East of England Co-op and Budgens operator Musgrave both reported profit uplifts for last year, undermining the view that Britain's four big supermarkets are trampling on smaller competitors and that the UK is becoming a 'Tescopoly'.
Profits at East of England Co-op, which operates 137 food stores, rose 5 per cent to more than£9 million in the year to the end of January. Sales hit more than£400 million.
Chief executive Richard Samson said: 'We're offering a good alternative to big supermarkets, with improved ranges and increased local produce. We're in villages that big competitors wouldn't go into, because they would not be profitable enough.'
Food sales at the Co-op, which is the UK's fourth-biggest co-operative, rose 0.5 per cent on a like-for-like basis during the period. Since then, like-for-likes have soared by a further 5 per cent.
Samson added that the Co-op's membership scheme is an added attraction for customers, this year paying out£4 million in dividends. 'It equates to more than double the return of a typical food loyalty card,' he said.
Membership of a multi-million pound buying group allows the Co-op to compete on price with the larger supermarkets.
Irish Musgrave Group, which operates Budgens and Londis in the UK, increased pre-tax profit by 14.2 per cent to 81 million (£55.5 million), on sales of 4.6 billion (£3.15 billion) across its retail and cash-and-carry business in the year to December 31.
Chief executive Chris Martin said: 'We are seeing independent retailers operating in the convenience market bringing a lot of flair to fresh food.'
Planet Retail analyst Brian Roberts said: 'The figures indicate there's room for more than the big four in the UK. Stores such as Co-op and Budgens have something to offer customers above and beyond the likes of Tesco, such as convenience and proximity.' He added: 'If it's a decent business, it will continue to grow profits.'
· Tesco faces a three-day strike next week by distribution drivers at Livingston near Edinburgh.
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