Food stays good says Scotmid

The Scotmid store at Barnton in Edinburgh, one the independent co-op’s premium fresh stores.
The Scotmid store at Barnton in Edinburgh, one the independent co-op’s premium fresh stores.

Scotmid saw its profit dip last year. In all the circumstances, says chief executive John Brodie, it was a reasonable result.

AS reported in the last issue of Scottish Grocer, Edinburgh-based independent co-op Scotmid saw group profit decline by 25% in the year to 25 January.
The £4.5m on sales of £431.4m compared to £6m on turnover of £428m the year before.
It was the fourth year in a row of decline, since the heady days of early 2010 when the society had recorded profit of more than £10m – just before Scotland, and much of the rest of the UK, felt the full effects of the recession.
But the society’s chief executive John Brodie said it had to be reasonably pleased with the 2014 result, given the continuing economic difficulties, especially in those parts of the UK in which it operated – Scotland and (largely through its Semichem subsidiary) the north of England and Northern Ireland.
In food retailing, he reckons Scotmid stores are more than holding their own.
The society doesn’t give separate results for its different divisions but, he said, the food stores were ahead of market figures provided over the year by the Scottish Retail Consortium.
“The biggest challenge, as you’ll know from the SRC numbers, is that the market is going backwards,” he said. “We’re happy that we’ve outperformed the like-for-like SRC numbers.”
While last year’s decent summer had been welcome it had to be balanced against poor weather at other periods, he said.
“We had one of the coldest springs in 50 years, summer only evened it out. The weather was fairly typical at the end of the year. We did enjoy good sales over the summer, helping to offset the challenging cold spring we had. For us, some of those extra sales were at lower margins than we were anticipating.”

According to the society’s chief executive John Brodie, at one time retail operations that weren’t innovating were standing still. Now if they are not innovating they’re going backwards.
According to the society’s chief executive John Brodie, at one time retail operations that weren’t innovating were standing still. Now if they are not innovating they’re going backwards.

Those margins had reflected pricing pressure both from the need to compete in a very tough market and from work that various co-ops had been doing with the Co-operative Retail Trading Group to develop a more competitive position overall.
However, beyond the straightforward numbers he said the society was well-pleased with the continuing development of its food and drinks stores estate and with progress being made on many retailing, ranging and marketing initiatives – including the continuing rollout of its black livery premium fresh stores, the partnerships being forged and developed with local bakers in many parts of Scotland and the trial of a local butchery counter.
But the experiment with a value-led store type, tried in the Prestonpans outlet, hadn’t been as encouraging.
“At this stage results suggest not planning any more. We will probably end up with a store portfolio segmented into two types, the premium fresh and our core stores,” Brodie said.
Much had to do with ranging. The CRTG’s Truly Irresistible range of premium own-label products and other lines had helped give the premium fresh stores a clear point of difference. That had proved more difficult to achieve with the value store.
And, tough economic times or not, significant parts of the population were demanding quality.
“The market is driving us to do more. In previous times, if you didn’t change and innovate you would stand still. My belief is, if you don’t change and innovate, you’ll go backwards and probably rapidly,” he said.
The troubles at the separate Co-op Group hadn’t been welcome, he said, but they had been dealt with without a bail out.
“We have our own co-operative identity and we are glad we have our very distinct Scotmid brand in Scotland.”