At a time when people are shopping locally more because of the higher cost of fuel, the Co-op should be doing better than it is

The Co-op issued interim results yesterday morning and they weren’t very good. Total sales were down 4.6% and like-for-likes down 3.6% in what chief executive Peter Marks described as the worst conditions he had seen in 40 years.

Conditions are undeniably tough, and ther Co-op has also had to manage the integration of the Somerfield chain. That’s never easy, as Morrisons’ difficult digestion of the Safway chain showed, but should be coming to an end now with most of the stores converted.

Many of the former Somerfield stores aren’t in the greatest locations but I’ve been impressed with the transformation of the ones near me, although in fairness Somerfield store standards had become so bad that it wouldn’t have been hard to make them better. The other thing which has been very striking when I’ve shopped in them is that even in such a highly promotional market, the Co-op is clearly promoting very aggressively and some of the deals almost seemed too good to be true.

But something has clearly gone wrong because the Co-op’s performance is lagging well below the market. Remember that food inflation is running at over 5% according to the BRC, so even if volumes were flat you’d expect to see some like-for-like growth. Marks can say that the market is tough for everyone - which it is - but its figures are much worse than any from the big four, Waitrose or the hard discounters.

What’s weird is that every other retailer has said that local stores are outperforming the big out of town ones because people are keeping trips to big stores to a minimum, both to save petrol and reduce the temptation to spend. So the Co-op should be performing relatively better than it’s peers.

The disruption caused by the integration is real, but the Co-op won’t be able to blame that for much longer. The problem it has is more fundamental though, which is that in a very crowded grocery market, with many of its rivals opening neighbourhood stores on its turf, the Co-op doesn’t have a clear proposition. It’s ethical stance is second to none, but sadly that isn’t what most shoppers make their chocie of store on.

Having a clear notion of what else makes the Co-op dfferent, and then marketing that difference effectively, will be key if the Co-op is to prosper in today’s ultra-competitive grocery market.