The Co-operative Food is ditching its “one size fits all” store model to better appeal to local shopper demographics.

The retailer will try new formats and has revamped two stores in the past two weeks to introduce tailored price promotions and ranges to suit the affluence of the surrounding areas.

Co-operative Group chief executive Peter Marks told Retail Week that the “look and feel” of the shops have been changed and they have already shown encouraging results.

Marks said: “We have a ‘one size fits all’ business model which is not appropriate [across the board]. We need to play with categories depending on the location of the stores.”

He said the two trial stores –featuring tailored merchandising and ranging – had delivered “stunning” results by deploying “a full menu that matches our competition”. 

Group chief financial officer Stephen Humes said: “We are talking about the importance of range, pricing and promotional packaging. The whole market place is seeing a swing into value and you have to range appropriately.

“If the store is all diamonds and pearls you can give the impression you are too expensive. We have to move away from a ‘one size fits all’ mentality and be more local.”

Kantar Retail retail insight director Bryan Roberts said: “The Co-operative Food has all the ingredients it needs to create a more propelling proposition but there is a perception that it is too expensive; it’s no fun to shop there and its service needs polishing.”

Last week, The Co-operative Food reported a 20% fall in operating profit to £309.4m in the year to December 31 2011. Like-for-likes slid 2.1%.

Marks blamed the fall on “the worst trading conditions of my 40 years in retail”.

The retailer said TV advertising has been designed to “shout value”. It has improved its supply chain infrastructure and will launch or remodel 1,400 own-label lines this year.