Ali Kurji, Chief Executive of the Heart of England Co-operative Society
Thursday, March 21st, 2022
The Heart of England Co-operative Society has recorded a satisfactory trading performance in 2021 amid an ever-more challenging marketplace.
The Society, which operates a network of 36 Food stores and 16 Funeral homes, invested £5.3 million in new capital projects – an increase of £1 million on new investments when compared with the previous year.
Such level of investment goes against the grain in a year which saw continued economic turbulence, not least as a result of Covid19. Over the course of the 12 months some 8,700 outlets were put out of business across the high street, retail parks and shopping centres. Many more were kept afloat largely as a result of the government’s furlough and business rates relief schemes.
In addition, the Society faced an unprecedented level of competition, predominantly in the Food sector, not only from the major multiples but also from the discount retailers who significantly increased their market share over a short period of time.
The Society’s turnover in the 53 weeks to January 22nd 2022, across both the Food and Funeral Divisions, was £90.9 million – a decrease of 1.3 per cent compared with the previous 52 weeks which were at an all-time high as a result of the pandemic.
Operating profit exceeded £5.83 million, reflecting an increase of more than 76 per cent when compared with the previous year and accounting for exceptional costs of £574,000, a surplus of £861,000 on the sale of fixed assets, a £176,000 surplus on revaluation of investments properties and a positive increase in the fair value adjustment for funeral prepayments totalling £1.3 million.
Food sales dipped by 1.72 per cent when compared with the previous year. This is in part down to the increasing competition but also as a result of supply chain problems in 2021, due to a shortage of HGV drivers brought about by the pandemic. Also, a change in customer shopping habits contributed to a changing face in food retail.
Margins were also under pressure, not only as a result of increased competition locally but also due to a drop in income against the previous year from the Co-op’s FRTS central buying group.
However, the Society forged ahead with its investment programme, completing significant capital projects within its Food stores in both Bulkington and Harbury.
The £872,000 project in Bulkington saw the Society broaden its customer offering and create a ‘hub’ experience for shoppers. The store was also divided into two units, with an Indian restaurant moving into the second unit.
The £445,000 refurbishment at Harbury was the store’s first major investment in more than a decade. The store, which has served the village since 1863, now has a broader customer offering and following a survey among locals was developed with the environment and sustainability top of mind.
In March this year the Society celebrated the opening of its £2.7 million store at Lower Heathcote in Warwick.
The latest investment will be followed by the refurbishments of the retailer’s Hillmorton and Balsall Common stores later this year. The Balsall Common store will feature a new coffee shop offering, while next year will see the opening of a drive-thru coffee unit in Wellingborough, Northamptonshire – another first for the Society!
The Funeral Division posted a 2.59 per cent increase in sales during 2021, although the number of funerals in that time fell by 4.79 per cent. The drop comes against an extra ordinarily high number of funerals in 2020, brought about by Covid19.
Pre-paid funerals saw an increase of 12.20 per cent on the previous year.
The Society invested in a new funeral home in Brackley, south Northamptonshire, taking the business over from the Midcounties Co-operative Society. The move allowed the Funeral Division to extend its footprint further south and followed on from the opening of its Towcester funeral home in late 2019.
All funeral homes were rebranded and are now known as Heart of England Co-op Funerals.
The Society’s net worth now stands at £52.8 million – an increase of 15.4 per cent on 2020.
Its healthy bank balance is now at £16.4 million, with a further £5.3 million spent on new projects throughout the year.
Society membership is now at 166,000 – up from 162,500 last year – while the member rewards earned in Food stores over the year topped £367,000.
In his annual report Ali Kurji, Chief Executive of the Heart of England Co-operative Society, said: “We are operating in a very volatile and more complex environment than ever before as food retailing has been changing, and the continued pressure on margins as a result of price reductions by the multiples, in order to compete with the discounters, and customers are now shopping in different ways as we have seen tremendous growth in home deliveries and online shopping.
“We face an extremely challenging and very uncertain 2022 and all the economic indicators are pointing towards a slowdown in the economy as it appears to be losing momentum compounded by the increase in the national living wage by 6.5 per cent and the increase in national insurance from April 2022.”
Speaking of the Funeral Division Mr Kurji added: “We continue to strive to develop our standards to the highest possible level, whilst maintaining a very competitive single price policy throughout all our funeral homes for the benefit of our client families.”