April’s National Members’ Council

Spent Saturday at the Co-op Council meeting: where the main focus of discussion was the publication of our year-end results, which were published last week. You can see the full report at https://assets.ctfassets.net/5ywmq66472jr/4Xi9Pw36VOEkmE2yqZhCQT/4d716091dec9e6e8832a357c718ca47b/Co-op_Annual_Report_2018.pdf

Overall our underlying profit result was flat year on year.  But with strong growth in food sales and an increased Profit Before Tax line the reception in the financial press has been very positive.  Food’s performance was outstanding with like for like sales up 4.4% – well ahead of the market – and the addition of NISA taking the Co-op’s total turnover to over £10 billion for the first time since we disposed of the Co-operative Bank. Funeralcare results were a little disappointing, with a drop in market share and profitability impacted by our introduction of lower-cost funeral options.  However, we still have a very strong platform and many opportunities in that sector and I am confident that we will see that part of our business turn around.  

It was very pleasing that the press gave plenty of coverage to other aspects of our performance too, recognising in particular the work we are doing to address crime levels in local communities, the investment by our pension trustees in social housing and the expansion of our network of academies.  This year we published the Co-op Way report at the same time as our financial results – which is something I have pushed for over the last couple of years.  There’s lots more interesting and encouraging news to draw out from that report, which I will cover in a future blog post.

The Council session also spent a lot of time looking at our work on leadership and colleague culture as well as reviewing remuneration policies which are covered in huge detail in the Annual Report.

During the Directors Q&A sessions we were challenged on a number of areas, including:

  • Progress on our IT transformation programme in the Food division (slipping behind schedule which will increase cost and delay service improvements – but we need to take the time required to get it right).
  • Reactions to the Grocery Code Adjudicator’s report and whether we were confident that our house was being put in order now: as previously declared, we had got things wrong but were working hard to make sure we treated suppliers well.
  • Colleague security: a continuing area of concern, in which we continued to invest time and money. 
  • Whether it was easier to report to shareholders or to members: we find Council questioning ranges far wider than that of financially-focused shareholders, and appreciate the fact that members take a longer term and broader perspective 

Altogether a very positive day, and I very much hope that it does not prove to be my last Council meeting, as the next one will not be until after our AGM in May when I hope to be re-elected!

January 2019 Council meeting

Saturday saw the first National Members’ Council meeting of 2019, and as part of my Member Nominated Director role I was of course delighted to be there.

The two main items on the agenda were an update from the senior management team on progress within our Food Business, and a Q&A session around the proposed sale of our insurance underwriting business.

2018 was an amazing year for Coop Food. Sales performance outpaced the market by a considerable stretch, we acquired NISA, opened a hundred new stores and invested in colleagues and testing out a whole range of new initiatives. Questions from Council focused on plans for developing our vegetarian/vegan/organic offerings, and underlined the importance of not using every new efficiency to strip hours out of stores but to enable more time for serving members and customers.

As one might expect there was appropriate challenge offered to the decision to sell underwriting activities to Markerstudy (see picture above and also my previous blog). Mark Summerfield, MD of Coop Insurance, was present to lead Council members through the rationale and provide reassurances – and it was great to hear explicit recognition from Council and Board members of the integrity and expertise he has brought to the negotiations. By the end of the session my impression is that Council members, a number of whom had initially been sceptical about the decision, came round to recognise that it was the right strategic move on the part of the Board.

There were also sessions when we as individual directors were held to account by questioning from small groups of Council members. In my own Q&A session there was discussion of our logistics operations, our investment in improved IT systems, the management of Group debt and the background to our Sustainability Bond offer in the autumn, and the role of MNDS compared with that of independent non-executive directors. Various points were made around our Festival offering in 2018 particularly in relation to displays about the Co-op’s wider purposes and membership, the use of membership cards and a desire to see us consider offering free water at future events.

All in all it was a good and useful day, with questions focusing on important issues and on longer-term opportunities, and answers being full, open and honest: as one would hope! It was also an occasion when we could note that Council Secretary Gill Gardner was moving on to another role within the Group.

Gill has been an amazing colleague, helping the Council to become ever more effective, and she will be a very hard act to follow: though I am told we have number of excellent candidates putting themselves forward and an excellent interim Council Secretary in Andrew Seddon.

Co-op Funeralcare

I was delighted to spend a morning attending a “town hall” meeting with colleagues from Co-op Funeralcare in Washington.  These are a relatively recent initiative to allow colleagues to be updated on progress in the business and get their feedback.  Colleagues from the Funeralcare support centre in Manchester are encouraged to get out to these local meetings around the country as a way of ensuring they keep in touch with the realities of life at the front line.

