HGV crisis forces Co-op into the red as delivery partnerships grow

The Co-op fell to a half-year loss as it warned of pressure on its full-year profits from the supply chain crisis. The Manchester-headquartered group reported underlying pre-tax operating losses of GBP15m for the six months to July 3, 2021, compared with profits of GBP56m a year ago. The company said it was hit by product availability issues and the continuing impact of the pandemic, the PA news agency reported.

: THG to float beauty division next year as half-year sales near GBP1bn but losses widen It also warned that the “unplanned supply chain challenges and ongoing Covid costs will bring greater levels of uncertainty”.
“This will in turn apply pressure on our prior expected level of profitability for year end,” it said. Food sales at the supermarket arm, excluding fuel, fell 2.8% in the first half against surging trading a year earlier during the pandemic.

Chief executive Steve Murrells said: “As we continue to experience the effects of the Covid-19 crisis, it is clear that things will never be the same again. “As a business and as a society, it is crucial that we learn from the last 18 months, particularly as we turn to the momentous task of rebuilding Britain and face into the continuing disruption to our business and our supply chains.” The results came as the Co-op also announced a new partnership with Amazon and moves to ramp up an acceleration of robot deliveries to more than double online sales to GBP200m by the year end.

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The alliance allows Amazon Prime customers to do their full Co-op grocery shop on Amazon.co.uk with same-day delivery and two-hour scheduled time slots.

The partnership has launched in Glasgow today, including surrounding areas such as Hamilton and Paisley, and will be rolled out to other parts of the UK before the end of the year, with the aim of it becoming a nationwide service at an unconfirmed date. Co-op is also extending its partnership with Starship Technologies, the robot company launched by the co-founders of Skype, which allows the delivery of groceries in as little as 20 minutes. The convenience retailer will increase the number of autonomous vehicles operating and delivering Co-op groceries from 200 to 500 by the end of this year, extending them from Milton Keynes and Northampton to Cambridgeshire and then into the North of England.

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For all the latest stories, views, polls and more, follow our BusinessLive North West LinkedIn page here. Mr Murrells added: “The pandemic has accelerated changes in consumer shopping trends and we’re driving forward with exciting plans to provide rapid kerb to kitchen grocery delivery services.

“We are delighted to be working with Amazon. Its reach and leading technology and innovative approach means greater convenience for people in their communities. “This, combined with our extended partnership with Starship Technologies, marks a significant milestone in our online strategy.”

Have you followed our BusinessLive North West LinkedIn page yet? Click here for the latest updates, stories and analysis from across the region. Jo Whitfield, chief executive of Co-op Food, said: “Co-op stores across the country are well-placed to serve shoppers locally and a key part of our strategy is to further develop our e-commerce offer by using the competitive advantage of our store footprint to provide ultra-fast home deliveries.

“As a convenience retailer, the ability to come into stores will always be important to customers, but we also know that they want flexible options online.

“Our commercial strategy is focused on getting closer to where they are to provide what they need, however and wherever they choose to shop with us.”