Scotmid fighting corner as war intensify

SCOTMID will continue to revamp its hundreds of convenience stores and back local bakeries and other food suppliers as it tackles the grocery price wars.

John Brodie said the retail landscape is still evolving rapidly. Picture: TSPL

The mutually-owned retailer, which is more than 150 years old, warned that tough trading conditions were likely to persist as consumers tightened their belts.

Pointing to major cost-cutting and store closures at rival grocery businesses, Scotmid chief executive John Brodie said the “retail landscape continues to change rapidly”.

He made the comments after unveiling a “solid” set of full-year results, which included an operating profit of £5.5 million, up by £1m from a year earlier. Turnover in the year to 31 January totalled some £436m, a rise of £5m. Like-for-like sales were close to flat.

Edinburgh-based Scotmid, which runs more than 300 outlets across Scotland, the north of England and Northern Ireland, has faced competition in many urban areas from Tesco and Sainsbury’s expanding their convenience store networks and the rise of the German-owed discounters Aldi and Lidl. Recent food price deflation has also made for a tough trading backdrop.

It has countered by bringing in local bakery partners, selling artisan breads and cakes and offering a selection of food to go.

Brodie said the policy of “differentiation” had proved successful and would continue.

“We are pleased with these solid set of figures, helping to deliver a like-for-like sales performance which has been consistently ahead of the market.

“The retail landscape continues to change rapidly as highlighted by announcements from all the major multiples to change strategies including decisions on store closures and future direction.

“The past 12 months has seen us progress our vision for food which has helped differentiate us from the competition with a real focus on concept bakery, local products and the introduction of a number of key value lines.”

There was a slight reduction in the overall headcount to about 4,700 during the year, chiefly due to the closure of a number of Semichem health and beauty outlets.

Scotmid also highlighted a strong balance sheet with assets of £87m.

Since the end of its financial year, the society has unveiled plans for a “merger” with Seaton Valley Co-operative, a small mutual employing about 100 staff across five outlets and a post office in Northumberland.

Brodie added yesterday: “Although this is a positive set of results it continues to be a challenging marketplace which requires us to innovate, work hard and, where necessary, take tough decisions.

“While remaining cautious and measured in our approach, the society will continue to drive new initiatives and look for other potential areas for growth.”

The society’s results came as news of a surprise decline for the wider UK retail sector last month added to fears of an economic slowdown in the first quarter of the year.

The Office for National Statistics (ONS) said retail sales volumes fell by 0.5 per cent in March, the steepest fall since January last year, wiping out a 0.6 per cent surge seen in February. The fall was driven by a sharp decline in petrol station sales.

It added to some economists’ predictions that the UK is likely to have seen a weak first quarter – with gross domestic product figures for the period due out next Tuesday just over a week before the general election.

Others remained optimistic, with Investec’s Philip Shaw noting: “We are not at all concerned by this apparent slowdown in high street activity as the retail sales series has been exceptionally buoyant in recent months.”