Expert analysis: How can the Co-operative make online retailing work?

Expert analysis: Graham Soult, Retail Consultant at, considers how the Co-operative Group can make its move to online retailing work.

Expert analysis: Graham Soult, Retail Consultant at, considers how the Co-operative Group can make its move to online retailing work.

On the face of it, The Co-operative Group’s entry into online grocery retail is counter-intuitive. It is, after all, a business that in recent years has pulled back from large-format supermarkets in favour of smaller, convenience-focused stores.

So, having successfully repositioned itself as a top-up retailer, the Co-op’s venture online is potentially confusing. Its brand is associated with convenience, yet online grocery shopping is almost entirely about full weekly shops and large basket sizes. Can and should the Co-op really try to compete?

Certainly, there are elements of the existing Co-operative Food offer that need to be improved first, though chief executive Steve Murrells does seem to be on the case.

Store environment is one issue. Though there are some excellent Co-operative Food shops, others feel tired and dowdy – a perception that the march of shiny convenience stores from Tesco, Sainsbury’s, Waitrose and Morrisons only exacerbates.

Sorting out product is key, too. Though the Co-op has some well-recognised strengths and distinctiveness – such as in Fairtrade products, and its impressive wine offer – more work is needed if the company’s own-brands are to have the resonance and recognition of its rivals’. In the online space, indeed, having a compelling own-label offer is a key differentiator.

The Group’s current investment in lowering prices is also crucial, as is making sure that customers are aware of the change. Though shoppers don’t mind paying a bit more in convenience stores, they will only use the Co-op’s online operation if its prices – especially for branded goods – are competitive.

So what might The Co-operative Food online look like? Encouragingly, statements from the Group so far re-emphasise the business’s role as a convenience retailer, and infer that the planned trials will make use of its greatest asset: the extensive store estate.

While certain categories – such as wine – would lend themselves to a Morrisons Cellar-style online operation, a more likely scenario might see the Co-op using online to enhance and better promote its existing local delivery service. Some form of click and collect – echoing the Amazon Lockers that are already in over 100 Co-op stores – could also work.

Unlike the other big supermarkets, the Group’s online grocery operation will also have to take account of the proudly independent regional Co-ops that run their own convenience stores. Again, this points to the Group somehow leveraging its store network – and avoiding the scenario of one Co-op’s online store competing with another Co-op’s high-street shops.

Graham Soult is a Retail Consultant at, and spoke about the future of Co-ops at Co-operatives UK’s National Retail Consumer Conference in February 2013

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