End of Year Review 2015: Retail

A increasing emphasis on ethical products saw co-op retailers continue their growth, with initiatives such as Fairtrade Fortnight as notable successes. But while supermarkets performed well, the co-op sector...

A increasing emphasis on ethical products saw co-op retailers continue their growth, with initiatives such as Fairtrade Fortnight as notable successes. But while supermarkets performed well, the co-op sector continued to pull out of the department store market with closures at Heart of England Society.

There has been a strong element of recovery in the retail sector this year, as co-op retailers increasingly promoted ethical products as a way of continuing their growth.

Fairtrade Fortnight, at the end of February, showed retailers encouraging shoppers to choose Fairtrade products. Fairtrade itself had a successful year as its annual report showed 1.5 million people in 74 countries are benefiting from an increase in sales.

Ethical online retailers such as Fairmondo, Ethical Superstore and the Buy Social campaign continue to grow, selling everything from candles to champagne.

Co-op Food launched ‘Growing Stories‘ – a website where shoppers are put into contact with Fairtrade producers from across the globe, to show the benefits of the scheme.

Co-op Food was also named as the country’s most ethical retailer at the Drinks Retailing Awards for the second year running, due to its commitment to responsible retail of wine, beer and spirits. They were rewarded for policies such as promotion of Fairtrade wine, commitment to reducing their carbon footprint by increasing the volume of wine bottled in the UK, and switching to lighter weight wine bottles.

There were mixed fortunes for the Group as Co-op Food was voted the UK’s least favourite supermarket from Which? magazine despite sales continuing to rise.

Fairtrade Fortnight 2015
Fairtrade Fortnight 2015

The Co-op Group was back in profit after two years of heavy losses. While in the third quarter of the year, sales at Co-op Food (and other co-op branded stores, such as Scotmid and East of England) were up 1.5%. Retail analysts Kantar, who provided the information, put it down to Co-op Food’s rebrand as a convenience retailer – in line with the general trend to shop little and often.

Talking of rebrands, in December word began to spread that the Co-operative was looking a a major rehaul of its branding and logo, with three logos from its past the front runners to replace the current ‘the Co-operative’ branding.

Although supermarkets continue to perform well and expand their range of products, it was farewell to more co-op department stores. Heart of England announced the closure of its ‘Rooms’ store in Coventry in August, swiftly followed by the decision to close all non-food retail stores in the next 12 months.

The end of the year reflected the general upward motion of retail co-ops with a couple of late Christmas bonuses. Lincolnshire Co-op members received a dividend bonus, sharing £1.56m between them, while at East of England Co-op stores, shoppers received an accidental 20% discount across all stores for over a day. The company lost £43,000 in discounts during that time, although sales also rose as people rushed to take advantage of the error.

Key events:

JAN: First co-op cluster held in Manchester.

FEB-MAR: Fairtrade Fortnight.

FEB: Allan Leighton, former Asda boss, announced as first independent chair of Co-op Group.

MAR: Co-op Food named country’s most ethical retailer at Drinks Retailing Awards for second year running. Read more here.

MAR: National Retail Consumer Conference. Another tough year predicted.

MAR: Channel Islands Co-op unveils double dividend offer on Tuesdays and Wednesdays, to spread out the trade from busy weekends.

MAR: Co-op Food voted UK’s least favourite supermarket in Which? poll. Waitrose tops standings.

APR: Co-op Group announced it was back in profit following two years of losses.

MAY: Heart of England Co-op launches low-cost payment scheme for funerals.

JUN: 2015 economy report published by Co-operatives UK names John Lewis as country’s largest co-op. Top spot had previously been held by the Co-op Group.

JUL: Nick Crofts elected new president of Co-op Group’s members’ council.

JUL: Midcounties Co-op receives Co-operatives UK’S Co-op of the Year award.

SEP: Heart of England Co-op announces closure of all non-food retail stores in the next 12 months.

OCT: 5p carrier bag levy introduced in England.

DEC: Sales at Co-op Food and other co-op branded stores (like Scotmid or East of England) reported as 1.5% up in third quarter of the year.


