The Co-operative group, Britain’s largest mutual retailer, said today it will give £38.1million to its customers under its dividend scheme – almost double last year’s pay out - as profits soared 35 per cent.

The Co-operative’s 2.5 million members will earn 2.63p for every point earned across its businesses, which ranges from shops to travel, funeral and banking services.

The windfall comes after the Co-op reported a 35 per cent increase in profits to £322.7m for the year to January 12.

“It is only right that our members, who ultimately own and control the business, share in our success,” said Patrick Allen, director of marketing at The Co-operative Group.

He added, “At a time when communities are becoming increasingly dominated by a handful of large and impersonal businesses, we are showing consumers that being a member of The Co-operative is a totally different experience from being just a loyalty cardholder with another retailer.”

The dividend is linked directly to the firm's profits and was launched in 2006, replacing a loyalty card scheme.

Members to the profit-share scheme receive a cash payment based on the points they earn when they trade at any of the group’s businesses. A member who spent £10 a week in a Co-operative food store over a year would earn 520 points, earning a payout worth almost £14. One who spent £1,000 on a holiday from the Co-op's travel services would earn 1000 points and a £26.30 dividend. While a person with a mortgage of £50,000 at the Co-operative bank would earn 2500 points, or a £65.75 payout.

The group’s profits reflect the continuing trend of shoppers looking for the best value in the wake of the credit crunch. In the supermarket sector, the likes of Lidl, Aldi and Nettor have been picking up thousands of “hard discounters” who are looking get more value from their shopping basket.

Market research released earlier this month shows that sales at Lidl were up 9.6 per cent in the 12 weeks to May 18, while Aldi recorded an 18.9 per cent increase. Unglamorous frozen-food retailers Iceland also notched up a sales surge of 12.2 per cent. The research showed that increasingly cost-aware customers had not abandoned the likes of Sainsbury’s and Waitrose, but were mixing and matching cheap basics from a lower-end store, with more expensive items from the likes of Tesco.

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