Co-op invest 125m to slash fruit and prices

The Co-operative is to cut the price of some fruit and vegetables to as little as 39p as part of £125m of new reductions designed to reinvigorate its convenience stores.

The retailer will cut the price of its fresh produce by as much as half and introduce a new promotion called “Fresh Three” in which the retailer will sell a revolving collection of fruit and vegetables for 39p.

The Co-op is Britain’s fifth biggest food retailer behind Tesco, Asda, Sainsbury’s and Morrisons, and has 2,800 shops across the country.

The supermarket business is part of the of the troubled Co-operative Group, which returned to profit after a recovery in its grocery stores and the sale of its pharmacies and farmland helped the mutual to bounce back from near collapse. The beleaguered group, which includes food, insurance and funeral care businesses, posted profits before tax of £124m in the year to January 3, compared with a £310m loss in 2013.

Steve Murrells, retail chief executive, said: “Consumers are shopping differently, buying little, more frequently and, increasingly swapping the weekly shop for purchasing what they need, when they need it.

“Food retailing remains highly competitive and we have responded to provide customers with great prices and fresh, quality produce at each of our stores. This makes our price investment the biggest by a convenience retailer, providing consumers across the length and breadth of the UK with lower priced produce and helping them to keep shopping in their neighbourhood.”

The Co-op food business is this year aiming to open 100 new convenience stores and will update another 255 outlets.

Vowing to ditch its larger stores to focus on convenience, the society revealed last month that it had sold 37 larger stores in the year up to 3 January, leaving it with 71 superstores and 2,079 convenience stores. It is also aiming to boost its presence within the M25, where it has in the past been under-represented.

Last year, Morrisons promised to invest more than £1bn in lowering price over three years. This month its new chief executive, David Potts, the former Tesco executive who replaced Dalton Phillips at the top, made his first move in the battle of the supermarkets, cutting the cost of 200 products including bread, milk, butter, sugar and other staples.

In January, Sainsbury’s promised to spend £100m on reducing prices on 1,000 products this year, while Asda invested £300m in lowering prices in the first quarter. Tesco then followed suit with its own price reductions.

Last week, credit rating agency Moody’s warned that Tesco, Asda and Sainsbury’s cannot afford to make any more price cuts and would not see any improvement in their like-for-like sales for 12 to 18 months.