Don’t worry! The question isn't as deep as it sounds. This is about your Co-op and the reason for our existence. The answer is simple: To serve our members. That’s it, nothing else.
How do we do it?
By listening to you, by returning the surpluses you help us earn, and by acting in your best interests.
We have 115,000 members and it is important that we act in your interests as a whole. We are not a single issue Society; you have to look at us in the round, which is what the Board, elected by the membership, has done in approving the strategy we are now seeing through.
Our intention to move food warehousing to the UK is not a one-dimensional decision, based on the warehouse location and the jobs there that might then be at risk. This is just one component of a wider, integrated commercial strategy that has been carefully designed to listen to our members, win sales, create more jobs and protect your dividend.
We are acting on what we know our members say that they want. I know that no member has specifically asked us to close down our warehouses, but it is true to say that many members have asked for significant improvements, and that’s what this strategy will bring.
Let me wind the clock back to 2010, when I was incredibly proud to be offered the position of CEO, having spent the previous 20 years working my way up from the shop floor. It is a real privilege to lead our wonderful team.
"Colin, we would like you to take the top job.” Hmmm.
I had to consider, Waitrose were coming, Iceland were rapidly expanding, GST in Jersey was strangling consumer spend, we were in the middle of the deepest recession for a generation and house prices (one of the barometers of how well off people actually feel) were falling. Low Value Consignment Relief (LVCR) was being hunted down and record levels of unemployment were plaguing our islands. Those in employment were worried and putting off purchasing decisions wherever they could. This was going to be a tough place to start!
So where did we start? As a Co-op that one’s fairly easy; you ask your membership what they want, and do your absolute best to deliver it within a strategic framework designed to develop and protect our Society. So, we conducted a significant piece of Market Research upon which to build a strategy to take us through the recession whilst protecting and developing member value.
This feedback was assessed in conjunction with a clear and honest look inside our business and a systematic review of our external environment, namely, the competition, the economy, the social trends and the political and legislative framework.
We are now coming to the end of this strategic cycle; therefore I can reveal the main elements of the strategy approved by our Board in late 2010.
We have delivered on our promises.
We have opened new stores at Don Street, St Mary & Sion in Jersey and at St. Andrews and The Royal in Guernsey.
We have also announced further pipeline developments at Grouville and Colomberie in Jersey and GT Cars on Le Bas Courtils in Guernsey.
We reviewed our local supplier relationships, held events to encourage new producers to talk with us and now use 74 suppliers across both islands and spend over £11,000,000 with them. This creates jobs in our supply chain and keeps your money circulating locally.
More and Better Offers
We changed point of sale material and are now selling more promotions than ever before.
We spent a whole year reviewing and improving our produce supply chain, and have seen marked increases in sales and improvements in quality as a result. Regrettably though, this area remains a common member concern.
We have diversified into both the funeral and pharmacy sector and these areas have integrated very well so far. Members now enjoy dividend in both brands too.
Consolidation of central costs
We reviewed our support centre costs and our ways of working and have made significant savings, with the potential for more, if we confirm our intention to transfer food warehousing to the UK.
Our central support function, or head office, previously spread over three locations, consolidated in Don Street two years ago.
We have dramatically reduced our fuel prices.
So, how did we do?
Despite the local challenges being more severe than those faced by the rest of the Co-operative movement, we have outperformed our sector in each of the last five years.
History is full of stories of Co-ops that have failed to respond to the needs of their members. As a result, the ‘Co-op Graveyard’ is jammed full of virtuous business models and great intentions.
So, the supply chain changes we are proposing are simply part of an overarching plan to respond to our members, but you can't pick this apart from the other elements, they are not mutually exclusive. The efficiency gains are part of the funding we require; the improvements to the fresh food environment are integral to our future competitiveness.
The loss of jobs is tragic and traumatic for those directly impacted and for the rest of our team too, but this strategy has and will continue to create many more jobs overall. We simply cannot ignore the bigger picture. We know that if we don't deliver what our customers want, we will not have a viable business for very long.
The prospect of a Tesco in Jersey looms on the horizon. I know our members will expect us to compete and they are absolutely correct. However, should we try to compete while we have embedded inefficiencies? Should we compete with limitations in our range and freshness? Should we compete taking into account our costly operating model?
Absolutely not. We must compete with the lowest cost structure, the best possible range of products and the best possible fresh foods. To do anything else would be unthinkable.
Tough decisions are just part and parcel of modern business.