Leeds University Union shop

Great visit with Head of Franchise Martin Rogers to see the new Co-op franchise store at Leeds University Union.  Only open for less than three months, it has already seen sales increase by 150% – a response to the excellent range and smart appearance of the shop and a recognition of shared values between the student body and the Co-op.  Run by the Student Union with a mix of permanent and student staff, it benefits from a dynamic team led by Karen the Union’s Retail Director. With wide aisles and the greatest number of self scan terminals in our estate, the shop looks really attractive, and the footfall while I was there was impressive.

Before visiting I had thought of university franchise stores mainly in terms of their being an excellent way of recruiting young people to become members of the Co-op and to get them to understand the Co-op values difference.  

However, what struck me forcibly on my visit is that these stores will also give us an opportunity to listen more clearly to the up-and-coming generation of shoppers, helping us to attune our ranges and sourcing approach to their needs.  For example, the greater proportionate demand for vegan and vegetarian food can allow us to try new ways of presenting that offer; and their demands on issues like removing plastic bottles will challenge us to move faster in an environmentally sustainable direction.  We already have a free water refilling service in this store, but have also introduced today a new range of water bottles made from recycled cardboard and plant-based plastics – Just Water.  

I was also pleased to see that rather than the Costa coffee point that we have in many stores, the Student Union had insisted on a Fairtrade coffee point! A further benefit of this store is understanding better the needs of the Chinese ethnic community, as students from the Far East form a significant proportion of the Leeds student body.

All in all this felt like the start of a dynamic two-way partnership in Leeds. Co-op has much to offer them in terms of an appropriate range and professional experience, and already they are seeing greater footfall in their building as a result, whilst we in turn have much to learn from their focus on a youth clientele.  Roll on many more franchise outlets in other universities!

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!

Co-ops UK Retail Conference

It was good to spend Friday and Saturday at the annual Co-ops UK conference for members who are retailers, a great chance to share notes and build relationships. A good turnout of Co-op Council colleagues (some also wearing other hats) plus Gareth Thomas, Helen Grantham and myself from the Group Board and executive.

As usual one of the highlights was the presentation from James Walton, chief economist at the IGD (Institute of Grocery Distribution), with a masterly overview of trends in the marketplace and consumer attitudes.

Take home thoughts from his presentation included: * the impact of Brexit likely to be negative in short to medium term at least, with 40% of our food imported from the EU. * Consumer confidence is consequently at a record low ebb. * Although there is projected growth in grey sales over the next five years, most of this will be form inflation and a little bit to reflect population growth. * Convenience, discounting and online sectors would continue to grow whilst larger supermarkets woful continue to shrink. * Future shoppers will be much more conscious of both health and ethical issues – and even if they still excuse themselves when they consume less-ethical products they will not excuse big companies for ethical lapses. * Growth in plant-based diets seems likely to continue.

There were also useful sessions on trends in the funerals market (including a presentation from Alison Close of the Co-op) and a discussion of initiatives on food waste, tacking anti-social behaviour and making food provenance more transparent in local supply chains.

More Fairtrade Fortnight activities

Just back from giving a talk at Cullercoats Methodist Church on Saturday. We had an audience of about fifty church members and Co-op members/supporters, and the event was organised by Co-op Council member Mark Ormston. Those attending included Sir Alan Campbell, the local MP and Deputy Chief Whip of the Labour Party, and Dan Crowe – Vice-President of the Co-op’s National Members’ Council.

Mark Ormston, myself and Sir Alan

I gave a very brief overview of the development of the Fair Trade movement and then talked about some of the key product categories sold by Co-op: wine, sugar and chocolate/cocoa. I was able to give some colour to my illustrations be describing from my own experience at Traidcraft how producers of these types of product often choose to use Fairtrade benefits. We discussed in particular education, access to clean and safe water and creating opportunities for women.

