High up in the executive lounge on the top floor of Co-op’s Manchester headquarters, Adele Balmforth is explaining how she is realigning the produce category of the UK’s fifth-largest retailer.
The building, a glass tower with ingenious ventilation, is coincidentally the most environmentally friendly building in Europe, so the PR tells me, while glass offices that rise around a central lobby presumably aim to foster a feeling of transparency. It’s something Balmforth is also setting out to improve in the retailer’s produce-supplier relations, as she relates a new programme of visits and reviews to put the Co-op team in front of its growers more often.
“I think our suppliers and growers have probably seen a lot more of the Co-op than they ever have done over the last six to 12 months. I think they maybe previously only saw an order on a list from the Co-op – we’ve got no face to them,” she says, adding: “I hardly ever see my team at the moment, they’re all over the place.”
The reason for this visiting spree is a major supplier review, with the ultimate aim of introducing longer-term contracts. Balmforth, who joined the team last year, says she noticed produce was lagging behind other categories she’d worked with at the Co-op, including chilled and soft drinks, and often used six-month rolling contracts with no guarantee of price. “One of the main things I identified is we’ve got quite short-term relationships with suppliers – they’re all relatively transactional, and that really stops you from planning ahead. One of the major issues we wanted to tackle is getting some long-term supplier relationships in place.
“The ideal, and what we’re working towards, is three-year deals. Whereas before it would be a year at most, or six-month rolling, or you might have a commitment to a supplier but no agreement on prices, so you haven’t really got a structure.”
Balmforth has retail trading in her blood, having started her career as a graduate trainee at Safeway, moving to become a buyer at Sainsbury’s, before relocating north to be closer to family and join the Co-op. It’s a CV that will surely serve her well in leading the produce category, and it’s clear she is embracing the role.
While more pleasant supplier visits are no doubt a boon – she compares visiting a paté manufacturer to the fragrance of an apple packhouse – it’s the sales growth and potential in certain produce lines that Balmforth really has her eye on. “We have a 4.6 per cent market share on produce at the moment, and we would like that to get to our total market share, which is 5.2 per cent. While our performance is really strong on produce, we need to get to that point of matching total Co-op.”
She pauses, before noting that, “actually, there are some areas where we are ahead of total Co-op, such as food to go, prepped produce, flowers, and also a lot of fruit products, particularly loose fruit.
“We are outperforming the market at 8.8 per cent on value for 52 weeks, and over 11 per cent on the latest 12 weeks figures [correct at time of interview]. We’re hoping that continues,” she says.
Key to the Co-op strategy from now on is sticking to brand and shouting about its community values and membership reward scheme, which allows own-brand sales to generate money for local charities.
The retailer has made a conscious, and refreshing, decision to take a sideline seat in the retail price war, although Balmforth says it will always aim to compete on key lines such as bananas and onions. “Our point of difference is how we engage consumers with our brand and that’s not about copying what everyone else does. To a certain degree we have ignored what other people are doing. We’ve looked at it and understood that that’s not us.
“We’re not a Tesco, and we’re not an Aldi. What we are is a commitment to our values and beliefs, and our commitment to British, Fairtrade and farming.
While admitting that Co-op is “never going to be the cheapest”, Balmforth says the business “absolutely needs to understand that price is a key measure for customers, and will stay within a boundary of what’s fair”. “But we can’t get distracted with chasing everybody to a price that’s unsustainable,” she adds.
Where Co-op has also been hesitant to jump on the bandwagon is introducing new wonky veg lines, unless absolutely cost-effective. “What you don’t want, and what we have seen, is suppliers packing perfectly good product into another retailer’s wonky lines, which doesn’t feel right. We’ve seen that happen,” she says, before revealing that Co-op has finally decided to launch an ‘out of spec’ range but it will only be used if it takes cost out of the supply chain.
Balmforth is particularly proud of the Co-op’s efforts to match range to store demographic – quite an achievement considering that comprises around 3,000 stores in every postcode of the UK from central London to remote Scottish islands. “I think we’ve got our act together with the right range in the right stores,” she says. “Previously we were trying to do a one size fits all, but what we’ve done over the last 12 months is really try to understand the demographic of each store.
“We’re probably overtrading at the moment on things like exotic fruit and prepared veg, and they’ll be the things that you probably wouldn’t have ranged in as many stores from a waste point of view. Whereas if you can target specific stores that you know have the shoppers wanting those products, then you’ve got more confidence in pushing more choice out and being braver on range.”
Of course, no UK retailer is immune to the current melting pot of pressure that is grocery retail, and Balmforth does mention the dreaded word “consolidation” when discussing her future supplier strategy. “What we need to do is get closer to growers, so we can consolidate and pack more at source. What we’d ideally like to say is that we’re taking enough volume now so you can pack it at source and ship it to our depot.”
And it’s not just at source where Balmforth is making her mark – in stores she says more produce will be included in lunchtime meal deals to encourage healthy eating, and the business is consigning more space to produce in chilled lines such as prepared and bagged salads. “It’s not necessarily that other products are shrinking, but we do need to grow the chilled space.”
If today is the age of convenience, the Co-op is certainly well placed to capitalise and its produce manager’s dedication to the cause will ensure fruit and veg drives the future of the business.
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