Co-op picks up pace on journey back to the future

Co-op picks up pace on journey back to the future

Jim Butler
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Never go back the mantra often goes. Well, the Co-op has and it’s paying handsome dividends – quite literally for those that remember the store’s famous “divi”. A focus on community, local goods and an emphasis on fresh produce is all at the heart of the group’s pledge to be best convenience store in the UK. Produce Business UK finds out more 

The past, it’s often said, is a foreign country. They do things differently there. Consequently, going back and reviving the past is often seen as a last resort, a sign of weakness and of a lack of originality. 

But what if someone – or in this case a company – recognised that along this journey called life something had been lost. Some original essence of what made that company so important in the first place had been misplaced. Going back to your roots to relocate those original attributes and then reconfiguring them for a modern context does not indicate uninspired banality.

And so it is with the Co-op’s avowed intention to go back to being what made the convenience store one of the UK’s most loved retailers. The signs have been there for a while – not least the re-emergence of the store’s classic 1968 clover-leaf logo earlier this year. Alongside this visual re-adoption (the logo was dropped a decade ago when it was decided a more corporate identity was needed) has been a re-adoption of the store’s original values – of community and membership. 

Back to being Co-op

This was highlighted at the Co-op’s first Farming Conference in Manchester earlier in the autumn. Kicking off the day’s proceedings – which also included a memorable speech from 1992 Olympic cycling gold medallist Chris Boardman about the merits of teamwork and the vital ingredients that go into making a successful team – the Co-op’s commercial director Michael Fletcher is quick to make a pitch for the Co-op going back to its roots.

Co-op Michael Fletcher commercial director Co-op on stage Sept. 2016
Michael Fletcher addresses the conference of growers, suppliers and buyers

We’re going back to all that’s been best in our heritage and making it relevant for today and for the future,” says Fletcher. “As part of this we’ve changed our look and brought back the iconic blue clover-leaf logo to once again draw attention to all we stand for.”

And rather than adopt a one-size fits all strategy, Fletcher maintains that focusing on differentiation and remaining at the heart of the community is vital to the Co-op’s future success. It is, he says, a key principle of the past and should be so again.

“Regional and local ranges that are delivered direct to store are important to the on-going success,” says Fletcher, in a clear statement growers, suppliers and buyers.

This means a Co-op owned by its members that is centred on service and delivers a great own brand range.

“That’s possibly where we lost our way a bit,” he admits. “People tend to forget that we were once the largest retailer in the UK, and possibly the most loved. Our customers knew and understood our model. They engaged with it. We are returning to those principles.”

Co-op riding a crest of a wave

The conference in September came at an optimum time for the Co-op group. We reported how the latest set of figures released by Kantar Worldpanel showed that the Co-op had out-performed the market in the 12 weeks leading up to 11 September 2016, with sales growth of 3.1%. Fletcher acknowledges that fresh produce is a key driver of this sustained growth – another boon for growers and suppliers. 

Of course this impressive growth didn’t occur overnight. The restructuring of the Co-op has been underway since 2013, when it launched its True North food strategy, an idea that was designed to really push the Co-op’s convenience store credentials.

This planning has clearly paid off. Fletcher notes that at a time when the grocery market in the UK has slowed down – or is even contracting – the convenience market is growing. Granted not like in the early 2000s, but growth nonetheless. 

“We want to be the best convenience retailer,” Fletcher stresses. “And this means focusing on good food, friendly staff and easy shops to navigate.” 

This means aiming at those shoppers that come into stores two, three, even four times a week for a top-up shop. 

“We can’t win on everything,” Fletcher continued. “So the emphasis has to be placed on our key principles. 

Re-fits, rebrands and new stores 

Fletcher remarks that in reality this means being competitive on price, but being honest with it too. He highlightsa recent £125million investment in price and said it had made a real difference. A strong re-fit, rebranding and new store programme is also vital. In 2016, the Co-op will have undertaken 173 re-fits come the year’s end and 644 store rebrands. Next year, 300 re-fits are scheduled and 1150 rebrands. The Co-op has opened 100 new stores this year and intends to open another 100 in 2017. Teams are in place in the regions, Fletcher says, to get close to the needs of individual communities: “With over 2,800 stores, one in every postal area across the UK, our vision is to ensure that each store is at the heart of its community.”   

Yet despite the IGD predicting that c-stores will experience 2.2% growth in the next three years up to 2019 – in comparison to a 2% fall for supermarkets – there are still challenges that c-stores, and in particular the Co-op, face. 

The Rochdale pioneers

Fletcher clearly believes that availability is key – and the stores commitment to sourcing British produce will be worth keeping an eye on. A strong commitment to sustainability, alongside running good, ethical shops that echo the original principles of the Rochdale pioneers are important too. Key structural trends Fletcher is keeping an eye on are smaller households, a growing population, a more diverse population and an increasingly urban population. In addition there are lifestyle trends to remember such as changing spending habits, more and more technology, a faster pace of life and greater health awareness. 

Co-op - Rochdale Pioneers
The Rochdale pioneers

“On the next stage of our journey we have to keep reminding customers that we mean something,” he argues. “We need to manage being Co-op and remain grounded in retail reality.” 

To this end Co-op is making membership a highlight of its stores once more. Members receive a 5% discount on own-brand products, while an additional 1% is awarded to the member’s account that they can donate to a good cause from a selection being supported by Co-op. Furthermore, when its rebuild programme is complete, the Co-op plans to bring back its famous “divi”, where an annual share of its surplus profits will go back to members in proportion to how much they have shopped in-store. 

“We want to get back to being the most-loved retailer in the UK,” Fletcher concluded to an appreciative audience. “We want to get back to making a difference.”

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