Scotmid solid in face of cost hike

Annual results positive amid increases


AGAINST strong financial headwinds, Edinburgh-based independent co-operative Scotmid has posted a trading profit of £4.8m for the year to the end of January.

While the figure represents a £0.5m decline in trading profit on the previous year, chief executive John Brodie told Scottish Grocer that the society’s team has performed well to reduce the impact of a range of cost increases faced by the sector last year.

“I think everyone in Scotmid has done a good job to mitigate cost challenges,” said Brodie.

“The vast majority of cost increases have fallen within the food business. There’s a large chunk of it from the rates revaluation and the increase to the National Living Wage.”

Brodie also highlighted the increasing cost of auto enrolment pensions, as well as apprenticeship levy contributions, as contributors to the external cost increase of £2m faced by the business last year.

I think everyone in Scotmid has done a good job to mitigate the cost challenges.

In response to these external cost increases, Scotmid has been implementing its “make it simple” programme, an ongoing project which aims to reduce unproductive tasks and implement process simplification and efficiency improvements.

Steps taken by Scotmid over the last year included the installation of upgraded cash solutions in 51 stores, new stock handling trollies in 160 stores targeted at reducing double handling, trialing nightshift deliveries where possible, and the introduction of self-checkout tills in another 24 stores.

Brodie added that while the introduction of self-service would reduce checkout staffing, the investment’s primary goal is to improve customer choice.

John Brodie
John Brodie said Scotmid will invest in its existing estate.

Scotmid also continued to invest in its food-to-go facilities last year, upgrading preparation areas in 183 stores allowing the society to expand its range.

Assessing the health of the overall business, Brodie took a positive view. While Scotmid’s turnover did decline by £2.5m on the previous year, Brodie said this could be attributed to the sale of underperforming Semichem stores and some Scotmid forecourt sites, which were sold as going concerns. And while a weakened pound in 2017 did lead to increased costs for food retailers, Brodie said most retailers had worked hard to keep prices down, adding that the relative strengthening of the Euro had been good for Scotmid’s Semichem stores in Northern Ireland, which benefited from an increase in cross-border shopping.   

Scotmid’s funeral business also put in a solid performance according to Brodie, while the society’s property portfolio continues to perform well.

Looking to the future, with Scotmid’s estate numbering 188 food stores and 99 Semichem stores, the main focus of investment will be the existing estate, although new sites could be added where appropriate. Scotmid also plans to expand its Community Connect charity initiative, initially trialed in its north member region, to cover all of Scotland this year.