Co-op boss Steve Murrells vowed to pursue new opportunities to build its scale in order to minimise price inflation for hard-pressed consumers.

The mutual, which this morning reported underlying pre-tax profit down 48% to £14m in its first half, said that inflation would be an ongoing pressure on the grocery market.

Murrells said: “We are going to see inflation for a while. We’re trying to pass on as little inflation as possible to our customers.

“It feels the right thing to do as people are becoming more strapped for money because of Brexit.”

Murrells said that the Co-op is exploring new growth opportunities, such as its potential acquisition of wholesale business Nisa, to build scale. 

The Co-op entered exclusive talks to take over Nisa for £140m late last month.

“Where we can build scale and hold inflation back that’s a good thing. We’re looking at other opportunities,” he said.

“Our roots are firmly in wholesale. For decades we’ve served our co-operatives. It’s obviously a place to have interest in as it plays to our core strengths.”

“Where we can build scale and hold inflation back that’s a good thing. We’re looking at other opportunities”

Steve Murrells, Co-op

Murrells did not limit Co-op’s expansion to wholesaling. “There are quite a lot of markets that are not serving customers in the right way. There are opportunities where we can offer a different way of doing business,” he said.

Murrells insisted that pursuing new opportunities would not distract him and his management team from rebuilding The Co-op.

“We’re spending 80% of our time focusing on the core. We’re mindful that you can get distracted so the home team is focusing on the core business and we have an away team working on new business,” he said.

A different model

The Co-op posted a slump in underlying pre-tax profits as earnings fell in its insurance business.

However, Murrells said its food business – which notched up a 3.5% like-for-likes sales rise over the half – was in growth.

The Co-op chief executive insisted that its membership rewards, in which it invested £29m over the half, stimulated growth.

“Shoppers realise that our model is different. It gives them a reason to want to come to us.”

“We make choices that others don’t. We’re not here for the short term. We’re here to provide value for our members and to share the wealth.”