“We are the largest convenience retailer with a store in every postcode so we are well placed to handle the competition,” The Co-operative Group’s CEO Peter Marks declared as the society unveiled its full-year results this morning.

The Co-op Group’s food business may have the most number of food stores, but as Tesco has learnt to its peril, being the biggest does not automatically mean you’re the best.

The society’s full-year results were less than impressive. Underlying operating profits fell 9.5% to £288m on sales up 1.4% to £7.44bn in the 53 weeks to 5 January. It also reported a 0.7% decline in like-for-like sales.

It knows it has got its work cut out to improve its food business in the face of cut-throat competition. That is why the Co-op blamed its profits fall on having to absorb “significant” inflation and cutting operating and overhead costs to invest in service, price and promotions.

In the past year, the society has been overhauling its supply chain, working on improving availability and trialling new store formats to tailor ranges to the local demographics rather than just putting in a bog-standard national offer.

There are tentative signs the actions are working. Although its full-year like-for-likes were down 0.7%, and were also down in the first three quarters of the year, they rose by 0.3% in the final quarter. And full-year like-for-likes were up 1.9% in its core convenience estate.

The Co-op Group used to be the biggest supermarket chain in the UK, but it was taken over by the likes of Sainsbury’s and Tesco who simply moved faster and offered what customers wanted.

The society is now the fifth-biggest food retailer in the UK, and although it does have the most number of stores, it has to prove to customers that its stores are worth shopping in. Shoppers want a good range, good prices, good promotions, 100% availability, short queues and top customer service.

The Co-op is working on all the above, but it’s still got a long way to go to achieve them. A store in every postcode is a great advantage - but not worth anything if the execution isn’t right.

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