Election time – my manifesto

It seems hard to believe that is almost two years since I joined the Co-op Board.  But AGM papers have just started going out to members, and include the ballot for electing Member Nominated Directors. It’s my turn to stand again.

I’m very much hoping to be re-elected for a second term.  My colleague Ruth Spellman has decided not to stand again owing to her other commitments, so I’m the only current MND standing in this year’s election.

Over the last two years I’ve got to know my way around the Society (you can see something of this by looking at my posts on this blog over the past six months). I’ve been able to build relationships with many colleagues and Council members and I’ve spent time listening the the views of customers and members around the country.  So I believe I’m well-placed to contribute to our planning for the next stage of the Co-op’s Renewal, and can provide continuity as we build on the successes and learn from the experience of the last two years.

My “manifesto” can be found here and if you are gluttons for punishment you can even see a short video of me making a two minute pitch!

A brief summary is that if re-elected I would focus on four things:

  • Firstly, empowering and equipping our colleagues so that they can use their skills and enthusiasm to serve our members and customers even better and get properly rewarded for doing so.
  • Secondly, extending our commitments to sustainability and ethical trade: more Fairtrade; more local suppliers; healthier ranges; less food waste.
  • Thirdly, I want to see us re-engage with the wider co-operative movement so that together we can truly champion better ways of doing business.
  • And fourthly, we need to build local structures that really connect with members and their communities and deliver benefits to them so that we feel like a real Co-op and not just any other business.

So if you are a member of the Co-op and entitled to vote I would very much appreciate your support!

 

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.

Co-ops UK Retail conference

Earlier in the month I attended a conference organised by Co-ops UK (our industry trade association) focusing on the challenges and opportunities faced by co-operative retailers.  Its an annual event, but it was my first time there.  I was particularly impressed by a presentation from James Walton, chief economist at IGD (the Institute for Grocery Distribution) surveying past and future trends in retailing and the economy as a whole. And the whole proceedings were ably presided over by Ed Mayo, Secretary General of Co-ops UK.

This picture shows me chatting with Nick Matthews, chair of Co-ops UK and director of Heart of England Co-operative Society, between two of the sessions.

Shared brand and services

It was a great chance for me to get to chat at greater length with leaders from some of the independent co-operative societies.  Many of these are closely linked to the Co-op Group, many of them use our brand and have votes within our democratic structures. We have a federal wholesaling system, meaning that many products are brought centrally using our collective purchasing power to get better prices.  But they are also proudly distinct, with their own histories and a clear focus on their own regional constituencies.

The existence of these independents is sometimes a cause of confusion to Group members and customers.  They see the Co-op brand over the shops and on own brand products inside, but find they cannot swipe their membership cards. If you understand the history behind this you can understand it, but in the modern era with so much more focus on clear brand identity you would probably not want to invent such structures!

The Co-op Membership offer

So I was especially interested to gauge the thoughts of the independents about adopting the Group’s 5+1 membership offer.  It would be so much simpler if members could receive 5% on Co-op branded products and get 1% donated to local community projects, regardless of where they bought those products.

But you can understand why some of the independents are feeling reticent about adopting the same scheme. In a business where margins are often wafer thin, giving away 6% of margin can feel a big risk, especially if you still want to be able to give away dividends or support good causes in other ways too in accordance with the wishes of your own members.

To be able to afford it you need to be able to see a number of factors coming to fruition.  You need existing members to switch their purchases from branded products to own brand products, as we need to give away less margin to suppliers on the latter ranges.  Secondly, you need your members to start increasing their basket size and frequency of visits in response to the offer – so they are buying more from you than before. And thirdly you need to attract new members – not just converting existing shoppers to membership (though that is a good thing in itself), but attracting in brand new customers to increase volumes.

There are already promising signs on all these fronts for the Group, with growing proportions of own brand sales and half a million new customers signed up as members.  But you can understand why an independent may for the moment want to wait and watch before plunging in.

