Peter Marks: “With unemployment rising, those in work are counting their blessings and their pennies. I know things are serious when my wife talks to me not of the weather or holidays, but of subjects such as quantitative easing. Economics is the new rock and roll.
“As a company, we strive to offer ethics and value in retail and are determined to be both ethical and commercial through offering great products at fair prices in locations which are convenient for consumers.
“In the past, we were held back by a fragmented structure where there sometimes wasn’t much cooperation and precious little in the way of movement. Our customers voted with their feet and took their baskets with them. If you’re not at the top of your game, you have no value products to offer consumers and no ethics to be valued with.
“We needed consolidation to offer a national solution, and the 2007 merger of the Co-operative Group and United Co-operative placed 80% of the UK Co-operative trade in one business that is highly focused and better able to meet customer needs.
“However, if I get one more person who says, ‘I can remember my granny’s divi number’, I will not be responsible for my actions.”
“We have made massive investments in excess of £2bn. It’s about being good for everyone – health and wealth, shoppers and savers, for young and old, for farmers and fair trade. We’re led by our principles and make changes to work for the better.
“Our rebranded stores have already seen sales uplift of 13%. We have had 12 successful quarters of like for like growth. The Somerfield acquisition gives us an 8% market share, with the big four becoming the big five.
“A bigger base enables us to drive down prices as the UK’s community food retailer. What’s not known is that we’re also the biggest travel agent in the UK, the third largest pharmacist and funeral directors in the UK.”
“We’re also Britain’s largest grower, with 60,000 acres producing 1,000 tonnes of cereal, 3,000 tonnes of peas and 2,000 tonnes of apples.
“The Co-op bank is one of the few which can hold its head high in the current crisis. We have remained solvent, without any government support, and our merger with Britannia will make us Britain’s largest mutual bank. We have old-fashioned values, and customers are finding these very modern and very attractive.
“It’s our values which dictate who we are and our values that have built our success. We began from the 19th century cotton towns of northern England. We have democratic foundations and it’s what our members want and not what shareholders demand which fuels this company.”
“As our 100,000 members recently told us, we’re on the right track with value and first class shopping, but no compromise on values. We want to continue with our Fairtrade and improve lives of suppliers on the other side of the world. In 1992, we launched our first Fairtrade coffee line. We now have over 200 lines worth more than £60m. We want to enable people to trade their way out of poverty and so have made Fairtrade mainstream.
“We’re the first to stock Palestinian Fairtrade olive oil from the West Bank and Gaza, and we currently buy Fairtrade products from around the world.
“We also buy regional meat and vegetables and are bringing in higher welfare standards for our own-brand chicken – the Co-op Elmwood chicken – following consumer research that this is something which really matters to our customers. We sell British-reared pigs, and continue to invest in local community causes.
“Climate change is also on our agenda. We set up our first wind farm in Cambridgeshire in 2006 and now have seven more turbines here, with 14 in Humberside – in all providing 15% of our total electricity needs.
“In 2008, we carried out the Co-operative ethical consumer survey with consumer spend in this sector rising from £31bn to £35.5bn over a year. You may have seen our latest advertisement using the music of Bob Dylan, Blowin’ in the Wind, to demonstrate the move for change, from community projects to Fairtrade products and the Co-op reassurance that profits will be shared.
“It’s the catastrophic failure of ethics that’s at the very heart of capitalism. And as the Asda chief Archie Norman stated recently, ‘CSR can only be ignored by big business at their peril’. And Irina Herz said recently: ‘Goodbye Gucci, hello cooperative capitalism’.
“Cooperation, collaboration and collective values are the way forward. The ‘sod you, Jack’ approach will no longer work. But we don’t plan to lose our strong commercial sense, our ability to combine the ethical with the commercial, and the times they are a changing.”
The question and answer session following was chaired by Clive Beddall. Peter Marks began by saying:
“What has not been said is that the Co-op’s 2008 results show a very significant increase in profit. So this is not just hollow talk. We had been looking at buying Somerfield for around four years, as it has some of the best retail sites in the UK. Their business was a mirror image of ours and therefore it’s easier to drive synergies. It took 12 months to complete the acquisition, but making it work and delivering value is another thing. The hard work starts now.
“We had bought Alldays a few years earlier, so know how to integrate a business. We will drop the Somerfield name within two years, but in the meantime we have 650 stores to integrate and it’s business as usual for our customers until then.
“It’s not just soft, ethical stuff we’re pushing – it’s the hard marketing and price formula, too. People are really angry right now and we have presidents and prime ministers talking about corporate greed. Today, people are more concerned about world issues. I can’t foresee the future, but I think it’s going to be a long, hard slog, with the global recession lasting for around 18 months to two years.
“But we’re in a highly geared market, and we’ll continue our investment in our shops to keep improving them by refitting and modernising. We must continue to negotiate the best deals to produce the value part of the equation, but we aim to produce a better balance than most.
“There has been the question of a supermarket ombudsman being appointed to protect suppliers from big, bad retailers, but I see no need for this. We cannot subsidise our competitors. However, if we agree price and payment terms, we will not renege on that; we will not go back on a deal.”
“As regards the position on UK consumers drinking too much – this is a deep-rooted cultural position, but putting prices up will not alter it. We understand the social costs, but there is no panacea. And by putting costs up, we’re penalising the majority for the minority. Having a drink is for many one of the few pleasures they still have.
“As one of the big retailers, we’re easy meat – obesity, alcoholism – it’s all our fault. But it’s actually an education issue and that is what we have to resolve here.”
**Jackie Farnham of The Money Programme queried: “Are we in danger of a class system forming of those who can afford to have values and those who cannot?”**
Peter Marks responded: “There will always be those who think ethics and values are important, and only recently have others woken up to CSR. We know it’s the capitalist framework that has created the economic crisis and that this format doesn’t work. The pendulum has swung too far. What we need is Co-op capitalism.
“I cannot say everyone must feel strongly about ethics, but current events are certainly shaping things for the better. I recently met in Europe regarding joint buying arrangements, and no doubt a mutual way of doing business will evolve naturally. Especially a financial services industry with ‘mutualism’ and co-operation at its heart.”
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