Co-operative Group

"Cooperative Wholesale Society" redirects here. For general information on organisations of this name, see Co-operative Wholesale Society.
Co-operative Group Limited
Consumer cooperative
Founded 1844 (1844)[1][2]
Headquarters One Angel Square,
NOMA, Manchester
, United Kingdom
Number of locations 4,900 stores
Key people Euan Sutherland (CEO)
Industry Retailing
Services Grocery retailing
Financial services
Travel agency
Agriculture
Car dealership
Funeral services
Pharmacy
Legal services
Electrical
Revenue £11.9 billion (2010)[3]
Net income £181.9 million (2010)[3]
Members over 7 million (2012)[4]
Employees Over 100,000 (2013)
Divisions The Co-operative Food
The Co-operative Pharmacy
The Co-operative Travel
The Co-operative Funeralcare
The Co-operative Banking Group
The Co-operative Motor Group
The Co-operative Legal Services
The Co-operative Electrical
Subsidiaries Manx Co-operative Society (Est. 1920)[5]
Website co-operative.coop

The Co-operative Group is a British consumer cooperative with a diverse range of retail businesses. It is co-operatively run and owned by its members. It is the largest organisation of this type in the UK, with over 7 million members,[4] who have a say in how the business is run and how its social goals are achieved. The group comprises a family of businesses, including: Food, Travel, Financial Services, Pharmacy, Funeralcare, Legal Services, Motors and Online Electricals. The organisation is widely called "The Co-op", particularly the food and banking divisions.

Membership is open to everyone aged 16 and over, provided they share the values and principles upon which the group was founded. Every year members receive a share of the group's profit, based on the total amount of profit made, and the amount of money they spent with the organisation in that year. Its slogan is 'Here for you for life'.

The Co-operative Group has over 100,000 employees across the UK. The group has headquarters in Manchester on a listed eight-building estate which includes the CIS Tower, Hanover Building, New Century House and Redfern Building.[6] The group's head office is One Angel Square which opened in 2013.

History

The Co-operative Group developed over 165 years from the merger of co-operative wholesale societies and many independent retail societies, changing from a wholesale operation to a major retailer. The group's roots can be traced beyond the Rochdale Society of Equitable Pioneers established 1844.[7] The eight Rochdale Principles included distributing a share of profits according to purchases that came to be known as 'the divi'. In 1863, the North of England Co-operative Wholesale Industrial and Provident Society Limited was launched in Manchester by 300 individual co-operatives in Yorkshire and Lancashire. By 1872, it was known as the Co-operative Wholesale Society (CWS). Throughout the 20th century, smaller societies merged with the CWS, including the Scottish Co-operative Wholesale Society (SCWS) in 1973 and the London-based South Suburban Co-operative Society in 1984.


By the 1990s, CWS's share of the grocery market had declined and the viability of its business model was in doubt. It sold its factories to Andrew Regan in 1994 and in 1997 he made a hostile £1.2 billion bid to take it over. There were allegations of "carpet-bagging" — new members who joined to make money from the sale — and fraud and commercial leaks. After investigations by a private detective and a subsequent criminal court case, Regan's bid was rejected and two senior CWS executives were dismissed and imprisoned for fraud. Regan was cleared of all charges. The episode proved to be a catalyst for rejuvenation which is continuing today. Tony Blair's Co-operative Commission, chaired by John Monks, made major recommendations for the co-operative movement, including the organisation and marketing of the retail societies.

In this climate, after years of aborted discussions, CWS merged with its affiliate Co-operative Retail Services (CRS) in 2000.[8] The Society's headquarters is on the north side of Manchester city centre near Manchester Victoria station. The complex includes two tower blocks, New Century House and the solar panel-clad CIS Tower. Other independent societies are part owners of the Group and their representatives are elected to the group's national board. The Group manages the Co-operative brand and the Co-operative Retail Trading Group (CRTG), which sources and promotes goods for food stores.[9] There is a similar purchasing group (CTTG) for co-operative travel agents.


