central England Co-operative has benefitted from the convenience of shopping locally during the various lockdowns when people were required to stay home. Its local suppliers were also less affected by the problems in the complex global supply chains and therefore the retailer suffered fewer product shortages, too. 

Member benefits

Co-operative members receive a vote at the annual meeting and can get involved in a variety of initiatives beyond just shopping at the stores. Traditionally, the demographic of the stores has tended to that of the older generations. However, with renewed and growing interest in shopping locally in a way that benefits the immediate community, Robinson says they have a great opportunity to redesign their member benefits for newer customers as well as the long-standing members. Part of that will involve easier digital sign-up and ‘always-on’ relevant members offers.

“The membership scheme is a big focus now. I think there’ll be a big battle for customer loyalty generally,” he says.

Another area of focus will be ensuring the stores stand out from their competitors. For example, the retailer wants to highlight its use of local suppliers as a unique selling point. With greater consumer attention on household carbon footprints, Robinson views this as a timely opportunity to raise its profile. It also helped ensure the stores were well stocked during the pandemic.

“We use national suppliers like other food retailers, but we also use a lot of local suppliers. It’s essential to us to have strong relationships with our supplier partners to make sure that the shelves are full, offering a range of locally relevant products.”

Central England Co-operative under-indexes on overseas imports, offering a higher proportion of its products from the UK, which certainly helps from a supply chain perspective. With the prospect of a tight squeeze on household incomes this year and next, consumers are looking for value as well as local produce.

Innovating and investing

With Brexit and COVID-19 inflicting damaging shortages, including HGV driver shortages, on British companies, Central England Co-operative was initially less impacted, because “if you treat your colleagues well, and that’s not necessarily just pay, you’re able to retain them better than others”.

The biggest challenge for Central England Co-operative wasn’t so much getting produce from its depots to the stores. It was the patchy nature of deliveries and randomness of the shortages. One week it would be chilled food, the next frozen goods, for example.

“The unpredictable nature of supply into our depot has been one of the hardest things to manage,” Robinson says.

As employers began raising HGV driver salaries to attract drivers, Central England Co-operative also began to suffer. The company has launched a training programme called ‘Warehouse to Wheels’ [see below] to mitigate the impact.

Central England Co-operative has also dipped a tentative foot in online retail, partnering with Snappy Shopper last year for member deliveries. It started with around four stores but has now expanded to cover around 80% of stores. They also introduced ‘click and collect’ and during the pandemic they had ‘call and collect’, designed to help more vulnerable customers.

Cost inflation and utility costs are skyrocketing, meaning this year’s trading climate will offer little respite for businesses across the UK. It also means an inevitable rise in prices. For Central England Co-operative it will be a tight juggling act to retain its value offering, while managing the profit and loss account. But it’s a challenge that Robinson is upbeat about. 

Warehouse to Wheels

Central England Co-operative pays for the three-month HGV training programme, and, once qualified, employees join the company’s fleet. It has also extended the programme to include retail and store staff, which helps balance the gender diversity of those applying and training.

The first three colleagues (one woman and two men) on the ‘Warehouse to Wheels’ programme have successfully completed their training and tests. A further five applicants are due to take their final test in January and 11 more are in training and will progress to the driving module in February. Apart from offering staff alternative career paths within the business and thus stronger staff retention, it also helps ensure a smoother supply chain and reduces fluctuating driver costs.

Trade: clean growth and tech

Clean growth and the application of major emerging technologies to existing sectors are two key characteristics of trade in 2022. Add to these levelling up supported by foreign direct investment, and there are exciting future prospects for business and the prosperity of communities globally.

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