The Co-op group continues to struggle, and rather than acting as one of the big boys, it must take a stance which greater reflects that set out by the Rochdale Pioneers 170 years ago.

The Co-op group continues to struggle, and rather than acting as one of the big boys, it must take a stance which greater reflects that set out by the Rochdale Pioneers 170 years ago.

With today’s results, comes a stark admission; “a disastrous year”. The scandal and turmoil facing the group has been well documented in recent months, and until the two major reviews (from Lord Myners and Sir Christopher Kelly) of the group, its banking arm and governance are published, it is difficult to say quite what will happen to the mutual.

The Co-operative movement started 170 years ago with the purpose of trading ethically and sharing profits among members and this ethos encouraged over a thousand independent co-operatives to spring up, all propped up by the same standards. Over recent years, various mergers and acquisitions have formed The Co-op group as we know it, culminating in Somerfield in 2009 and the botched Lloyds TSB deal in 2013.

Acquisitions and mergers are an established way for a retail business to grow quickly and many successful examples exist. But the implications of acquisitions for a capitalist organisation are wholly different to those for a mutual. While scale is a huge advantage for a business operating at the end of the supply chain, for a mutual, an acquisition on the scale of Somerfield for example, dilutes one of the core reasons for its existence - supporting and trading within and for a community. The Co-op group is too big and its businesses too disparate to fulfil those values set out by the Rochdale Pioneers in 1844.

All we need to do is to look at the recent announcement from regional mutual The Midcounties Co-operative for an example of what a co-operative should be. In its recent results the organisation announced sales growth of 23.8% and operating profit growth of 20.9%. This lean regional player proves that with a solid focus on local retailing, co-operation is popular with shoppers. John Lewis Partnership is another example of a mutual organisation – this time employee rather than member owned – which is consistent in its performance. While Midcounties focuses on several businesses within a small geographic area, John Lewis Partnership has national coverage but with a focused offer, department stores and supermarkets. The Co-op Group is national, but it is far from focused.

The Co-op group needs to develop a regional focus, rather than a national one. This will allow it to drive member engagement in communities and regions which it serves rather than acting as the soulless corporate national giant that it has evolved into. Co-operatives don’t work when they try to become vast national organisations, but they do when they focus on fulfilling the needs of their members and operate within clearly defined principles.

  • Andrew Stevens is a senior analyst at Verdict