Co-operative Group, Ltd.
Market Position and Strategy Overview
Market Position and Strategy Overview
The Co-op Group is a consumer-owned cooperative that is a major food retailer and wholesaler.
Co-op has more than 5 million active members (who have shopped at its stores or utilized its various services within the past 12 months). Its membership numbers have grown markedly in recent years thanks to efforts to keep prices down. The group added more than 1 million in 2023, a 14% increase year-over-year. That’s also led to an increase in store traffic — members shop an average of 12.9 times every 12 weeks — and more repeat sales. Member penetration, or the proportion of purchases made by members in its stores, reached 37% in 2023, up from the previous year’s 31%. Co-op plans to increase its member-owner counts to 8 million by 2030.
According to Kantar research, Co-op ended 2024 with a grocery market share of 5.4%. Co-op has more than 2,500 local, convenience and medium-sized stores, and according to them they're the second most visited grocer in the U.K. It also has 23% of the “quick convenience” market, and aims to capture 30% in the next four years. That includes scaling its e-commerce capabilities. (See E-Commerce.)
Besides groceries and convenience items, Co-op also:
- Is the largest funeral services provider in the U.K., with 811 funeral homes.
- Is a major provider of legal services (especially probates and wills).
- Is a major general insurer, offering home, travel and other insurance plans.
Co-op provides products to more than 5,000 other independent convenience stores, including those run by independent cooperatives as well as its wholesale business, Nisa Retail Limited. Wholesale customers in more than 130 countries have access to Co-op’s own brand products.
Besides growth, Co-op is dedicated to running an ethically responsible business, supporting a number of causes that include inclusion and belonging, sustainability, education, leadership development, British farmers, fair trade, fair pay, affordable energy, waste reduction and more — with a stated vision of “Co-operating for a fairer world.” It’s kept that goal in mind, championing better business practices through a range of products and services that create value for its members and communities, but due to the cost-of-living crisis hitting the U.K., in 2023 it drafted a new mission statement: “Co-operating to build more value for our member-owners every day.”
In 2022, it embarked on its pure convenience strategy, with a renewed focus on convenience and greater value, both online and in-store. In 2023, Co-op invested 90 million pounds to reduce food prices across 770 product lines, and member-owners won additional discounts on 178 of those lines.
Because basket sizes are down but store visits are up, Co-op is targeting shoppers who seek treats, food on the go and quick meal inspiration.
Co-op hosts live events and has a presence at many U.K. music festivals. Co-op Live is an annual event with music acts (Jonas Brothers, Olivia Rodrigo and more, for 2023, and Stevie Nicks and Justin Timberlake for 2024) as well as sports, charity and business events. Co-op Live and pop-up stores at music festivals also serve as a means to drive membership, with particular success in gaining younger audiences, which is part of Co-op’s strategy. (In 2023, the festival season reached more than 700,000 attendees and an additional 10 million through partner channels. While 20% of Co-op membership is age 35 or younger, the festival track in 2023 saw 12,500 new members use their cards for the first time, and 69% were 35 and younger.
Merchandising
Merchandising
Co-op stores focus primarily on convenience, and sell a mix of own brand and name brand products.
With an added emphasis on convenience, more fresh, chilled and frozen meals as well as snacks and refreshments are being stocked to offer shoppers quick shopping options and easy discovery of new offerings.
Co-op offers products in a number of categories, including:
- Dairy, eggs and chilled juices
- Ready meals
- Fresh meat and poultry
- Household items
- Snacks and treats
- Beers, wines and spirits
- Bakery and cakes
Besides food, Co-op also offers wholesale, funeral care, insurance, legal and federal services — the latter pertaining to the Federal Retail and Trading Services, a joint buying group owned by Co-op (the majority shareholder) and other independent retail cooperatives. The group acts as a wholesaler to other U.K. independent cooperatives.
Sales in 2023 for the various businesses amounted to 11,3 billion pounds, broken down as follows:
Co-op also has a supplier incubator program, the Apiary, which supports diversity and inclusion within its store brands and offers mentoring and advice on the entire product journey.
Store Formats/Growth
Store Formats/Growth
Co-op has approximately 2,500 stores across the U.K., both retail and franchise, as well as wholesale.
In 2023, Co-op launched three new-to-market franchise stores and tested a new on-the-go format at three fuel stations. Their performance is providing information for National Health Service hospital-located stores, which are being launched in 2024.
For franchise stores, 2,500 to 3,000 square feet is considered ideal, but exceptions are made for unique locations, so stores can vary from as little as 2,000 square feet to as large as 12,000 square feet.
Co-op continues to refresh existing locations. Store offerings may include:
- In-store bakery
- Hot food
- A Costa Coffee Express machine
- Fresh produce
- Everyday essentials
- Food-to-go
- Flowers
- Chilled beers and wines
- Pizza
- Vegan, plant-based and free-from products
- Free ATM
- Parcel collection services through Amazon, InPost or DPD lockers
- A “Photo-Me” booth
- Recycling options
- Self-scan checkout
Many stores also have online ordering and delivery options.
Co-op’s wholesale channel is Nisa Retail Limited, which operates nearly 4,000 stores and has more than 1,400 business-to-business partners which include convenience stores, supermarkets, fuel stations and holiday parks. Nisa also has customers in more than 130 countries.