I then talked about the challenges in Fairtrade at the moment, with reference to the decisions of Cadbury’s, Nestle and Sainsbury’s to drop the Fairtrade Mark from some of their key product lines. We also discussed the commercial problems that Traidcraft has recently faced.

My message was to take heart from the fact that new commitments to Fairtrade were still being made: Waitrose has just announced that it has taken all its chocolate confectionery Fairtrade (something Co-op has done for many years fo course!). And Fairtrade has still had a huge impact on these big organisations, and that big corporates now had to take sustainability very much more seriously. Nestle, Cadbury’s and Sainsbury’s all still were pursuing ethical sourcing schemes, and often applying them now across their whole supply chains rather than just on Fairtrade lines. Whilst these schemes were less impactful in depth, they brought benefits to many millions more producers.

But I then emphasised that we need to keep Fairtrade thriving so that the pressure to run these schemes continued and that everyone had a part to play. As consumers our individual buying choices mattered and send important signals to companies – we should never underestimate how much our own purchases matter: so keep buying Fairtrade (and see my call for taking up the Co-op Fairtrade Pledge on my blog below!).

We can also all join in campaigns and petitions – such as Fairtrade Foundation’s current campaign for a living wage for all cocoa farmers in Ivory Coast. I could show form my own experience how just a few thousand campaign postcards could be enough to get a meeting with a minister of European Commissioner to press for change.

And finally I encouraged people to carry on buying from the fair trade pioneers such as Traidcraft, Divine, Cafedirect and Liberation Foods (as well as buying Co-op Fairtrade products, since Co-op convenience stores could only stock a limited range of their goods). The pioneers are needed to keep standards high, to enthuse and mobilise supporters at grassroots level and to push forward innovation in Fairtrade.

Interestingly this was the first talk on Fairtrade that I had given with a Co-op rather than an exclusively Traidcraft emphasis. What struck me forcefully was just what a difference Co-op and Traidcraft working in partnership together has made – the first Cafedirect products on supermarket shelves, the first fair-trade wine, pioneering of new categories such as charcoal and rubber gloves, sourcing fair trade coffins from Bangladesh. And Co-op has also partnered with Divine since 2000 when it took all its own brand chocolate Fairtrade boring with Divine’s Kuala Kokoo co-operative. Partnerships like this are a great expression of Co-operation in practice – and they really work!

Also in the last week I gave a talk to students at St Chad’s College on Fairtrade matters and ran my own Traidcraft stall at our local church. And we are still only half way through Fairtrade Fortnight!

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: back to the future

Spent yesterday visiting the wonderful Beamish open air museum here in the North-East. As always one of the highlights was going round the village high street from the early 1900s: a high street dominated by the Co-op’s grocery and haberdashery stores.

I loved the nostalgia of looking along shelves to see some brands that are still going strong (Colman’s mustard, Rowntree chocolate …), and other products that have long since disappeared.  Lots of Co-operative Wholesale Society own brand products too, of course, many of them manufactured and packaged in our own factories and proudly labelled with their origins.  Early examples of the importance of knowing a product’s provenance.

And there were the posters urging customers to “Join Us” as members – something we are still encouraging people to do today.
   Over half a million customers have signed up to become members since the New Year – so we are well on our way to the target of one million new members this year.  But we need to do more than sign people up.  We need to reconnect with the local community too, in the same way that the store at Beamish was once the heart of the community in Annfield Plain.

So I am delighted with the £9 million we have given to 4,000 good causes around the UK and that we have announced in the last week.  This is the first fruit of our 1% donations on all own brand products bought by members since the relaunch of our Membership offer in September. As the scheme builds we hope to be giving £20 million a year in this way: that’s serious money.  I hope the pioneers and the many colleagues who worked for Co-op down through the last 170 years would be proud of what we are still able to do in the spirit of the service they gave their local communities.

Annual results

This week has been dominated by preparations for the release of the Co-op Group annual results for 2016 on Thursday.