Fairtrade Fortnight – Co-op’s cocoa initiative

In the last week it has been great to catch up at various events with Mike Gidney, Chief Executive of the Fairtrade Foundation who for many years used to work with me at Traidcraft where he used to be Director of Policy while I was chief exec.

Mike Gidney               Fairtrade mark

Update on Fairtrade

Mike was able to share the good news that the value of Fairtrade sales in the UK rose slightly in 2016 despite the challenges posed by changes in the EU sugar regime which have severely hit Fairtrade sugar sales.  Given food price deflation, the underlying volume growth (which matters most to producers) was about 8%.

At one event a producer from Divine Chocolate (or rather from Koapa Kokoo the co-operative which owns and supplies Divine), impressed Co-op Group staff with her simple explanation of how selling cocoa on Fairtrade terms had allowed her community to achieve clean water, build a school and provide decent toilets for themselves.

Co-op’s cocoa initiative

But for me the stand-out event of the fortnight has been Co-op Group’s announcement that from May 2017 all the cocoa in any of our own brand products (not just the chocolate bars) will in future be sourced on Fairtrade terms. We are the first business in the world to make a commitment like this, and it means our purchases of Fairtrade cocoa will go up an impressive five-fold, with an extra £500,000 per annum in Fairtrade premiums flowing through to our producer suppliers on top of the value of the coca sales themselves.  Co-op is challenging other businesses to follow suit, as this is how we can really achieve scale of impact.

Chocolate report

It is a source of justifiable pride that Co-op is still leading the way in Fairtrade – perhaps particularly after the disappointing announcement that the Fairtrade logo will shortly disappear from Cadbury’s Dairy Milk (shame on them!).  I am pleased to have been able to play a small part by providing Board-level encouragement for our commitment to Fairtrade, but the credit must go to our Fairtrade sourcing manager Brad Hill whose commitment and focus over many years has been absolutely exemplary.

 

Council and Senate

I am getting a little bit behind with my blogging, but ten days ago we had a dinner for Board and executive team members with members from the Senate of the National Members Council, to mark Richard Pennycook’s departure as chief executive.   This was a good occasion, not only because of the excellent food and wine (exclusively Co-op own brand products of course!), and a memorable farewell address from Richard, but also because of the chance to build informal relationships between Board and Senate members.

Co-op democracy

The ten members of Senate are elected from the 100 members of the National Members Council (many shown in the image below), and as well as leading the work of the Council they are a forum to which the Board can refer for guidance on how Council might react to particular courses of action being considered.  To carry out this latter role effectively requires the building of trust between individual directors and Senate members, so that we can speak openly with each other and yet know that confidentiality will be respected.

Co-op logo Council

Role of MNDs

In my role as Member Nominated Director I am fortunate to have had more opportunities than many of my colleagues on the Board to get to know our Senate members and the wider Council.  This is both through attending Council meetings and because I am a member the rather strangely named Stakeholder Working Group (which acts as a point of liaison between Board and the Council President and Vice-Presidents), and last year I also served on working parties relating to the election process for MNDs and the development of the “Co-op Compass” as a way of measuring our performance against key objectives.

Holding the Board to account

The Co-op’s governance give the Council a vital role as representatives of the interests and priorities of our members, holding the Board and individual directors to account, providing inputs on possible future direction and acting in many ways as the “conscience” of the Society – making sure that we strive to hold true to co-operative Values and Principles and high ethical standards.  At times dialogue can feel uncomfortable – when Council challenges a decision or proposal from the Board.  That discomfort is essential and can be creative if we are to ensure that the Board really does steer a course that is in line with what our member owners would like. It can and does have a very positive influence for the good.  But there is always a risk that it can descend into confrontation and misunderstanding if mutual trust is replaced by suspicion or an assumption that either the Board is wanting to undermine our Values or that the Council is just wanting to create obstructions.

The way to make sure that Council-Board relationships add value to the Co-op is twofold:  firstly – clear, open and early communication; secondly – strong personal relationships.  We can always do better at both, and as an MND and member of the Stakeholder Working Group I believe I have a particular responsibility to help make sure we continue to invest in making dialogue and mutual understanding as effective as possible.  Social interaction such as the dinner are a really important way of creating human relationships that will then make more business-focused discussions increasingly productive.

