Co-operative retailers are looking at ways to improve the competitive convenience store market which, say experts, is “growing but slowing”. One way to stand out from the crowd is to develop franchising partnerships – but how do partnerships between co-ops and private companies work?
The Southern Co-operative operates over 190 stores in the south of England. It also franchises more than 20 stores, using the ‘Welcome’ brand to distinguish it from its regular food outlets. A spokesperson from the society explained the roots of the arrangement: “This small group of stores has its origins in the Alldays business, acquired by the Co-operative Group in 2002. This included both company-owned and franchised stores.
“The bulk of the franchises were converted to society-managed co-operative stores. The remaining franchises were re-branded under the “Welcome” fascia by the Co-operative Group and the management of this residual franchised business was passed to the Southern Co-operative in 2007.
“The stores continue to be owned independently but are traded under licence to contracted operational standards overseen by the Southern Co-operative.”
The partnership has been viewed as a success. In Southampton, for example, there are three Welcome stores, run by local business Parkview Limited.
Richard Inglis, director of Parkview Limited, said: “You’re working with a partner who has a wealth of experience in the same industry as you. The Southern Co-operative run their own convenience stores so they understand what it is we do. They operate in Southampton and the surrounding areas as well, so they understand the community we work in – the markets and conditions.”
Parkview began in 2000, originally operating Spar stores. After a number of years, there was a desire to increase product range and move more firmly towards the convenience sector. The Southern Co-operative fitted the bill.
The agreement is a fairly straightforward franchise arrangement – Parkview holds all the leases and employs all their own colleagues. The Southern Co-operative supports with range, retail support, marketing, employment law, and shop refits whilst checking we maintain the correct franchise brand standards. It also does all the main billing.
The partnership with a co-operative society also required a certain ethical stance. “Like any other franchise we adhere to the same standards that any other franchise operation would,” says Mr Inglis. “The difference being that we adhere to the co-operative standards and values – whether that be through the fresh meat we source, the type of local suppliers we use, or our community engagement.
The arrangement has allowed the private retailer to formalise an ethical stance, while the co-op can expand its reach in the community with more stores
“For a customer coming into one of our Welcome stores, they benefit from the high quality products and high standards they would expect from the Southern Co-operative, whilst supporting an independent, local retailer with a focus on benefitting our community.”
In the case of Parkview’s Welcome stores and the Southern Co-operative, the arrangement has allowed the private retailer to formalise an ethical stance, while the co-op can expand its reach in the community with more stores.
Similarly, Scotmid Co-operative recently concluded a trial with Conviviality Retail, which owns the UK’s largest off licence and convenience retail chain operating mostly under the branding of Bargain Booze, Bargain Booze Selective Convenience and Wine Rack.
Malcolm Brown, from Scotmid, said: “Conviviality do all their own marketing. The four stores that are part of the trial (all former Semichem stores) are run operationally by us.
“Conviviality were coming to Scotland and they decided to work with us due to our reputation in responsible selling of alcohol.”
The four Scotmid stores were converted into Bargain Booze sites, under the name Bargain Bs.
When the partnership began in 2014, Scotmid became Conviviality’s exclusive Scottish franchise. Conviviality’s CEO Diana Hunter said it worked like any other franchise – franchisees buy everything from Conviviality in exchange for “great prices, great ranges” and support with branding and marketing.
Although the two enterprises have entered into the agreement, customers won’t see the Scotmid logo in these shops. Instead, there is a sense of ethos being passed on, of mutual benefit rather than a public display of co-operative status.
“We do not use any form of branding on the carrier bags,” said Mr Brown. “In a nutshell, operationally we bring the same experience in the responsible selling of alcohol as seen in our Food stores to Bargain Bs. Obviously in the future we will look at the results of the four store trial, along with Conviviality, before potential expansion of the brand.”
This same sense of mutually understood values is present in another co-op society franchise agreement: Midcounties Co-operative Society’s partnership with Coffee Republic. This franchise, however, is vastly more visible to customers, with branches of the coffee chain opening up inside some of the society’s larger food stores.
In January, the first Coffee Republic appeared in Midcounties’ food store in Walsall town centre. Ten more are planned by the end of the year, with the next ones planned for Swindon and Stourport. Similar agreements were already in place between the society and other high street retailers like Bonmarché, Brantano and the Works.
Phil Ponsonby, deputy chief executive for trading at the Midcounties Co-operative, said: “In-store cafés have, for a long time, been an important part of many of our larger stores. However, as part of our ongoing long-term development plans, we have recognised a need to refresh these sites in order to provide our members and customers with an even better service.
“As part of our new policy of welcoming partners into our stores, we’re now in the process of turning a number of our café facilities into Coffee Republic outlets.
“We’ve chosen to partner with Coffee Republic as it’s a company which shares our values of not only providing a quality service to customers, but also providing a sustainable future.”
This sustainability includes further commitment to Fairtrade. Since the partnership began, the coffee chain has introduced its first ever Fairtrade coffee.
It is easy to see why there might be confusion from the outside about co-operative societies and their franchise partners. Especially when some of the partnerships occur between enterprises that seem far removed from principles of co-operation.
Since 2013, for example, the Southern Co-operative has had a franchise agreement in place with Starbucks. The move was part of the coffee company’s strategy to increase its presence in the UK by opening stores in profitable locations. At the time, Jane Coleman, vice president of franchising at Starbucks UK said the deal presented the Southern Co-operative “the opportunity to bring their own expertise and experience to our business”.
A spokesperson for the Southern Co-operative said: “We work in partnership with Starbucks to ensure the coffee shops we operate deliver great service to our customers, provide a great place to work for our colleagues and, in line with the Southern Co-operative’s purpose and ethos, that they make a positive contribution to the local economy, the environment and the communities where we trade.
“Our reasons for choosing to work with Starbucks include their commitment to high-quality products and service, their active involvement in their local communities, the way they share profits with their employees, their deep-rooted relationships with their suppliers and the central role their coffee shops, like our own food stores, play in the local community.”
Franchises are one way in which co-operatives are fighting to survive, and indeed expand, in a competitive environment
The message is very much of collaboration between the two enterprises: a mutual exchange. The society now has three Starbucks locations – two in Southampton and one in Bath – and there are plans for more franchises.
Away from Starbucks, the society is openly inviting applications from other independent operators, stating: “we wish to focus on the quality, not the quantity”.
The franchise policy certainly seems to have been successful up to now. For example, at the Convenience Retail Awards in March, the Southern Co-operative’s Welcome store in Marchwood scooped the prize for ‘Best Multiple Convenience Store’.
Franchises are one way in which co-operatives are fighting to survive, and indeed expand, in a competitive environment. Franchises bring customers into stores and improve the financial performances of co-ops – therefore benefiting members too.
Some will see a co-operative entering into a business partnership with a global conglomerate (ie Starbucks) as jarring, and out of step with the ingrained values of a co-op. Others will see it as a welcome sense of collaboration and co-operation that goes beyond the traditional co-op sector.
Whichever way you look at it, franchises are here to stay.
In this article
- Bon Marche
- coffee chain
- Coffee Republic
- Consumers' co-operative
- Convenience stores
- Conviviality Retail
- Diana Hunter
- Jane Coleman
- Malcolm Brown
- Midcounties Co-operative Society
- Oliver Holden
- Parkview Limited.
- Phil Ponsonby
- private retailer
- Richard Inglis
- Southern Co-operative
- Starbucks UK
- The Co-operative brand
- The Co-operative Food
- The Co-operative Group
- North America
- United Kingdom
- Top Stories