“This conference is about working together and challenging each other. We want to become better as individuals, better as businesses, and better at serving our members more broadly,” said Don Morris, chair of Co-operatives UK, opening the organisation’s 2023 Co-op Retail Conference in Cheshire.
The theme of how co-ops do things differently to make things better was addressed throughout the event, alongside an assertion of the power that can be unleashed when co-operatives co-operate with each other.
Nowhere was this more clearly articulated than in the address by Co-op Group CEO Shirine Khoury-Haq, whose blunt assessment of the cost of living crisis on co-op members, colleagues and communities underpinned a clear desire – and practical plan – to revitalise the UK’s retail co-op movement.
“Our shared history shows that as co-operatives we are disruptors and a powerful commercial beast when we really embrace what it means to be co-operatives and when we work together as only co-operators can,” she said. “The retail movement seems to have lost this over time, in my opinion. And my question is whether we have the ability to find that fire again, and address some of the challenges that caused the dominance of this movement to be eroded over time.”
Speaking on the first anniversary of her appointment as interim CEO (ahead of her permanent appointment last August), Khoury-Haq said working at the society gave her “the ability to combine my passion for commercial business with the need to do the right things and do business in the right way”.
Appointed following the resignation of Steve Murrells, she immediately faced into a series of challenges, including an SAP (resource planning software) system that needed to be remediated, disrupted supply chains and the tail end of the pandemic.
Read more… Inflation prompts words of warning from IGD at the 2023 Co-op Retail Conference
“We had to take some very strong action very fast to reduce our operating expenses, to better allocate our capital to improve cash generation and to reduce net debt,” she said. “Only that would give us the ability to shield our members and our colleagues for the short-term cost of living challenges while setting up for the future.”
To aid this, Khoury-Haq undertook a significant leadership restructure, creating a new operating board, which “brought our key leaders together, that helped us to disseminate information and make decisions very quickly”.
“We had to improve operational efficiency, and how we run our co-op, to ensure that we were running a successful business while delivering on our vision,” she said, adding that it’s because co-ops have been embedded in communities for so long that they are “well-placed to create meaningful societal change”.
Co-ops can also create change through lobbying, she told delegates, describing a series of meetings with groups across the political spectrum. “It’s clear to me how much [politicians] want to hear from the co-op movement [and] just how highly regarded our movement is. They understand the impact co-operatives can have on changing the direction of this country.”
The Group is refining its commercial strategies in response to recent challenges, with a focus on membership, e-commerce, wholesale and franchise, while “challenging legacy assumptions in all these areas”. And there will be investment in digital technology and data, and a continued focus on colleague wellbeing. “We are building a different culture, Khoury-Haq said, “removing hierarchy and looking at servant leadership. Leaders should serve people, not the other way round.”
Principle 6 in action
“At the inception of this movement, we existed to provide affordable and ethical access to food and goods, with the profits being shared among our members for their benefit and for the benefit of their communities. And I think that that’s just as relevant today, as it was then,” said Khoury-Haq.
She acknowledged the challenges from competition, from the lack of capital compared with retailers such as Sainsbury’s, “who can find £400m pounds to go and invest in property”, the encroachment of Asda and Morrisons into the convenience sector, and the sheer scale of companies such as Tesco, “which has just opened its 2,000th store and shows no signs of stopping”.
“We’re doing all this while fighting the discounters in the bloodbath that is food retail and while responding to consumer demand to be more socially responsible and to give to communities,” said Khoury-Haq. “I look at our collective 6% market share and I worry about how we respond to those challenges when we don’t have access to the kind of capital or scale that others have.”
But, she said, through immersing herself in co-operative heritage and speaking to fellow co-operators in the UK and Europe, she has learned a big lesson. “That big lesson is that we have something that none of the others have. We have the idea of co-operation.”
She described how Co-operatives UK CEO Rose Marley gave her a challenge: “Rose told me that for any business issue, don’t look at why co-operation is an issue, look at why co-operation could be the answer. Those are really wise words. And if we can make that idea a reality further through making the principles flourish, then we can meet the challenges that we face.
“And I don’t say that as some piece of romantic, conceptual rhetoric. I say that as a hard-headed accountant and as COO with decades of global experience.”
She shared the experience of meeting the CEO of Finnish retail co-op S Group. “The population of Finland is 5.5 million, and a staggering 3.9 million are co-op members. Their loyalty scheme offers 5% cashback. They’re cheaper than any other retailer and have a 47% market share. Norway and Denmark have similar stories […] And in all of these examples, what they have in common is that the co-operative movement has come together to be very clear about what are core and non core activities. They’ve consolidated their buying, their distribution, their IT, their marketing, their membership platforms, and they benefited from significant common footprints, as well as economies of scale.”
This means that instead of focusing on admin, the co-op serves its members, engages with its communities and concentrates on “being a formidable, cooperative, collaborative, competitive force”.
Her question for delegates was “how can we work together to create a co-operative ecosystem that will challenge our competitors while promoting corporate values and doing good business as only we can?”
Answering a question about the role of the Group within the movement, she said her focus is on the movement. “The Co-op Group is undeniably big, but I see us as one amongst equals. I believe that collectively, as a co-operative movement, we’ll be more successful than anyone one of us could be individually if we work properly and quickly, and that includes the Group.”
But for this to work, she added, “we would all have to give up things we think we own for the greater good, and I expect the Co-op Group would have to give up quite a lot”.
