Co-op vows major overhaul to keep funeral business alive
Changing customer habits and a lower death rate in 2019 have dented profits and led to some soul-searching by bosses.
The Co-op is set to overhaul its funeral and life planning business after profits more than halved and the company revealed increased demand for low-cost funerals and cremations without ceremony.
Bosses want to implement the same turnaround they imposed on the food division of Co-op over the past five years, which helped sales in its supermarkets jump 3% to £3.7 billion in the six months to July 6.
On a like-for-like basis the rise was 1.7%, with the company pointing out that this was against tough comparisons last year which included the Fifa World Cup. Underlying pre-tax profits rose from £80 million to £120 million.
The wholesale division also improved, with 90% of Nisa partners now selling Co-op own-brand products, and six franchise stores opened via Costcutter and on university campuses.
But the company warned that a no-deal Brexit would hit the business and could lead to fewer products on shelves.
It said: “With Brexit continuing to create uncertainty, we continue to plan and prepare as best we can.
“In the event of a no-deal Brexit there is an increased risk of some disruption to our supply chain; however, we will do all we can to protect our customers and members from this impact.”
In the funeral business, Co-op said it was particularly keen to improve its offering, in a year which saw the competition watchdog, the CMA, launch an investigation into pricing.
Sales in the division fell 6% to £163 million, partly due to a 10% reduction in the death rate, but also due to the “continued reshaping of the business in response to market changes”. As a result, profits fell from £28 million to just £13 million.
Co-op chief executive Steve Murrells said: “In funerals we are actively re-positioning the business to meet the changing needs of our members. We are the market leader but we will also lead the market in providing better choices and options for our customers in the years ahead.
“Likewise, the development in our insurance, legal and health businesses will enable us to significantly broaden the range of Co-op services, in areas where our members know the Co-op difference can be clearly seen.”
Elsewhere in the business, Mr Murrells said Co-op Health is set to be rolled out nationally by early 2020 and that Co-op has re-entered the life insurance market.
A trial of express deliveries with Deliveroo in London is also set to expand.
Overall, revenues for the entire group for the period rose from £4.83 billion to £5.39 billion, with pre-tax profits – when one-off costs are included – fell from £44 million to £25 million.