2025 was a year that Co-op will not want to see repeated. It brought the triple whammy of major disruption from a criminal cyber-attack on its systems, difficult trading conditions affecting some of its biggest sales categories and sharply rising business costs.

2025 saw the Co-op’s revenue decline

The net result of this ‘annus horribilis’ on its recently released annual group financial results was a decline of 2.3% in revenue and 32% fall in operating profit. However, despite this financial downturn, Co-op reported a positive trend in active membership, which rose by one million in 2025 to reach 7.2 million. This has led the business to raise its target for the future, aiming to hit 10 million members in 2030, offering a significantly expanded engagement platform in that timeframe.

Food retail and wholesale outcomes

Within the weakened group performance, both Co-op’s food retail and wholesaling divisions suffered. Food retail sales were down 2.0%, to £7,256 million, and wholesaling (Co-op Wholesale plus Co-op franchise) sales were down 0.9% to £1,387 million.

Excluding the direct impact of the cyber-attack in Q2, Co-op food retail sales are estimated to have seen underlying growth of 1% over the year. However, the business was also affected by some significant headwinds, especially in the tobacco category, which accounts for 14% of food retail sales. Impacted by falling consumption and persistent illicit trade in the UK market, Co-op tobacco sales fell by 9.4%, significantly faster than the overall food retail business.

Non-tobacco categories, in contrast, showed significantly greater resilience, falling by just 0.8%. Co-op has continued to invest in the renewal and improvement of its store estate, but overall, the number of stores owned and operated by Co-op dropped slightly in the year, down by 10 to 2,338.

Quick commerce remained a standout

One area of the food retail business that saw significant ongoing growth was quick commerce. Notwithstanding the cyber-attack, Co-op’s ‘quick commerce’ operation grew by 15% in the year, reaching £534 million. Yet this rate of uplift was significantly lower than in 2024, when sales grew by 46%.

Co-op’s success in sustaining growth in its ‘quick commerce’ operation has been in part achieved by increasing its accessibility to shoppers. In 2025, Co-op rolled out its ‘quick commerce’ service to 279 additional stores.

Co-op wholesale

While Co-op’s wholesale business suffered less disruption from the cyber-attack, it felt a greater impact from tobacco’s decline, which has a notably bigger role in its sales mix, representing 24% of total wholesale sales. As a result, non-tobacco sales in the division were actually up 1.8%, while overall performance was dragged back by a 13.0% drop in tobacco.

2026 and beyond…

Looking forward to 2026, there are signs of a return for headline growth in both Co-op’s retail and wholesale divisions. Retail sales will be boosted by the addition of some 250 Southern Co-op stores once the proposed merger with that society is completed, which is expected in June. In the last reported year (2024/25), Southern’s retail sales were £465 million. As well as gaining some boost from the Southern merger (through its Welcome franchise network), Co-op Wholesale has seen significant business gains in the early part of 2026, including a new long-term supply contract with major forecourt retailer Park Garages, which operates 80 sites nationally.

…As the Co-op faces up to a challenging convenience channel

However, it’s clear that the UK convenience channel still faces significant headwinds in 2026, not least with tobacco sales continuing to decline significantly, while volume growth remains elusive across the grocery sector as a whole.

Furthermore, though the merger with Southern will bring incremental scale to Co-op, it is apparent that the driver behind the move is the falling profitability experienced by that society over the last two years, causing it to close several underperforming stores. This background could suggest that the integration process may bring difficulties of its own.

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