The headlines have predictably focused on the decision to write down the value of our holding in the Co-operative Bank to nil.  Although the headlines say this means we just get it to be “worthless”, in fact it simply points to the impossibility of being able to put a clear value on the shares at a time when a sale is in prospect and uncertainty is being fuelled by (often misleading) press speculation.

Highlights

The newsworthiness of this item and the fact that the write-down turned our year end profit into a loss have hidden a lot of other good news:

  • All three of our core businesses (Food, Funerals and Insurance) have shown growth in both sales and market share.
  • Strong uptake of our new membership scheme, and re-engagement of many members with the Society.
  • Operating profit was up 32% year on year.
  • Underlying profit before tax was slightly down on last year, but ahead of our budget and unsurprising given the scale of re-investment we are making across our businesses and in re-launching our brand and membership proposition.

The full press release can be found here.

Future prospects

Our markets remain fiercely competitive, of course, so the next couple of years will be challenging.  Nevertheless we now have a stable and much stronger platform from which to develop and launch our plans for the future. It was interesting that the BBC coverage ended up focusing on what markets the Co-op might choose to enter next and disrupt.  That’s quite a change from just three years ago when everyone was wondering whether the Group could even survive!

 

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!

Tackling loneliness together

The Co-op Group and British Red Cross have formed a partnership to tackle the issue of loneliness in the UK, and launched a research report on the subject yesterday.  This has highlighted that loneliness is not just an issue for older people, but can affect people of all age and backgrounds. The media have particularly picked up the fact that new mums are especially vulnerable to feeling isolated while looking after their young children – but there are many other affected groups.

loneliness-report            loneliness-presentation

For the Co-op loneliness is an issue of relevance to many parts of our family of businesses.  Our food stores provide a vital social lifeline for people who otherwise have little contact with others – and we know many stories of our colleagues who have gone out of their way to look after regular customers whom they suspect to be isolated and who fail to turn up when expected at that store.  Our FuneralCare business is also at the front line in providing help to people at a time when they are particularly likely to fall into a cycle of loneliness and depression following the death of a loved one.

So it is no surprise that over the last 15 months our colleagues have really thrown themselves behind fund-raising efforts for the British Red Cross as our chosen charity partner.  We set a target of raising £3.5 million over two years, but have already exceeded £4 million and are still going strong.

But what is really exciting is that we are not planning just to hand over a cheque and let the Red Cross get on with things.  We announced yesterday that Co-op intends to really get behind the challenge of tackling loneliness in an active way:

  • Encouraging members and colleagues to volunteer for the new centres being set up by the British Red Cross across the country to reach out to people experiencing loneliness and help them to reconnect with their communities.
  • Building up local voluntary organisations in the 1500 communities around the country where Co-op has a presence, through distributing of 1% of the value of member purchases of own brand purchases.  The research indicates that getting involved in volunteering is one of the best ways of overcoming loneliness and restoring one’s sense of identity and purpose.  My hope is that we can also harness the energies of some of our 50,000 pensioners behind such groups.
  • Setting up more bereavement clubs in our funeral homes, a proven way of helping people at a key trigger point in their lives.
  • Our Insurance business is aiming to help set up 30,000 further Neighbourhood Watch groups – and encourage them not only to look out for each other’s property, but to look out for those suffering loneliness and other issues in their own communities.
  • Increasing awareness of loneliness issues among our own 70,000 colleagues.  The research ages it clear that many people in the workplace are experiencing loneliness, and that employers can do more to help. There is also a key role for us as a business to help our own colleagues prepare well for retirement – another of the key transition points that people can find difficult.

crofts-loneliness-2So this initiative is going well beyond the normal Corporate Social Responsibility raising money for good causes. It is about getting the organisation as fully behind tackling loneliness as we can. It is a great example of a full collaboration between a business and a major charity. And it is another good reason to feel proud and excited about being Co-op and the way Co-op is really re-engaging with making our communities better places for everyone.

You can find the full and summary report at: coop.co.uk/loneliness