Thinking back through Co-op history making provision for a dignified funeral was a key concern of our members in the nineteenth century, so it is great that we continue to provide a high level of service in this sector to this day.

Recent progress

There is a remarkably good story to be told about our recent performance:

  • Growth in market share for the first time in five years 29% market share in sales of pre-need funeral plans – an excellent sign for the future Investment in new funeral homes – now over 1,000 around the UK – and in renewing our fleet of vehicles.
  • Launch of a low cost Simple Funeral to help address funeral poverty – which has forced competitors to respond in kind.
  • Announcement that we will provide funerals free of charge to any person who is 17 or younger, helping families at a time of acute grief:  an initiative that was recently commented on positively by the Prime Minister in the House of Commons.
  • Merger of the funerals business with our legal services operation, to maximise the synergies around will writing and probate work and provide a fuller service to our clients.
  • Development of new software by our Digital team that promises to transform the back office operations of Funeralcare, improving efficiency and releasing colleague time to care for bereaved families.

Under the leadership of Richard Lancaster and Robert McLachlan there is a new confidence and willingness to take the business forward with a clear focus on caring for families.  I was impressed by the positive comments and clear engagement of the colleagues at the briefing session.

Digital developments

At the session I was able to hear more about the Digital project (now being trialled in Edinburgh) from Regional Operations Manager, David Knowles.  David was seconded to the Digital team for six months, to make sure that someone who really understands the needs of the business was plugged into the systems design from the outset.  His enthusiasm for the potential improvements that would flow through was tangible, but I was especially pleased to note how positively other colleagues responded to the news:  embracing the change rather than fearing a new challenge.

High standards

 

It was also great to be given a tour of the Washington Funeralcare centre, the hub of a network of homes in the area.

Our senior manager Karen Crake, with nearly thirty years of experience, is justifiably proud of her purpose-built building, for it looks very smart and professional throughout.  They are the sort of premises in which the deceased can be handled in a dignified, respectful and professional manner, with strong standards clearly in place.  I heard several stories of funeral directors visiting from other non-Co-op organisations and being amazed by the quality of what we do.  Our main competitors, Dignity, in their recent results announcements called for more regulation of standards in the funeral industry.  I am confident that the Co-op already leads the way in this respect, and we would welcome the opportunity for standards to be improved across the board to benefit families everywhere.

So thanks to David, Karen (shown in the photo above, with me) and Funeralcare’s Head of Marketing Lorinda Robinson for making me so welcome!

Lending a Hand

I spent yesterday stacking shelves and helping customers at my local store – Framwellgate Moor.  Thanks to Vicky and Kate for making me welcome and showing me the ropes – and it was also good to see Lloyd and Michael the Regional and Area managers passing through on a tour of the shops during the morning!  Framwellgate Moor store only opened in the summer, but it is already achieving and indeed exceeding its sales targets thanks to the friendly and hard-working staff team, and this is also reflected in an excellent customer satisfaction score, well above the national average.

lloyd-michael-vicky-kate-at-fwellgate

pgc-stacking-shelves-at-fwellgate

For me it was great to see things from a shop floor angle, and gain much greater familiarity with the range of products that we stock and with the customer experience.  Lots of colleagues from the support centre at the Co-op are encouraged to spend a day helping out under our “Lend A Hand” scheme, as an important gesture of support at this busiest period of the year, but it also keeps us all rooted in the realities of our business by experiencing the “frontline”.

Morale is high at Framwellgate, but it is good that in the last week or so our latest “Talkback” survey of our 70,000 colleagues across the Group has shown a strongly improving trend in colleague “engagement” right across the country.   In a way this improvement is not surprising given the Back to Being Co-op training most colleagues have been through this year that has helped re-instil pride in our history what we stand for, the excitement of our rebranding and relaunch of Co-op membership, and the sense of satisfaction that comes from a renewed confidence in the outstanding quality and value of our own brand products.  Combined with the positive sales momentum we have experienced throughout the year, I was expecting to see the figures on an upward trajectory.  But nonetheless the improvement is important further evidence that “the Co-op is back” and going places.  If we are going to succeed there is no doubt this can only be built through the enthusiasm, skill and dedication of our colleagues as they meet the needs of our members and customers and serve their local communities.

kate-at-framwellgate

A great note on which to finish before Christmas!