A Southern Co-op trial has revealed that compliance with the government’s HFSS scheme does not have an impact on overall profitability.
The trial, which began in March and took place over a 16 week period in Romsey, saw five stores with three different format types adapted to become fully compliant with the new scheme.
The business said the goal of the trial was to develop an understanding of the impact of HFSS regulations on customer behaviour, the costs associated with new formats and the overall impact upon profitability.
Whilst it was expected that the largest impact on margins would come from the removal of HFSS products from impluse locations such as dump bins near tills and queuing areas, no such effect was observed.
“Although we saw behavioural changes in the store, our overarching profitability stayed exactly the same,” said Southern Co-op head of trading and format Andrew Farndell.
“In an inflationary market where margin is everything, actually our margin was absolutely what it was pre-trial.”
Despite the welcome news on profitability, Southern Co-op said that the cost of adapting stores to comply with the regulations would represent the second-largest capital expenditure in the business this year.
“Legislators have absolutely no grasp of the complexity of end-to-end supply chain,” said Farndell.
It comes amid news that government ministers have ordered a review into the HFSS scheme that could see the plans scrapped in an effort to relieve pressure on businesses.
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