Co-op U-turn: How retailer went from ‘brink of collapse’ to opening 100 new stores 

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Co-op U-turn: How retailer went from ‘brink of collapse’ to opening 100 new stores 

Co-op Food, which previously traded as The Co-operative Food, is a brand devised for the retail business of the consumer co-operative movement, whi

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Co-op Food, which previously traded as The Co-operative Food, is a brand devised for the retail business of the consumer co-operative movement, which started in 1844. Local people got together to start the Rochdale Society of Equitable Pioneers that would treat their people with respect and provide affordable food for all, known as The Rochdale Principles and for a large part of the Co-op’s history the core business was the Co-operative Wholesale Society (CWS), which supplied around 70 percent of products to Co-op stores. But, by the turn of the 1900s, the CWS came under strain from high costs and the wholesale group moved to support local stores by starting the CWS Bank, providing financed loans for societies to use for expansion through purchasing new buildings or land.

The movement continued to spread and by the Fifties, the Co-operative’s market share of food retail peaked at around 30 percent, but today that is just 6.4 percent.

The Co-op has faced its fair share of issues in recent years due to the changing face of the retail market and the increasing popularity of German discounters Aldi and Lidl, who now enjoy just shy of 14 percent of the market.

They have also had to compete with the rise of online shopping, including Ocado’s introduction to the market, as well as strapped-for-cash consumers who are now willing to shop around rather than remain loyal to their weekly shop thanks to the financial crisis of 2008.

But, beyond that, a crisis at the Co-operative Bank – which was saved from collapse in 2013 and later offloaded in 2017 – hit the retailer hard.

Co-op Group CEO Steven Murrells

Co-op Group CEO Steven Murrells (Image: GETTY)

Co-op opening its first self-service store in London

Co-op opening its first self-service store in London (Image: GETTY)

That same year, Lord Paul Myners was appointed to the board as a senior independent director and was commissioned to lead a comprehensive, independent review of governance.

He found that the group had been “brought to the brink of collapse” and further damaged by a subsequent management shake-up and a series of boardroom leaks. 

He said this had created “deeply damaging uncertainty for [the Co-op’s] 90,000 employees,” as well as for its millions of members.

But, the group turned things around.

The Co-op has been ruthless and it has paid off. 

As well as managing to get rid of its remaining stake in the beleaguered bank, it also sold a whole range of assets that were not helping its overall performance.

READ MORE: Marks and Spencer’s radical rebrand plan to cut costs and ‘revitalise’ company revealed

Lidl and Aldi have caused the retailer issues

Lidl and Aldi have caused the retailer issues (Image: GETTY)

In 2014, it sold off its farms business, which included 100 residential properties and 27 commercial properties, as well as 15,997 hectares of freehold and third-party-owned land – to the Wellcome Trust for £279million.

That same year Bestway Group bought its pharmacies business for £620million and it also offloaded its travel business and sold hundreds of stores to McColl’s, allowing the Co-op to pay more attention to its convenience stores – which are still in demand.

With that in mind, the company reached an agreement to become the exclusive wholesale supplier to the 2,200 stores across the Costcutter group and in 2018 the group acquired Nisa.

It announced that same year that it had committed £160million to open 100 new food stores in 2019, with a key focus on London, but 18 also planned for Scotland and others will open their doors in places like Blackpool, Manchester, York, Southampton and Bristol.

Consumer specialist at Kantar Worldpanel, Ashley Anzie, told the Independent that opening new stores was a smart move as convenience is still the most important driver for customers.

The rise of online shopping has also hit Co-op

The rise of online shopping has also hit Co-op (Image: GETTY)

Lord Paul Myners

Lord Paul Myners said the company came close to the brink of collapse (Image: GETTY)

He said in 2018: “Quite simply, having a greater physical presence gives consumers less of a chance to choose the competition.”

In the most recent financial reports, The Co-op Group was found to have a seven percent share of the retail market, a two percent increase over the last five years.

A study last month also stated that Co-operative businesses have a better chance of weathering the economic storm expected to hit the UK as the country emerges from lockdown.

The annual Co-op Economy report revealed mutuals had almost double the chance of surviving the first five years after formation when compared with other startup businesses.

Compiled by sector body Co-operatives UK, the study showed 76 percent of Co-ops, were still operating after the difficult first five years of existence. 

The company sold off its banks

The company sold off its banks (Image: GETTY)

100 new Co-op stores have opened since

100 new Co-op stores have opened since (Image: GETTY)

In contrast, just 42 percent of all new companies make it beyond five years.

Collective decision-making, a more rounded approach and not being fixated on maximising profits would give Co-ops, which are owned and controlled by members rather than shareholders, a distinct advantage as the UK economy recovered from the effects of the coronavirus pandemic, the report said.

Reacting to the news, Co-op CEO Steve Murrells said the business played an important role in the social and economic fabric of the UK and were well placed to face the difficult economic conditions in the post-lockdown world.

He said: “Co-ops are in existence to create value for their members and their communities and are not just about maximising profits for shareholders.

“All businesses now face unprecedented challenges, but the fact that many co-ops have community-based ownership means more people are invested in their long-term success.”



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