At the start of 2007, the group began discussions with United Co-operatives, the UK's second-largest co-operative, about a merger of the societies.[10] On 16 February 2007, the boards announced they were to merge subject to members' approval, and on 28 July 2007 the new society came into being. At the same time, the group transferred the engagements of the Scottish Nith Valley Co-operative Society which, while trading profitably, was suffering a burden with its pension fund commitments.[11] In July 2008, the group announced a deal to purchase the Somerfield chain of 900 supermarkets and convenience stores.[12][13] The sale was completed on 2 March 2009, costing £1.57 bn.[12]

Also in 2008, the group bought ten convenience stores trading as Bell's and Jackson's in the north and east of England from J Sainsbury.[14] In autumn 2008, Lothian, Borders & Angus Co-operative Society members voted to transfer of engagements to the Co-operative Group. The transfer came into effect on 13 December 2008.[15] The group announced in November 2008 that despite the economic downturn, half year profits had risen by 35.6 percent to £292.6 million for the six months to June 2008.[16] In January 2009, Co-operative Financial Services and the Britannia Building Society announced their intention to merge, subject to regulatory and member approval. Members of the Plymouth & South West Co-operative Society joined the Co-operative Group in September 2009.[17]

The group's reputation suffered a blow in 2007 after it was fined £250,000 because 38 of its 41 stores in Sussex failed fire safety inspections.[18] It was fined £210,000 in 2010 after an investigation at one of its Southampton stores.[19]

In May 2010, the Co-operative Group unveiled plans to build a new headquarters in Manchester. The initial phase of construction has commenced on Miller Street near the existing estate where the Group has been based since 1863. The project, entitled NOMA, aims to reflect ethical values of the organisation in its design, construction and its relationship with employees and the surrounding communities. The centrepiece of the initial development is One Angel Square. Occupation of the new building began in early 2013.[20]

In May 2013, after recognising inadequate capital levels in its banking group, Euan Sutherland took over from Peter Marks as chief executive.[21] That month Moody's downgraded the bank's credit rating by six notches to junk status (Ba3) and the bank's chief executive Barry Tootell resigned.[22] The difficulties stem largely from the commercial loans of the Britannia Building Society, acquired in the 2009 merger.[23] The Co-op intends to sell its life insurance business to Royal London releasing about £200m in capital, and is planning to dispose of its other insurance business. Further financial restructuring will be required.[21] On 5 June Richard Pennycook, former finance director of Morrisons, was named Co-operative Group's finance director, and Richard Pym, former chief executive of the Alliance & Leicester bank, as chair of the Co-operative Banking Group and the Co-operative Bank.[24]

Marketing and brands

CWS became Co-operative Group (CWS) Limited on merger with CRS in 2001. CWS Retail had been formed in 1933 and demerged in 1957 as CRS, with the purpose of opening shops in co-operative deserts and to take over failing retail societies. The combined Group merged with United Co-operatives, based in Yorkshire and North West England, in 2007, reinforcing its position as the largest consumer co-operative in the world.[25] At this time the current name, Co-operative Group Limited, was adopted.[26]

The modern Co-operative Group was formed from a large range of different independent societies with separate brand identities which led to a lack of consistency giving an incoherent message to consumers.

In 2007, the group began a re-brand of its estate to create a unified identity. The four-leaf clover 'Co-op' brand, introduced in 1967 and adjusted in 1993, and those of most of its other businesses including Travelcare and Funeralcare, was phased out in favour of The co-operative strapline.

With more than 4,000 stores and branches to convert to the new identity the process has been cited as the "largest rebranding exercise in UK corporate history."[27] The Co-operative Group launched its largest television advertising campaign in 2009. The two and a half minute advertisement aired for the first time during Coronation Street on ITV. The advertisement, created by McCann Erickson, features the Bob Dylan track "Blowin' in the Wind", a rare occasion that he has allowed his music to be used for commercial purposes.