Highs and Lows

Richard Pennycook
Richard Pennycook

Richard Pennycook

Chief Executive, the Co-operative Group

Highlights:

The first year of our Rebuild has seen colleagues and members achieve a great deal. Our priorities in the businesses are all focused on fixing the basics, whilst at Board and Council level I am highly encouraged that our new governance structure is settling and working well.

I would point to our first one member, one vote AGM as important. All Members welcome, able to say anything (however contentious) and the press in attendance – proper transparency created through the governance reform.

I was pleased, too, with the vote to return to our campaigning roots in partnership with the British Red Cross, by seeking to tackle loneliness in communities across Britain. All of our businesses have made good progress this year, and that can only be achieved through the efforts of great colleagues and I thank them for their loyalty, commitment and service.

What would you like to see next year (and how do we get there)?

Our new purpose begins with “championing a better way to do business”, and earlier this month I was privileged, along with colleagues in Angel Square, to witness the first set of 15 children graduating from the school in Tilimuqui – a remote village in Northern Argentina. It was a school built with funds from the sale of Co-op Fairtrade wine, and 800 children will start their school life there this year. That is why Rebuilding the Co-op Group is worthwhile – we can do so much more of this.

Peter Leatherland
Peter Leatherland

Peter Leatherland

Online Sales Manager, Ethical Superstore

Highlights:

We work with the Newcastle West End Food Bank throughout the year collecting donations from our generous customers via our checkout, we convert these donations to actual grocery products for the Food Bank.

On Black Friday (and the weekend) we donated a grocery item with each order over £30 to the Newcastle West End Food Bank. These products are the ones picked by the food bank so will be the right items that people need.

This was extremely popular with our customers who are usually the type who look for something different from your everyday supermarket giant. We wanted to give out a different message on Black Friday and highlight a growing issue in the UK, use of Trussell Trust food banks has risen 19% this year, many people see food banks as helping homeless people but there are a huge number of working families who are struggling in the economic climate and the use is only going to grow.

We are proud to be doing something to help and will be shipping the products over to the food bank this week.

Low points:

On the much less positive side we did see the Newcastle West End Food Bank we work with ram raided earlier in the year with over £1500 worth of donations stolen. No one knows if the people responsible were aware of who they were taking from but the response from the public and local businesses was fantastic and actually inspired us to work with them on Black Friday.

What would you like to see next year (and how do we get there)?

Hopefully more of the same, Ethical Superstore was launched back in 2006 so we’ll be celebrating our tenth year online. Over the years people have taken more of an interest in the products they buy, not just what they are and what they cost, but what goes into making them, who makes them, what are they actually made of, how are they made etc.

People are realising that there is an additional cost to that £2.50 t shirt they just bought, a human cost. There are now many more options when buying clothes to ensure the welfare of the people producing them with Fairtrade and Organic brands such as Braintree and People Tree amongst others. I’d like to see this same approach with electronics, with appalling conditions coming to light to get us our latest gadgets this is an increasing problem.

There are signs things are beginning to change with the Fairphone for example, a high spec smartphone with a transparent supply chain. Hopefully this will shame the bigger phone manufacturers into improving their standards.

 

Nina Gibson from the Unicorn Grocery
Nina Gibson from the Unicorn Grocery

Kellie Bubble

Member-owner, Unicorn Grocery

Highlights:

Our building work was completed early 2015 after years of planning and working with a local co-operative architect firm Loop.  

In addition to improvements to insulation and the look of the building, Unicorn gained a large commercial kitchen for a very exciting and growing part of our business.  

Sales of Unicorn-made dhals, curries, salads, soups, etc. have significantly increased over the year. As a result of shortening the supply chain our offer is fresher, uses less carbon and is very affordable.

Low points:

As usual there are many sad stories in the grocery world and this year was no exception, so the lowlights would be continued exploitation in the supply chains, from UK growers struggling to make a living to the ongoing and extreme tragedy of Indonesian forests fires.

What would you like to see next year (and how do we get there)?

We would like more worker co-operatives spreading throughout the UK like a beautiful virus. We get there by demonstrating there is a better way to trade, not perfect but much, much better!

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