Yet more controversy surrounded the Co-operative Group today with news emerging the society has lost another chief executive.

Yet more controversy surrounded the Co-operative Group today with news emerging the society has lost another chief executive.

This comes at a particularly bad time for the society which is about to report one of its biggest losses in its history. So what does all this mean for the future of the society?

Well, it suggests a more conventional board structure may be necessary to ensure greater stability and a more unified position. The continual leaking of highly confidential information to the media such as that surrounding salary is far from helpful.

Moving beyond the board structure there are a number of other factors that will need to be addressed. For one, the society has an ageing estate with many outlets in poor locations and suffering from poor sales densities. While the society is looking to address these issues through a wide ranging refurbishment and store closure programme the challenge is very large indeed.

The second point is the society’s ageing and out-dated supply chain infrastructure, resulting in poor availability – something that is particularly important at convenience stores where stock holding space is at a premium. Rivals such as Tesco and Sainsbury’s are simply leaps ahead in this area.

Point three is around own brand product range. It is an area which once market-leading, the Co-op now lags major rivals both in terms of product quality and packaging design. Even on ethical standards, the society’s reputation is slipping following controversy of Paul Flower as chairman of the embattled banking arm.

Point four is the society’s pricing position, which is for the most part more expensive than rivals and which is a bad place to be considering the current shift towards the value end of the market.

So, who would be fit to resolve these problems? Richard Pennycook, who has been appointed interim chief executive, would certainly be a front-runner for the top job. His long-running experience at Morrisons indicates he certainly knows how to run a food business albeit he may be less suited to running the other non-core businesses. Not such an issue however, considering some of these businesses, notably farms and pharmacy, may be sold off.

What does this all mean then? Well, while I’m not normally an optimist, it is safe to say the chain’s problems are significant but not insurmountable. With the right management and a significant investment in store refurbishments, product ranges and pricing – the society could turnaround its food business. But on the other non-core operations I am not convinced.

David Gray is retail analyst in grocery at Planet Retail