Will the sale of 130 of its petrol stations break Co-op’s local commitment?

The Co-op has always had its customers at the top of its mind; why else would it trade in remote areas with small populations that no other retailer would touch? This makes it a hero with its customers, but obviously not with the CFO.

And now, rising debts (£920m) brought on by inflation, higher wage costs and supply chain problems has forced it to raise some cash, an estimated £450m for 130 of its petrol stations.

Coop has form here; it sold its pharmacies and travel agents in 2017 and also its stake in the Co-operative bank, so it worth speculating on its commitment to local retail.

Retail Connections has already commented on the weakest link in the Co-op’s operational capabilities and that is the supply chain, which struggles to maintain availability, often of even staple items.

The truth is, the Co-op is simply not as hard-nosed about its business as other supermarkets. It makes the investments in local retail which are almost certainly loss-making, and it invests heavily in environmental and community programmes that make the company a good citizen but a poor judge of the competitive environment.

The company should take note of the fact that both Aldi and Lidl are now in the top five supermarket chains and consider how it can build a more profitable business through investment in its supply chain. What it will also have to decide is, which comes first – profit or people?

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