Co-op food retail: an organisation that has expanded in the wrong areas?


Gary Greenwood, analyst at Shore Capital comments on the Co-op Group’s food retailing: “It just looks like an organisation that has expanded in the wrong areas . . .“

Food sales were down 0.7% on a like-for-like basis. Overall, the group reported losses before payments to members, the equivalent of pre-tax profit for a plc, of £599m, in the 53 weeks to January 5 . . .

It could expand by offering a range of local and organic food

ursula lidbetter2Ursula Lidbetter, the independent Lincolnshire Co-operative’s innovative chief executive, has overseen this transition and their stores now stock a wide range of local food.

The co-operative’s meat procurement policy “which supports local farmers and reduces food miles” has a Business in the Community Award for Excellence.

ursula lidbetter lincs co-op food

Co-operative stores in this part of the West Midlands are not attracting those who are aware of the risks inherent in non-organic meat and dairy products and those vegetables which can be permeated with pesticides.

The Co-op and other stores should also reconsider their acceptance of GM animal feed because non-GM feed is  available to buyers  – see producer’s information – who offer reliable contracts to producers, as many Europeans do, instead of gambling on a cut price on the ‘spot’ markets.



Lincolnshire Co-operative’s local multiplier is evaluated

Localise West Midlands argues that small and medium locally based businesses, including those who may be part of a larger national franchise, have a greater ‘local multiplier effect’ on local communities, increasing the community’s prosperity directly, as well as creating comparatively high numbers of jobs.

In summer 2012, Lincolnshire Co-operative, an outstandingly well-run society, used the Local Multiplier 3 (LM3) to measure the local economic impact of its operations on Lincolnshire. The process was sponsored by Co-operatives UK and economic analysts K2A evaluated Lincolnshire’s project.

LM3 study coverLM3 methodology is set out in The Money Trail, a handbook published by nef in 2002 and authored by Justin Sacks, now with K2A; Justin advised LWM on the workshops following their 07 report for Birmingham Strategic Partnership, ‘Developing Sustainable Procurement in Birmingham’.

His evaluation of Lincolnshire’s project was published in a booklet Sticky Money (left), which can be downloaded here.

Research by K2A followed the money spent by customers of the Lincolnshire Co-operative and found that it increased in value by going to local suppliers, to customers as a dividend and to employees in wages, who in turn spent a proportion of their money locally.

On conservative estimates, using internationally accepted benchmarks, the co-operative generated an additional £40 for the local economy for every £100 spent by a customer, rather than generating profits for outside investors and global suppliers.

The study referred to the money generated for the local economy by Lincolnshire Co-operative as ‘sticky’ – because after being passed on to suppliers, employees and customers it passed through local people’s hands five times, generating local wealth and jobs in the process.

In addition, £5 million a year, that would have gone to external investors in a conventional shareholder business, is distributed to the 205,000 owner members of the society in Lincolnshire as a dividend, which can be spent locally again.

Local food lincs4

Lincolnshire Co-operative sustains 2,800 local jobs in all parts of the business, using more than 600 local suppliers, 47% of which see their contract with the co-operative as a significant part of their business. It supports small local suppliers by helping them to grow their business to a scale where they can supply a large retail operation; where some local businesses supplying Lincolnshire have faced closure, the co-operative has stepped in to save the jobs and business. 

As Ed Mayo, Secretary General of Co-operatives UK said: “Every pound spent in a co-operative shop is a real boost to the local economy. In fact, every pound spent in a co-operative store changes hands five times, at diminishing levels, until the final penny leaves the local economy. This adds a wonderful life to any local community.”