Katy Askew

COMMENT: Co-Operative management shake-up sets stage for resurgence

By Katy Askew | 16 January 2013

Co-Op looks to improve competitiveness

Co-Op looks to improve competitiveness

The Co-Operative Group's food business has had a tough time of late. But a management shake-up, announced today (16 January), would suggest it is looking to improve its offer on two fronts - increased customer focus and more effective back end management.

The Co-Operative should be firing on all cylinders. The core portfolio of the UK's fifth largest retailer is focused on one of the fastest growing segments of the market. While supermarkets still retain the majority of the weekly shop, there is little doubt that the bricks-and-mortar growth in UK grocery sits firmly in the convenience sector.

Its strong town centre presence should mean The Co-Op is the best-positioned of the retail majors to benefit from the growing trend for consumers to make more frequent, smaller basket trips - often to outlets that are in walking distance.

However, the company is yet to capitalise. Indeed, The Co-Operative has seen flat-to-down market share for some time. According to the latest figures released by Kantar Worldpanel, the company's share slid from 6.5% to 6.3% of total sales in the 12 weeks to 23 December.

The Co-Operative Group is facing a significant challenge: competition in the UK convenience sector is heating up. The likes of Tesco and Sainsbury's are rapidly building their portfolio of convenience stores. Even smaller rival Waitrose and - admittedly late to the game - Morrisons are increasingly focusing on this space.

Compared to these entrants, The Co-Operative has at times seemed somewhat tired and, most significantly, the chain has failed to compete on price or range. Price is a key battleground, given the constrained consumer sentiment affecting the UK, while the group's merchandising and own label offering has not always delivered.

Nevertheless, it seems the company may have identified these issues and taken steps to begin to address them. After a weak first-half, the group rebounded somewhat to reveal an upbeat Christmas trading statement this week.

Indeed, when The Co-Op announced a swathe of management appointments this morning it made for some interesting reading. In its release, the group said it was "strengthening" the executive team to "continue to drive the performance of the business".

In short, it appears The Co-Op hopes to deepen the pool of leadership it can call on with specific experience on two fronts: customer insight and back-end delivery.

The firm has appointed Sainsbury's head of insight and loyalty Andrew Mann to the newly-created post of customer director. We need not dwell on the highly successful loyalty initiatives that Sainsbury's has implemented, using targeted data gathered through the Nectar card.

The appointment of Mann to this role would certainly suggest that The Co-Operative is aware it must act on the challenge of building a closer relationship with the consumer. And it is likely we can expect more action on this presently.

But any such venture to win over fickle consumers would be for naught if The Co-Op failed to deliver on its in-store experience. And today's announcement would suggest the firm is eyeing improvements here also.

Under the new structure, COO Sean Toal will head up the group's stores, service delivery and supply chain teams. Under Toal, The Co-Op has created two new executive roles: service delivery director and supply chain director. Existing Co-Op executives Cheryl Marshal and Mark Hale will take on these positions. The move to assign direct responsibility for these functions could again be taken as a signal of intent from the retailer.

Commenting on the appointments, chief executive of The Co-Operative Food Steve Murrells said the expanded team would have accountability for "driving the performance of our food business". Management is focused on "delivering quality and value" as well as an "enhanced experience at store level", he added.

So, with a feel-good Christmas and a new executive team under its belt, we could well see the Co-Op begin to tackle the challenges it faces head on. With all eyes focused on convenience in the UK, it is worth remembering that the Co-Op - which has so far proven the laggard of the group - has a considerable advantage when you consider the enviable locations boasted by its store portfolio.

Sectors: Retail

Companies: Sainsbury’s, Tesco, Waitrose, Morrisons

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COMMENT: Co-Operative management shake-up sets stage for resurgence

There is currently 1 comment on this article

I was interested to read your article on the new aims of the co-op food group.
Sadly it appears that it has already failed in its aim to engage with its shoppers/membership.
Shoppers in Hillsborough Sheffield were shocked and horrified that their local store had been sold along with its staff without warning or discussion.
This loyal group of staff and members of the public had been led to believe that redevelopment was imminent as the council had just passed the planning application.
Reasons given were that substantial investment (in putting forward plans!!!) had not increased profits (actually doing some basic work in the store may have helped), and that a new sainsbury's store a mile away (that will appeal to car drivers only) would make the Hillsborough store less viable.
People who know and use the area were surprised as these reasons are simplistic and inaccurate. In this area customers are loyal to the co-op for historic and ethical reasons and this group of consumers is rising in numbers again. The treatment of the staff (some with over 30 years of service) has disgusted members and many I've spoken to are planning to withdraw from the co-ops other businesses as they feel that they were willing to accept a less rewarding deal in exchange for a company that behaved ethically. If an ethical stance is no longer relevant to the co-op it may find it starts to pay a heavy price with losing customers.

 

ethical believer said at 8:42 pm, April 8, 2013

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