Heart of England Co-op is switching its strategy from traditional convenience to a foodservice hybrid, as it launches a new store in Warwick designed to replace declining tobacco and alcohol sales with high-margin food to go.
The 2,200 sq ft convenience store centres on food to go, with hot counters and made-to-order products under its own-label DeliCo brand, alongside a 1,200 sq ft Bewiched Coffee shop that it runs under a franchise deal.
It also offers a “tightly curated” convenience range, spanning fresh, chilled, grocery and alcohol, featuring Co-op own label and products from local suppliers, as it looks to differentiate itself from other foodservice players.
Heart of England Co-op’s DeliCo brand made its debut at its Lower Heathcote store in 2022 but had been solely used as a grab-and-go hot food offer.
CEO Steve Browne said the new Warwick store marked an evolution of the brand as the society sought to become “foodservice dominated” in a challenging convenience market.
The range at the new Warwick store now spans cooked-to-order pizzas, a salad bar, and freshly prepared toasted ciabattas and flatbreads with fillings including chicken tikka, beef brisket, and pulled pork.
There is also a hot food counter serving cooked breakfasts, pancakes and jacket potatoes, as well as a grab-and-go section offering breakfast baps, burgers, sausage rolls, pasties, hot dogs, and chicken bites.
There is also a sweet selection spanning cookies, brownies, ice cream sundaes and a sweet and savoury bakery range.
Heart of England Co-op is working with several suppliers, including Country Choice, Toppings Pies and Dough Girl for the food to go range, which collectively come under the DeliCo banner.
“We think the two things between a traditional retail offer and hospitality are blurring,” said Browne. ”Greggs are stepping into the convenience entity – so likewise with us, what can we be?
“We’re on the cusp of a significant pivot where we think this is the way to protect our business for the longer term. Tobacco is declining, and we’re also seeing challenges around grocery and consumers drinking less alcohol, so convenience is coming under dramatic pressure. We’re trying to reposition ourselves.
“We might not be able to replace all of the sales pertaining to tobacco and alcohol, but we can absolutely replace profit.”
Brown said DeliCo was “multifaceted” and could fulfil propositions for different stores as looked to roll out the concept across its 39-strong estate.
“Some stores might need a small proportion of the offer, other stores can take the full enterprise of breakfast, lunch and dinner,” said Browne. “I can’t be looking at a singular format or proposition.
“Because we’ve only got a finite amount of capital, we have to decide where we want to put our money. There will be some of our core estate that won’t last the test of time, but it’s about redirecting any proceeds into the new food-to-go hybrid and coffee entities.”
The society is also considering standalone DeliCo stores and continues to open coffee shops. It currently operates four, with three more to open by early next year.
Other future plans for Heart of England Co-op include opening a central kitchen that would allow it develop products and supply stores so it becomes “broadly vertically integrated”.
“We have to own more of the margin end to end,” said Browne.
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