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Where to now for the Co-op?

Posted on: April 11th, 2014 by Will Carter

I am reminded of the old Soviet-era Lada and Skoda jokes?
Q. What do you call a convertible Skoda?
A. A skip
Q What do you call a Lada going uphill?
A. A miracle.
The problem with the modern-day Co-op equivalents to these jokes, is that none of the punch lines
are funny.
Watching the painful and drawn-out car-crash involving one of the oldest and best known names in
British food retailing is just depressing.
Q What do you call the 21 man Cooperative Society Board largely made up of elected
representatives from the individual societies?
You see…..It’s just not funny, and the answer to the question would be even less so.
Ben Reid, Coop Board member and CEO of the independent Midcounties Coop, was yesterday
reported as confirming that his Board at Midcounties has “unanimously agreed that if Lord Myners,
as expected, presents proposals which fail to reflect representative democracy or the interests of
the independent societies, then it will vote against them.”
Perhaps Mr Reid has yet to fully appreciate the pretty state the Coop’s “representative democracy”
has landed them in thus far.
Of course Mr Reid presides over a pretty successful independent society within the cooperative
movement. It was recently announced that Midcounties has delivered profits growth of over 20%
and is to distribute a reported £6m bonus amongst its 439,000 members and staff.
But I’m not sure that any of that will be of much comfort to the many more tens of thousands of UK
Coop group employees if the business continues to head lemming-like to the cliff edge. Myners has
warned that “unless the group takes urgent steps to reform its governance so that it generates
sustainable economic value, it will run out of capital to support its business”. In layman’s terms,
translate that as “keep on this track and it may well go bust”!
What Myners proposes may not suit all, but if the alternative is a committee of representatives with
local vested interests, some of whom appear to have extremely tenuous qualifications for the
herculean task ahead, then I know which way I’d vote if my job depended on it.
Perhaps those who truly have the interests of the Coop’s staff at heart should take a look at another
staff-owned retailer with a mid-sized grocery business amongst its other operations.
The John Lewis Partnership runs a somewhat more conventional style of Governance and Board
structure than its ailing rival.
Despite this, I have yet to read of much revolt against JLP’s lack of “representative democracy”
amongst its 90,000 or so staff as they plan what to do with their bonuses; this year these equate to
some 15% of annual salary and last year amounted to some 17%. Oh, and by the way, that’s just a
little bit more than £6m divided amongst 439,000!

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