“Championing a better way of doing business for you and your communities,” is the new business purpose for the Co-operative Group.
It was announced by Richard Pennycook, the Group’s interim chief executive, following the organisation’s annual general meeting. He said the purpose had been designed to enable the society to go back to its original co-operative roots and has been developed with the Group board, members and colleagues.
As well as bringing rigour to its finances, the Group aims to continue delivering True North, a five-year self-funding strategy to transform the Group into the best convenience store.
In April, the Group announced historic losses of £2.5bn and is currently paying £100m in interest payments on £1.4bn of debt. Failings in management and governance have caused substantial losses for the Group, with more
than half of the assets built up over the last 150 years lost in the last four years.
“I am hugely excited by the next stage of the journey,” said Mr Pennycook. “The good news is that the Co-op is still an organisation that people want to survive and flourish. We are down but we are not out. We may have lost or way but nobody wants us to disappear.”
He added: “No other business in the UK can offer an alternative of our scale. You shop, we share. It is our business model and it has been here all along.”
He added that the Group’s main aim was to get back to being a campaign organisation led by the community. The purpose is focused on emphasising the co-operative difference by addressing some of the most concerning social issues which are relevant to the business and its members. The Group said it would continue its commitment to ethical values and sourcing and will aim to provide immediate and tangible benefits for members and also for customers who are not yet members.
It plans to enhance customers’ experience by providing better prices, great quality and excellent customer service.
“No other business in the UK can offer an alternative of our scale. You shop, we share,” said Mr Pennycook. The co-operative will continue to remain rooted in the local community by being locally relevant and reinforcing reasons why members and customer should be loyal to the Co-op, he added.
Why a new purpose?
In the 1950s, the co-operative sector had the equivalent of 23% market share – but today the Group accounts for only 6.4%. “Other retailers caught up and we stopped being different,” said Mr Pennycook. To address this, the Group aims to remain rooted in the local community by being locally relevant and reinforcing reasons why members and customers should be loyal. A new business plan and blueprint for the society will be released at the Group’s half-yearly meeting in November.
At the meeting, Steve Murrells, chief executive of the Co-operative Food, said that over the next five years the Group will focus on simplifying the business, including using one payroll system, one membership database and one IT platform. According to Mr Murrells, the current portfolio of the Group does not work together.
“Simplicity will make this business achieve so much more. But we have to accept that as a business we must get the debt under control to grow. We need to be brave enough to see through the sale of farms and pharmacies.”
Mr Pennycook said the Group would focus primarily of its food business but that it would strive to be the best provider of retail, funeral, legal and insurance services.
Nick Folland, chief external affairs officer at the Group, added: “Our foundations have to be secure and only when we are comfortable that they are can we begin to invest in future. We have a world-class purpose. We must take the time to deliver in full. This is a once-in-a-generation opportunity to bring purpose back to life.”
This could be done by modernising the delivery of the co-op difference, he said, arguing that the purpose could only be put into action by placing communities at the heart of the business. The Group will increase investment in community hubs, he added.
Community pioneers
The Group’s strategy will also seek to reinvent the membership offer and engage more with employees. A new pilot scheme aimed at transforming staff into “community pioneers” has already been in place in a number of stores, leading to an increase in sales. Community pioneers in the food stores were given time, a small budget and a tool kit for community engagement.
“Nobody should just work at the Co-op. Colleagues should become champions of our purpose,” said Mr Folland.
Richard Pennycook added that the executive would continue to work with members to assess the best way for them to get involved.
He said the Group will also look at how to make the best use of the digital technology to communicate with its members. He explained how the Group would combine its membership database to get an accurate picture of its members
and identify the best way to engage with them.
With the new purpose, the Group aims to revitalise its brand by developing a new vision based on the co-operative’s traditional values. This will include investing in systems and processes to increase efficiency, investing in people, dropping food prices and modernising.
“Many competitors have stolen our clothes. It’s not enough for us to moan about it we have to make it meaningful for people to shop with us because our profits stay with the community,” said Mr Pennycook. “If there was ever a time for a strong Co-op it is now.”
What does the purpose mean?
The purpose: “Championing a better way to do business for you and your communities.”
- Championing: Part of the heritage, taking a stand, making a noise on a small number of social issues which are relevant to the businesses and its members lives.
- Better way of doing business. The Group needs to be commercially successful, building a sustainable way of doing business that is mutually beneficial, recycling our success into strengthening communities. Continuing its ongoing commitment to ethical values and sourcing
- For You. Immediate and tangible benefits for members and customers who are not yet members. Functional benefits, such as better prices; great quality; right location; excellent customer service; emotional benefit – feels good and feels right
- Your Communities. Enabling and strengthening communities, being locally relevant and reinforcing reasons why members and customers should be loyal to the Co-operative Group.
