Co-op expects North East sales surge after new restrictions imposed

The Co-operative Group expects supermarket sales to surge in the North East in the coming weeks after new restrictions for the region were announced. 

Chief executive Steve Murrells said local lockdowns had boosted sales in areas where curbs had been placed on bars and restaurants.

“We’d expect to see a bounce up in the northeastern part of the country in the coming days, and where local lockdowns have taken place – Leicester and Birmingham – we’ve seen much stronger like-for-like sales,” he said.

Wider restrictions would “most definitely” lead to increased trading at Co-op stores, Mr Murrells said.

“People will shop more locally and more often, and we are seeing our basket sizes rise as well, driving this performance.

“So that gives us some encouragement for what we see as a tough six months ahead with a perfect storm of unemployment, inflation and the likelihood of a no-deal Brexit in front of us.”

Kantar data on Tuesday suggested that Co-op sales have increased by more than a quarter in areas where local lockdowns have been imposed. 

It came as the retailer reported a surge in half-year sales on the back of “exceptional” food and wholesale trading during the height of the pandemic. 

Total revenues jumped by 7.6pc to £5.8bn for the 26 weeks to July 4, while funeral volumes increased dramatically.

However, funeral revenues rose at a far lower rate due to pricing restrictions amid the crisis, up just 3.5pc to £148m. 

The Co-op said food revenues increased by 5.2pc to £3.9bn, with 9.9pc like-for-like growth in the second quarter, adding that it expected competition to “intensify” in the grocery sector but believes it remains “well positioned”.

Costs from the pandemic, including recruitment and PPE purchases, took a £54m toll and is set to hit £97m for the full year.

The Co-op is also seeking to expand its online delivery capacity after online sales increased fourfold during the period. 

It has resumed opening stores and made a commitment to invest £130m in 50 new shops, expanding 15 and revamping another 100, creating 1,000 jobs before the end of the year.

Revenues at the Nisa wholesale business the Co-op bought in 2018 jumped 13.9pc to £801m for the half-year, as it benefited from more people shopping locally at convenience stores.

The group also plans to increase hourly pay to be in line with the Real Living Wage, meaning those on £9 an hour will be paid £9.50 from next year.

It also outlined an “inclusion manifesto” to address diversity at the business and aims to ensure that 10pc of staff in leadership roles are from ethnic minority backgrounds by 2025.

Mr Murrells added: “The coming months and years remain uncertain, and we know our own Co-op will not be immune to the pressures the recession brings to family budgets and to local and national economies.

“We will continue to invest within our core businesses to ensure that our Co-op value resonates within Co-op households and local communities.”

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