Businesses


The group has 85% of the co-operative retail business in the UK and substantial shares in wider markets, including travel, funerals and pharmacies.

The Co-operative Food business is the largest division of the group with over 3,000 stores of various sizes and the biggest geographical spread of any retailer. The stores are mainly in the convenience and medium sized supermarket sector, with some larger superstores.

Co-operative Travel operates 450 travel agencies made up of 'Travelcare' and 'Co-op Travel'. The business has direct sales channels through telephone, home workers, and the internet. In July 2009 the business launched its own tour operation as a joint venture with Cosmos Holidays. On 8 October 2010 it was announced that Co-operative Travel and the Thomas Cook Group of travel agencies were to be transferred into a joint venture owned 70% by Thomas Cook Group and 30% by the Co-operative Group creating the UK's largest travel network.[28] The merger was referred to the Office of Fair Trading as a result of monopoly concerns.[29]

The Co-operative Funeralcare is the UK's largest funeral director with over 800 funeral homes, many of which retain their private names whilst others operate under the co-operative brand.

The Co-operative Pharmacy is the third largest community pharmacy group in the UK with nearly 800 branches. It has a nationwide presence.

For many years, the CWS's financial subsidiaries were separately managed. In 2002 they were brought together under an umbrella society, Co-operative Financial Services, the Co-operative Banking Group, which is made up of the Co-operative Insurance and the Co-operative Bank, including the internet bank Smile, and the former Britannia Building Society; it has over four and a half million customers.

Co-operative Legal Services is a national legal services provider. Services cover writing wills, probate, conveyancing, legal assistance with accidents and personal injuries and employment law. The group announced the formation of this division, based in Bristol, in April 2006.[30]

Co-operative Farms manages over 70,000 acres (280 km2) of land across Great Britain which provides an increasing number of products, such as soft fruit, potatoes, flour and cider, to Co-operative Food stores allowing the group to further differentiate itself from competitors. The Co-operative is the largest farmer in the UK.

The Group has interests which span retailing, property investment and land development.[31] Co-operative Clothing design, manufacture and distribute workwear, businesswear and uniforms for catering, construction, beauty and most other industries under its own label. The Co-operative Electrical sells electrical products, from kitchenware and white goods to home entertainment. The Co-operative Motor Group is one of the top 50 motor dealers in the UK and represents ten motor manufacturers.[32]

Former businesses

Syncro was the rebranded engineering and building services business of the Co-operative Group, based in Salford. Syncro was sold in 2006.

Associated Co-operative Creameries (ACC) was the group's milk processing and distribution division. ACC handled logistics of the retail business but this responsibility was transferred to Co-operative Retail Logistics before it was sold to Dairy Farmers of Britain, a farmers co-operative, on 10 August 2004.

The group withdrew from the department store business after many years of increasing losses, with several stores being acquired by the Anglia Regional Co-operative Society, and the remainder closed. Many shops had been in poor locations and had suffered from under-investment. Initially, two stores were to be retained in Perth and Tunbridge Wells to trial of a new style of department store but were closed in 2006.

Shoefayre, established in 1959, as Society Shoes was co-owned by several co-operative societies and became owned and managed by the Co-operative Group. In 2006, it reported operating losses of £6 million and in 2007 was sold to Shoe Zone.[33]

Dividend and membership scheme

The idea of co-operative trading revolutionised food retailing with the dividend, often known as "divi", and the "divi number" became a part of British life. The way in which co-operative retail societies are run for the benefit, and on behalf of their members sets them apart from their modern-day competitors. The dividend is a financial reward to members based on each member's level of trade with the society. The distribution of profits on the basis of turnover rather than capital invested is a fundamental difference between a co-operative and most private sector enterprises.

Historically, members' sales would be recorded in ledgers in society's stores and at the end of the collection period a proportional payment would be made to the member. As the societies grew, and the number of members increased, the method of using ledgers became cumbersome. As a solution, some societies, including Co-operative Retail Services, issued stamps to members for qualifying transactions. Members collected stamps on a savings card and, when the card was complete, would use it as payment for goods or deposit into their share account.