Changing of the Guard

Richard Pennycook 2

You will have heard by now that Richard Pennycook has decided to stand down as chief executive of the Co-op Group.  This comes after nearly four years during which he successfully rescued us from imminent collapse and rebuilt us to a point where we are once again looking to the future with confidence.

We all owe Richard an enormous amount.  Without his experience, intellect, integrity and steadying sense of calm at the centre of the Group things could have turned out very differently.  His vision for how we could express our co-operative values and re-engage with our communities whilst remaining a professional and successful set of businesses has helped us recruit many talented leaders into the Co-op.

It is typical of Richard that he recognised that unless he was to stay on for another four or five years, it would be best that he moved aside early to allow a new chief executive to lead our planning processes through this year for the Renew phase of our turn around.

And we are very fortunate to have had a clear successor in place in Steve Murrells, who in October was awarded the 2016 Grocer Cup as the person judged to have been “the individual who has contributed most to the industry over he past year and who has shown exceptional leadership in inspiring his company to achieve exceptional results”.

Steve_Murrells 2

Steve is the person who has transformed Co-op’s food business in the last three years.  By focusing more clearly on our natural strengths the convenience sector and re-building an own brand range that we could all be proud of, Steve has been instrumental in restoring morale, momentum and sustained market-leading growth to our stores.

I am delighted to be working with someone whom I know will bring vision, enthusiasm and energy to the task of leading the Co-op, and who totally buys into our values and ethos.  More exciting times ahead!

Sustainability reporting

In Manchester yesterday to meet with DNV GL – the assurance firm that works with the Co-op Group on our annual Sustainability report.

Social reporting at Traidcraft

I am a fan of such reports as a way of encouraging companies to take more action about their impacts on society and the environment and as an important form of transparency.  At Traidcraft we were an early pioneer of social reporting and won many prizes for initiatives in this area.  I found producing social accounts a really effective way of keeping the organisation focused on our wider mission goals and non-financial impacts. I learned that social and sustainability reports need to be set up in a way that will be effective as a real business tool and a force for change and improvement – rather than being seen as a public relations vehicle addressed largely to an audience of sustainability experts as is too often the case.

Co-op sustainability reports

Co-op’s reports have over the years been seen as leading the way in good practice reporting, and they certainly make very interesting reading (see https://www.co-operative.coop/ethics/sustainability-report to read the 2015 report, published in the autumn of 2016).

2015 Co-op Sustainability report

Lots of evidence in here of the Co-op putting its ethical principles into practice across our engagement with supply chains, local communities, environmental impact and colleagues/members.  Really encouraging to see the data set out clearly, some really impressive examples of what we have been delivering, and it’s good to be able to identify areas where we could still do better too.

Revitalising the Co-op Way

However, even at the Co-op there is scope to make improvements to our approach, if we want sustainability targets and reporting to be truly as embedded in the organisation as our financial and commercial goals. And although we have continued to place a lot of emphasis on sustaining our ethical trading principles, as you would expect, we have to recognise that improving our reporting and systems has not been a major focus of attention during the Rescue and Rebuild phases of the Co-op’s turnaround, when we have (rightly) had to focus on restoring our basic viability as a business that can serve its members well.

But we are now in a position to move on from that stage. So it is great that we have been putting a lot of effort over the past year into revitalising our ethical principles through the work of the Coop Way Policy working groups, where senior colleagues and Council members have worked together to review and update our ethical policies across the board.  We have also identified the key strategic areas on which the Group Board needs to be held to account by the Members’ Council in the work on setting a “Co-op Compass”, and these include demonstrating leadership in delivering social impact.  These welcome initiatives now need to be worked through into our business planning prepare for our Renewal phase from 2018-2020.

