Co-operative Group has just posted record profits and is now the fifth biggest grocer. What is the appeal of its business model and how is it different?

Why are co-operatives in the spotlight?

Co-operative Group - by far the largest co-operative in the UK - reported record profits last week, up 20% to £473m in the year to January 2. The figures, lifted by the acquisition of both Somerfield and financial services company Britannia, have propelled its status and it is now the UK’s fifth biggest grocer.

What is a co-operative?

A co-operative is a company owned by its members. There are about 4,700 co-operative and mutual enterprises in the UK. Retail co-operatives are owned by their customers.

The blueprint for the modern co-operative is the Rochdale Principles, inspired by the New Lanark co-operative in Scotland and written in 1844. It is the ethical basis for every successful UK co-operative and has been adopted by the International Co-operative Association.

The principles include democratic member control; providing education and training for their members; working with local, national, regional and international structures; and the sustainable development of their communities through policies approved by their members.

Is the status of co-operatives growing?

Co-operative Group chief executive Peter Marks said last week that the co-operative business model is “in vogue with the mainstream political parties”, who “see consumer and employee-owned co-operatives as a potential solution to some of the issues faced by the public sector”.

Similarly, while not co-operatives, employee-owned companies are also in the limelight. John Lewis Partnership chairman Charlie Mayfield said earlier this month that “co-ownership is becoming fashionable again”, citing recent Labour and Conservative proposals that encourage more co-owned organisations to provide health, education and local services.

How many retail co-operatives are there in the UK?

The number of retail co-operatives has dwindled over the years as many have merged with each other, or been bought out by bigger co-operatives.

There are 20 in the UK at present: Co-operative Group; Allendale; Anglia Regional; Channel Islands; Chelmsford Star; Clydebank; Coniston; East of England; Heart of England; Lincolnshire; Midcounties; Midlands; Moulton; Penrith; Radstock; Scottish Midland; Seaton Valley; Southern; Tamworth; and Wooldale.

Most of the co-operatives focus on grocery but many, such as Co-operative Group, have several other specialisations including banking, financial services, funerals, homewares, pharmacy and travel.