By the late 20th century the group's predecessors and then the Co-operative Group no longer paid true dividend as it had become a drain on limited resources, although several independent societies (such as Anglia Regional) continued to do so. In the mid-1990s a loyalty card scheme, in the style of the Tesco Clubcard, was introduced which used the dividend brand.[34] These loyalty cards were inspired by the co-operative dividend but were little more than marketing exercises and a way to gather useful customer information. Co-operative customers, not just members, could sign up and receive a swipe card to record purchases with vouchers sent out twice a year which could be exchanged for cash or goods.

In September 2006 the Co-operative Group relaunched "true" dividend whereby a proportion of the profits of the Co-operative Group is returned to members. To emphasise the change, the scheme is now called the Co-operative Membership and members earn a "share of the profits". New members are recruited by allowing them to deduct the refundable subscription for a £1 share from their first dividend. Members can collect points to increase their share of the profits by using the services provided across the whole family of businesses. In 2008, the dividend almost doubled to £38 million, equivalent to 2.63p per point (one point being earned for each £1 food purchase), reflecting an 8% increase in underlying profit.[35]

Group membership increased sharply in the first year after the relaunch, to 2.5 million with many more young people who have an affinity with the co-operative values and principles attracted to join.[36][37][38]

In 2007, the Oxford-based Midcounties Co-operative joined the group's membership scheme allowing its members to earn dividend at Co-operative Group stores and vice versa. It was the first independent co-operative to adopt the new Co-operative branding. Since then, other independent co-operatives have joined the reciprocal membership dividend scheme, including Anglia Regional Co-operative Society (2008), Southern Co-operatives (2009), Chelmsford Star Co-operative Society (2009) and Midlands Co-operative (2010).

Executive remuneration

The Annual Report cites a number of factors in determining executive pay, including "attracting, retaining and motivating senior Executives of the appropriate calibre to further the success of the Group" and "ensuring that the interests of Executives are aligned with those of the Group and its members".

Former CEO Peter Marks was paid a basic salary of £1,014,000 in 2012, with a performance-related bonus of £103,000. The basic salaries of the thirteen executives adds up to £4,836,000, with their performance related bonuses adding up to £240,000.[39]

Co-operative practices

As a co-operative, the group places importance on ethical and transparent trading and reporting, and democratic accountability and participation. Retail trading areas are overseen by area committees of twelve members, which have annual elections and meetings for all members. The Area Committees also distribute, via the 'Community Fund', sums of up to £2000 per recipient, to various good causes. The Community Fund is made up of donations from members "share of the profits" which are put into this central pot.[40] The Area Committees also elect members onto regional boards, there are 7 regional boards throughout the United Kingdom, the most northerly of these is the Scotland and Northern Ireland Regional Board. A national board includes directors elected from regional boards, plus representatives of other societies, the corporate members. Individual stores may have member forums. Unlike a pure consumer co-operative, voting rights are shared between the corporate members and the individual consumer members, as described in an annual report:

Voting for corporate members is in proportion to trade with the society. Each individual member has one vote in the appropriate region of the society and each region has voting rights calculated on the same basis as a corporate member.[41]

As the UK's largest co-operative, the group plays a key part in the co-operative movement. It is a major sponsor of new co-operative ventures, local initiatives through Co-operative Action and Fairtrade promotion.

Political ties with the wider Cooperative and Labour movements

The Co-operative Group, as the largest retail business in the UK Cooperative movement, is the biggest affiliate supporter of the Co-operative Party, which fields candidates in UK national, regional and local elections on joint tickets with the Labour Party, its sister party. In addition to core aims of furthering cooperative values and mutualism in Parliament and on the national stage cooperative party members, activists and representatives (MPs, MSPs, AMs and councillors) campaign on wider social issues, including "The Feelings Mutual" campaign. The Co-operative Group facilitates, takes part in or owns services provided for other UK Consumer Cooperative Societies, supports community concerns and projects and runs ethical and social campaigns and advertising and events which correspond to the interests and values of the democratic society and the wider community.