Sustainability reports and targets

As a member of the Board’s Risk and Audit Committee I am encouraging work to improve the profile of our Sustainability Report and ensure it gets the in-depth attention it deserves.  I would like to see us setting a smaller number of longer-term (say 3 to 5 year) targets focusing on those areas where we think we can make a big difference and that are core to the nature of our work.  Of course we would still need to monitor, track and improve many other social and environmental indicators as well, to ensure we are delivering good practice across the board in line with our values and principles.  But by setting longer-term plans and targets in a number of key areas we are more likely to be able to integrate our aspirations more fully into our resource allocation and planning. And that will be the key to making real change happen.

I am encouraged that the Co-op’s team is also beginning to develop new systems to measure our impact as well as our activity, which is an area in which most sustainability reports are relatively weak: if we get this right we will reinforce our reputation as a trail blazer in sustainability reporting.

Fairtrade wine and chocolate

Over the festive season our family got through quite a few bottles of Fairtrade wine from the Co-op!  The first fairly traded wines in the early 2000s were co-branded with Traidcraft, where I was then chief exec, and which was at that time the only UK importer of wine from fair trade producers.  The initiative was so successful that it proved the business case for developing the international standards required for a Fairtrade mark on wine as a new category, opening up a much wider potential market.  It was a great example of Co-op and Traidcraft pioneering a new area of fair trade together.

ft-wine

Today the Co-op accounts for two thirds of all Fairtrade wine sold in the UK, and indeed we represent almost one third of the total global sales. That’s over 8 million bottles a year – or 16 bottles a minute!  A huge success.

In November Mondelez announced that bars of Cadbury Dairy Milk would cease to carry the Fairtrade mark, and that instead they would be using their own in-house scheme to help cocoa farmers.  It’s a disappointing move, and the first time the Fairtrade mark will have come off a significant product.  But will consumers really trust a scheme run by a major global multinational?  Won’t they get confused by yet another logo making ethical claims, when the Fairtrade mark is already one of the best recognised and most trusted logos in the UK?

I suspect this will be prove to be something of an own goal for the Cadbury brand, making even Nestle look more ethical than Cadbury for the first time – given the fact that KitKats carry the mark!  So much for Cadbury’s much vaunted Quaker heritage. This has the hallmark an initiative driven from a global HQ looking to cut costs, and not realising how much better recognised and valued Fairtrade is in the UK market than anywhere else.  So here’s hoping the decision will get reversed as the implications sink in.

But the big question people are asking me is: will the Co-op be tempted to follow suit and downgrade its commitment to Fairtrade? I really don’t think that’s going to happen – and I would certainly fight hard against any proposal that might be made to that effect.  Fairtrade values are so well-aligned with the ethics that underpin the Co-op Way, and with our commitment to working with small producers and co-operatives, that it would make no sense for us to appear to move away from such standards. And we know that our members consistently and strongly voice their support for Fairtrade.  Indeed, if other companies choose to move away from supporting Fairtrade (which I hope they will not, as it would clearly be bad news for Fairtrade producers around the world) it could even play to the Co-op’s benefit by underlining the real commitment to ethical trade that differentiates us from so many other food industry players.

So rather than seeing this as the start of a slippery slope, I think we should look forward to further announcements in Fairtrade Fortnight at the end of February, which will underline the Co-op’s determination to do the right thing and support the millions of farmers around the world who are daily benefiting from the sale of Fairtrade products.  And that will be worth opening another bottle or two of Fairtrade wine to celebrate!

 

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!

Encouraging local suppliers

Took a day out a couple of weeks ago to visit four small companies feeding products into our new local ranges in North Yorkshire. A wonderful chance to see how cheese, cakes, ale and burgers are made using local ingredients and recipes. The picture is me inspecting cheeses at Shepherd’s Purse. Thanks to the staff who took the time to explain about their businesses and production processes.

shepherds-purseCo-op is trying to bring more products from local small-scale suppliers into our stores – offering a choice customers tell us they want and also helping those companies to build their capacity to sell to other organisations too. It’s an important contribution we can make to the local community. The initiative is already up and running in Yorkshire and Lancashire, and soon to be rolled out to other regions. It adds logistical complexity, but is a great thing for us to do as an expression of the Co-op Way: and makes some really tasty products more widely available.