The Co-op is taking the pricing battle to its main convenience rivals as it rolls out a new £70m investment in lower prices.
The move marks the society’s biggest-ever single investment in pricing it its history – and, it claims, the biggest ever announced by a convenience retailer.
The Co-op has today extended its recent Member Prices initiative across almost 200 everyday grocery products, which Co-op Food MD Matt Hood told The Grocer covered the 180 most bought convenience grocery products such as milk, eggs and bread.
Member Prices, which launched in April, was previously based on promotions that changed every few weeks. However, the scheme will now see these core items offered at a lower fixed price for members on an ongoing basis. It said members could save up to 11% on retail prices.
Co-op said its Member Price for one pint of British milk was now 85p, compared with 90p at Tesco Express and 95p at Sainsbury’s Local. It also highlighted its six medium free-range eggs at £1.40 for members compared with £1.55 at Tesco and Sainsbury’s convenience stores.
The overall £70m investment also includes a reduction in shelf-edge prices on a further 600 items, which Co-op said meant they were now in line with or cheaper than other national convenience stores. It adds to the £15m price investment from the Co-op when it launched Member Prices earlier in the year.
Member Prices is seen as a key driver in the Co-op reaching its target of growing its membership by one million over the next five years. It said it had attracted more that 40,000 new members each month since its launch and Hood said he expected the rollout of permanent lower pricing for members to prove a catalyst for even faster growth.
“Whilst food inflation is starting to slow, household budgets remain under huge pressure, so this major price investment will make a real and tangible difference for millions of Co-op customers and members,” said Hood.
“This £70m investment is the most significant ever made by a convenience retailer, allowing us to turbocharge our member pricing proposition for the millions of our members who shop with us every day, by tailoring the price cuts to those key lines we know our they buy the most.
“We are focused on delivering member value in a way that will make the biggest difference to their weekly budgets, and I’m clear there should be no compromise on quality and value by shopping in convenience. This is not a loyalty scheme but rather the Co-op difference in action, whereby the people who own our business, our members, benefit every time they shop.”
Co-op said the investment had been made possible by the major cost savings and business improvements introduced over the past 12 months in the face of rising inflation and increased operational costs. Most industry analysts now agree that food inflation has now peaked and that recent falls in commodity prices are set to continue in the second half of the year.
Hood said the retailer’s latest move was about “looking to get in front of this deflation for our customers”.
The move also follows the recent research by the Competition & Markets Authority, which found that although there was no evidence of supermarket profiteering from rising cost increases due to the competition between operators, “not everyone is able to benefit fully from strong competition, particularly those who cannot travel to large stores or shop online, and therefore may rely on higher-priced convenience stores”.
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