Analysis: The Co-operative Group financial results 2021

'Competition is not going to lessen, so it is critical that elements under the Group’s control are made as effective as possible'

The period since early March 2020 has been a turbulent and traumatic one for everyone. Even now, we are living in the aftershocks of the pandemic, with a high Covid-19 incidence in the population and consequent impacts on demand and supply and business operations, including distribution. “Living with Covid” is not as straightforward as some would make out.

The publication of the 2021 financial results for the Co-operative Group are thus of more than normal interest. Trading in turbulent times is not to be taken for granted. The pandemic affects the assessment of performance. What is the underlying operational and business performance and what are pandemic impacts, shocks or responses? Is our comparator the pre-pandemic “normal”, or do we accept that the world has been transformed and operations remain essentially short-term and reactive?

For instance, the 2021 sales figure for the Group is £11.2bn. This is a decline from 2020 when the figure was £11.5bn.  On the surface, this is disappointing – but 2020 was a very strong year as lockdowns and other restrictions favoured the local store model. The last pre-pandemic year (2019) saw sales at £10.9bn which was itself up from £10.2bn in 2018 (due in part to the Nisa acquisition). What is the appropriate benchmark year? More critically, perhaps, what should our expectations be in this changed world? Should we be disappointed in not holding on to the sales gains of 2020 or should we accept it was never likely to be sustained?

Related: Aftermath of Covid crisis hits results at the Group

Table 1 provides the numbers for the (self-identified) key performance indicators (KPIs) for the Group. In this table, the data is taken back to 2018 to allow for a short pre-pandemic trajectory as well as two years (differentially) impacted by Covid-19. The data, especially the purely financial figures, shows two issues. 

First, on every measure the results show that 2020 was an exceptional year for the Group. What caution there is for 2020 comes in the non-financial figures, where active membership numbers fell, as did rewards spending (though the base rate reduced in October 2020).

Secondly, there is the question of considering 2021 against 2020 and/or the years before. Here the story is not as positive, with figures generally returning to, or below, the 2019 and 2018 levels. While sales are greater in 2021, all profit measures are lower, and debt is now much higher. A 10% increase in Group sales over three years has not really resulted in any overall financial improvement. Non-financial measures continued to decline – for example in active membership, rewards and colleague engagement.

Almost 69% of the Group’s sales are in the food sector, with around 15% each in the wholesale and the federated components; food remains the driver of the Group’s performance. The store estate is being remodelled (50 new stores in 2021, plus 87 stores renewed, 25 relocations and 15 extensions), but overall store numbers fell (by 29) and sales floorspace is at its lowest level in at least five years. There have been investments in branding and pricing, supply chain (a new depot) and colleague remuneration (Real Living Wage), while Covid-19 costs continued (c£30m) in 2021.

The supply chain has struggled to deliver, especially in the latter half of 2021, possibly due to new systems but also to wider global pandemic-related issues and the consequences of dealing with fluctuating production and demand. The amount of stock in the Group had been reducing (from 16.4 stock days in 2018 to 14.6 in 2020), but it increased in 2021 (to 16 stock days). The e-commerce food business saw tremendous growth (reaching £200m sales in 2021 from £4m in 2019) but from an exceptionally low base. Roll-out of store focused e-commerce, micro-distribution hubs and the links with Deliveroo, Starship and (more controversially) Amazon and Amazon Prime, would seem to be sensible given the pandemic surge in the local and online channels. The strategy seems clear.

Related: Annual results from the co-operative sector

In presenting the results, the chair accepts this has been a challenging year but claims the “continued planned strategic investments mean… (we) are well placed to ride out the storm and prosper beyond”. The interim CEO, Shirine Khoury-Haq, pointed to the long-term strategy, investment in the business and the values of the Group as the building blocks for the future.

But is the Group, with its focus on the local community and convenience market, as well placed as it might be? This was clearly working in 2020 as circumstances swung in the model’s favour. A stronger 2021 operational performance might have been hoped for. The figures and comments point to some internal operating issues in addition to the impact of wider macro sector effects. Uncertainty hit cashflow and stockholding, adding to the debt and losing sales.

Competition is not going to lessen, so it is critical that elements under the Group’s control are made as effective as possible. The pandemic has not gone away nationally or globally. The full implications on supply chains of Brexit remain to be felt, though they are becoming increasingly apparent. The war in Ukraine has caused a range of human and business impacts there and elsewhere, the full dimensions of which remain unclear. Individuals, communities and businesses are being pressured by the impact of rising costs and altered demand. That the business needs to be agile, resilient and flexible in the eye of these various challenges is heightened, but in an environment the like of which most have not experienced either as individuals or business managers.

It is not clear how people will react to these pressures, problems and difficult times. One would hope that the values and strengths of communities and locales would come further to the fore, as they did in the initial stages of the pandemic. In this regard, the Co-op Group is more than a food retailer of course, and such values and behaviours help people and the planet. The financial performance is obviously important to allow this investment in operations and activities within this wider context (Co-operating for a Fairer World). More than ever the balance between these aspects of the Group  needs to be borne in mind. But in the final analysis, if business operations do not produce enhanced results, then difficult times and decisions lie ahead.

Leigh Sparks is professor of retail studies at the University of Stirling. He also runs a retail blog at

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