E-Commerce
E-Commerce
Co-op offers online ordering and delivery at a growing number of locations, with a goal of getting more than 30% of the quick commerce market in the UK in the next few years.
In 2022, in response to the supply chain crisis earlier that year, it rolled out new SAP systems, to improve product availability in stores. That year, it also built a new distribution center in Biggleswade, a 660,000-square-foot facility which can handle more than 2 million cases of product each week. Co-op also updated and expanded its Newhouse distribution center to further bolster its logistics network. Co-op is using artificial intelligence to strengthen its e-commerce operations as well as to gather data and support innovation in farming and industry.
In 2023, overall online revenue was 311 million pounds, up from 2022’s 222 million pounds. For 2024, Co-op plans to grow the number of its stores with their own online shops to 1,000. Delivery charges start at 99 pence.
Co-op has several partnerships to fulfill online orders and deliveries, including:
- Amazon
- Deliveroo
- Just Eat
- Uber Eats
- Snappy Shopper (in Northern Ireland)
- Autonomous delivery of groceries by robots through Starship Technologies
Co-op estimates more than 80% of the U.K. population has access to its products through its online shop or the delivery fulfillment platforms it partners with.
It also has a dedicated “Best of British” section across its online delivery website.
Private Label
Private Labels
Co-op has its own brands, which can be purchased in its eponymous stores, online and via its app. Its Nisa Retail Limited wholesale business also has Co-op products. Most of Co-op’s approximately 2,400 products are sold under the Co-op label, and are cause-linked, including to fair trade (especially with coffee and tea), free range (eggs), outdoor-bred (meats), sustainability and supporting British farmers.
Co-op products are sold in several categories, including:
- Bakery: Breads, naan, wraps
- Beer, Wine & Spirits
- Crisps, Confectionery & Snacks: Chips, candy
- Dairy & Eggs
- Drinks: Soda, sparkling water
- Food Cupboard: Canned and jarred foods, condiments, pasta, grains, baking supplies
- Frozen Foods: Ice creams and novelties, pizzas, appetizers, vegetables
- Fruits & Vegetables
- Household & Pets: Cleaning supplies, dry and canned cat and dog foods, cat litter, toilet paper
- Meat, Poultry & Fish
- Ready Meals & Chilled: Includes desserts, dips, pizzas, sides
- Toiletries & Healthcare
Co-op has other own brand offerings, including:
- Irresistible: More indulgent items including wines, spirits, chocolates, cured meats, bakery, ready-made meals
- GRO: Plant-based and vegan ready meals, meatless proteins, sandwiches, snacks, wraps, chocolate, ice cream, plant milks.
- Honest Value: Affordable staples such as rice, pasta, canned goods, vegetables and more.
Co-op will get members involved to help shape products and flavors, including inviting them to share ideas for new ice cream flavors or to help design a new Co-op wine.
Loyalty Programs
Loyalty Programs
Co-op considers members as owners, and in its 2023 annual report it stresses it is “not a loyalty scheme [program] and as owners, you should have access to products and services from Co-op at great prices.”
In 2023 it recruited more than 1 million member-owners, bringing total membership to more than 5 million, the most it’s gained in a single year since 2017, and more than in 2021 and 2022 combined.
Because Co-op is owned by individual members and other co-ops instead of big investors, eligible members have a say in how the business is run and enjoy savings and rewards. To vote on motions, attend events, and elect leadership, an individual member must be at least 16 years of age and in the previous 12 months they must have spent at least 250 pounds at Co-op and/or be a Co-op insurance policy holder, bought legal services, or purchased funeralcare from Co-op.
People can become a Co-op member through its app, coop.co.uk or in store for the price of 1 pound.
Most members get:
- special pricing and access to limited-time deals and sales on both name-brand and private label products such as a free Amazon Prime movie when buying a meal package in-store.
- personalized offers each week.
- early access to special events such as Co-op Live’s concerts, which in 2024 include acts such as Stevie Nicks, Justin Timberlake and Kings of Leon.
- special offers on various insurance policies, including life, travel and home.
Member prices do not apply at all locations, however. Certain regions, some franchise stores and non-Co-op branded stores (such as Nisa Retail Limited) have different pricing.
Retail Media
Retail Media
Co-op Media Network launched in January 2024, boasting that it’s the first retail media network in the U.K. convenience sector.
A key goal is to help brands reach new and wider audiences — supported by Co-op’s 17 million unique weekly shopper transactions and a presence in every U.K. postal code — as it improves advertising relevancy for its shoppers.
Co-op Media Network brings together the retailer’s in-house team and its long-term agency partner Threefold, an SMG agency that’s the U.K.’s largest operator of retail media networks, under one recognizable identity.
The network can capitalize on Co-op’s strengths pertaining to the scale of its aforementioned reach and its knowledge about the unique characteristics of convenience shopping ( more impulsive and more frequent) providing brands with new opportunities to strategically target customers in-store or via offsite digital media channels.
SMG’s proprietary software product, Plan-Apps, helps brands investing in Co-op Media Network to gain deeper insights into campaign and brand performance as well as measurable ROI. (More than 80 touchpoints powered by first-party data help deliver a ROI of 1.24.)