By Scott Wright

THE chief executive of Scotmid has warned the results achieved by the co-operative in recent times are “unlikely to be repeated in the coming years”.

John Brodie was commenting on the difficult outlook facing Edinburgh-based Scotmid, retailers and businesses in general as they face the cost-of-living crisis, surging overheads, and the uncertain outcome of Russia’s war on Ukraine. He was speaking as the historic co-operative, which includes 290 Scotmid retail stores, the 66-strong Semichem toiletries chain, a funeral business and a property investment portfolio, reported a fall in trading profits amid the continuing effects of the pandemic.

Scotmid announced a trading profit of £5.7 million for the 52 weeks ended January 29, compared with £6.4m for a 53-week period previously. That came as it dealt with major supply-chain disruption, record staff sickness levels because of the Omicron outbreak, and a reduced benefit of local shopping versus the lockdown periods of 2020.

The co-operative, which employs around 4,000 people across Scotland, the North of England and Northern Ireland, saw turnover dip by £6m to £403m.

Mr Brodie told The Herald: “The next few years will be very, very tricky, I think. Not just for Scotmid, but for retail in general and many businesses. Looking ahead, the results we have produced for the past few years will be unlikely to be repeated in the coming years.”

Scotmid is facing an “avalanche” of cost increases, Mr Brodie said, while consumer confidence was showing “early signs” of being affected by rising inflation in terms of day-to-say spend. Annual UK consumer prices index inflation rose to seven per cent in February and is forecast to reach 8% later this spring.

Asked if the co-operative was seeing evidence of the cost-of-living crisis in its convenience stores, Mr Brodie replied there were “early signs of it”.

He said: “You are also seeing signs of more frequent visits, but a lower average spend. But some of that is a reversal from the pandemic, when people were out less but spent more when they were out. But undoubtedly, given the pressure on household budgets, and inflationary pressures, it is likely to happen in the coming year.”

Asked if Scotmid has put prices up in convenience stores in response to the rising costs it faces, Mr Brodie said: “We are working hard to offset as many of the price increases we are facing as we can, or at least defer them, but there is a real avalanche of cost pressures on the business. That is across all areas: goods for resale, consumables and things like refit and professional services costs. It is something we have not seen in recent times – that level of cost price pressure on us.”

On Semichem, Mr Brodie said that there had been a “steady improvement in sales as the year progressed”. However, he noted that the Northern Ireland protocol, introduced following the UK’s exit from the European Union, remains an issue, and is continuing to add extra costs and administration when transporting goods to stores in Northern Ireland.

The situation has been exacerbated, he added, by the problems at P&O Ferries, which resulted in services across the Irish Sea being suspended.

Scotmid’s annual report shows that the value of its property investment portfolio reached the “milestone” of £100 million for the first time by year-end. The period saw the co-operative complete the development of eight flats above its food store on Edinburgh’s Leven Street, which are now producing rental income.

Mr Brodie believes that there will be opportunities to add further food stores to the group in the current year, despite the challenges facing the market. Last year, Scotmid invested £12.8m in innovation and capital projects.

“We have a significant capital programme for this coming year, and we will look at opportunities when they arise,” Mr Brodie said.

Scotmid’s funeral business has seen demand for full services return following the restrictions brought by the pandemic, which put limits on the number of people who could attend ceremonies.

Meanwhile Mr Brodie said Scotmid has responded to the plight of Ukraine by making a “substantial cash donation”, and through listing a fund-raising craft beer to support the relief effort. Russian products have been de-listed by the Co-operative buying group, of which Scotmid is a member.

Mr Brodie paid tribute to Scotmid’s staff in stores, whom he declared had done a “tremendous job in the pandemic, right from the start”. All Scotmid stores have remained open throughout the crisis, he said, despite record levels of sickness when Omicron struck last winter.