Focus on Communities

In the period when the co-operative was in ascendency, although ideology and ethics did play a part, there principle reason for success was that the goods retailed were of good quality, representing value at the time of purchase with the additional benefit of a share of the profits through the dividend scheme. People related to the success of their own enterprise. This spirit was diluted through the generations and concurrently there was a shift in retailing from locally owned and run shops into regional, national and international chains who had the benefit (following the example of CWS in the 1930's and 40's) of bulk purchasing, dedicated manufacturing base enabling development of an own brand concept. I am not sure whether by rolling back the clock to what become effectively small regionally controlled societies is a practical solution given the current competition from other retailers. A problem of the Co-operative Group is that it has often talked the talk but failed to walk the walk. In the last ten years the business has been selling off fixed assets - buildings and land to invest in modernisation of stores (and pay exec salaries, bonuses, redundancies, aquisitions, new head office) the return on this investment has been poor and the property sold has increased in value significantly c.f. Gordon Brown selling gold reserves. Green belt farmland inherited from the London Societies was transferred into the pension fund to bail out losses from these societies when they began to lose money. I am not sure whether this is still in the portfolio but this land was tenanted by Farms Group which is now apparently up for sale. The business has gone from low gear principles to being higher geared. Local committees are important for feedback on the effectiveness of the offer and for deciding how profit is invested or distributed. From the retail offer pespective this commercially needs to be centralised. I was always aware of distrust between the regions and head office on pricing and before taking the Head Office job Peter Marks was vociferous wanting the Manchester Complex to be disbanded and the business decentralised into four regions, once in the centre .......well that's a different story. Be very careful what you ask for.

I'm not quite sure what Neil is suggesting here, but in this day & age I don't think local groups will work. We are all so busy with different things that the only way we get together is via email. I suppose we could try 'area' groups according to post codes or counties, but contact would still have to be by email to ensure everyone is kept informed & involved.

The dilemma is that the retail landscape has changed and the majority of members see membership in the same way as loyalty card schemes such as Boots or Tesco Clubcards. I don't think that they grasp that they actually own the business and have any influence on it's policies. The perspective from the independent regional co-operatives is different to that in the centre and there are regional differences in awareness of the Co-operative Movement. Over the last 10 years the management has tried to run the business on a more centralised plc basis and the chase for expansionism and direct competition with what is now the big four retailers has brought the business to it's knees. It is clear that the situation needs to change. Working inside the business it was clear to me (and others) that there were some dubious accounting practices going on to massage figures (this had always been suspected by the regions). The decision to change from a progressive salary structure to a bonus led one - which operated top down exacerbated this. The mirrored what was happening in plc's particularly banks where there were also disastrous consequences. It would be interesting to look at the decisions taken over the last 10 years on head & regional office renumeration and appointments, the majority of customer facing workers - in store, funeral parlours, banks, chemists etc were outside the bonus scheme, although ironically they are key to customer retention. The deals in store often failed to match that of the competition largely down to the added margin to cover overheads (some elements being due to store size) You have to wonder why market share has dwindled despite store and brand refurbishments and much greater advertising, whether the board was misled and the effectiveness of the accountants approving the balance sheets. Myners blames the board for poor governance, this may be so. I would place more blame on the executive who it was clear lacked any focus in working the existing asset base and growing the business organically but embarked on a course of trying to buy market share without doing the required due diligence, this not only included taking on Alldays, Somerfield Britannia et.al but also bringing United/Yorkshire Co-operative into the group which had massive pension liabilities and probably were effectively rescued in financial terms. Local / Regional groups will only work if you have some real engagement with the majority of members and if there is a mechanism in place to ensure the voices of the local groups are given real influence on the board and hence to the executive.