List of corporate members

As of 2011, 22 independent consumer co-operatives are corporate members or customer owners, of the group. They invested share capital to found or join the group's wholesaler predecessors, such as the North of England Co-operative Wholesale Industrial and Provident Society and the Scottish Co-operative Wholesale Society. These co-operatives are represented alongside the regional boards at annual meetings and in the board of directors, and are entitled to dividends based on the amount of their purchases from the group.

Society Website Founded Members Activities

(number of outlets)

Allendale Food retail (1)
Anglia Regional arcs.co.uk 1876[42] 216,102 Food retail (29), Funerals (22), Travel (11), Non-food retailing (35), Petol retailing (11), Opticians (3)
Chelmsford Star chelmsfordstar.coop 1867 52,937[43] Food (36), Non-food (2), Travel (2), Funerals (6)
Channel Islands ci-cooperative.com 1919 Food (16), Non food (3: two 'Homemaker' stores and one 'Totalsport' store), Travel (2)
Clydebank 1881 Food (6), Non-food, Funerals, Post Offices
Coniston conistonco-op.co.uk 1896 Food (1)
East of England eastofengland.coop 1858[44] ≈350,000 Food (133), Non-food (14), Travel (12), Funeral (30), Pharmacy (8), Optician (3), Motors (3), Jewellery (2), Education Centre (1)
Grosmont (North Yorkshire)[45][46] 1867[47] Food (1)
Heart of England heartofengland.coop 1832[48] 179,657[49] Food (33), Non-food (21), Funeral (9), Travel (3), Post Offices (4)
Hawkshead[50] 1881[51] Food (1)
Langdale[52][53] 1884 Food (1)
Lincolnshire lincolnshire.coop 1861[55] 228,00 (2013) Food (77), Bakery (1), Filling Stations (10), Pharmacies (48),

Post Offices (40), Travel (13), Funeral (17), Coffee Shops (2).

Midcounties midcounties.coop Food (147) Funerals (69) Travel (41) Pharmacies (44) Motors (12) Nurseries (6)
Midlands midlandsco-op.com Food (160), Non-Food (6)
Penrith penrithco-op.co.uk Food (10), Non-Food (1)
Radstock 1867 Food (11) Non Food (1)
Scotmid scotmid.coop Food (129)
Seaton Valley [2] Food (1)
Shepley Food (1)
Southern southern.coop Food (108) Funerals (16)
Tamworth tamworth.coop Food (14) Non-Food (1) Funerals (7)
Wooldale wooldale.coop Food (3)

Achievements and criticisms

In 2002 the society gained Worldaware's 2002 Shell Award for Sustainable Development for its use of Fairtrade goods.[56] and in 2007 it won a Queen's Award for Enterprise in the Sustainable Development category, in recognition of its business practices, including its pioneering stance on Fairtrade and the environment.[57] In January 2010, the society appeared on the shortlist for the Transform Awards for rebranding and brand transformation in a number of categories [58] A 2011 Which? survey claimed that the Co-operative was the least favourite grocer with only 46% satisfaction among customers compared to Waitrose which achieved 85%.[59]

At the end of April 2012 The Co-operative Group, announced that it was "no longer engaging with any supplier of produce known to be sourcing from Israeli settlements." This involved the ending of contracts amounting to around £350,000 with a number of companies sourcing products from settlements built on Palestinian territories, but not Israeli companies in general.[60]

The Co-operative Bank has consistently been one of the highest rated banks in the UK for customer satisfaction.[61]

See also

Notes

References

External links

  • Co-Operative Group
  • Co-Operative Group Ethical Plan
  • The Co-operative Food
  • Co-operative Motor Group
  • Co-operative Travel
  • Co-operative Membership website
  • Co-operative Group (CWS) Ltd. History
  • The Origin of the "Wholesale", George Jacob Holyoake: 'The Rochdale Pioneers'
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