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The Co-op said it will open 50 new supermarkets in the second half of the year after 'exceptional' demand for food during the coronavirus pandemic lifted sales.
It also will invest 'some extra income' into lowering food prices to remain competitive as as 'price becomes the dominant consumer consideration in response to a deep recession'.
Recently, rival supermarket Morrisons also announced its 'biggest ever price cuts on customer favourites', adding it needed to 'compete in recessionary times'. © Provided by This Is MoneyGearing up for price war: The Co-op said will invest 'some extra income' into lowering prices
The Co-op, which had paused its store opening programme due to the pandemic, has now resumed it and plans to invest £130million on it for the rest of the year.
The investment will also include the 'significant' extension of 15 stores and refurbishment of a further 100 stores. It says the move will create 1,000 jobs before the end of the year.
It comes as the Co-op has emerged as one of the winners of the coronavirus pandemic, with food sales rising 5.2 per cent to £3.9billion for the first half to 4 July.
Like-for-like sales in the second quarter alone rose almost 10 per cent, as customers shopped closer to home and ate out less frequently during the lockdown.
The growing trend of local shopping also helped its convenience stores Nisa, which saw wholesale revenues rise 14 per cent to £801million.
Recent figures by Kantar confirm the Co-op's as one of the Covid winners, showing sales rose 13 per cent in the 12 weeks to September 6.
Despite growing competition and the supermarket not expecting the same peak in sales seen in recent months, chief executive Steve Murrells said the group was 'well positioned. © Provided by This Is MoneyCustomers shopping closer to home also helped the Co-op's convenience stores Nisa, which saw wholesale revenues rise 14 per cent to £801million
'As we look to the rest of this year and in to 2021, we expect there to be on-going costs related to Covid-19 but on a lesser scale than in the first half,' he said.
'Meanwhile, we'll be investing some of the extra income from the start of the year into food price reductions in the second half as our members and customers start to feel the impact of the recession.'
The Co-op Group overall, which also includes the funeral and insurance business, saw total revenues increase by 7.6 per cent to £5.8billion for the first half.
The funeral business revenues rose 3.5 per cent to £148million,with a 22 per cent increase in volumes offset by a lower average revenue per funeral due to Covid-19 pricing restrictions.
The group said the pandemic had a total impact of £54million on its half-year figures and expects this to rise to £97million for the full year.
Video: UK economy extends recovery from COVID crash, growth seen fading (Reuters)