With competition from discounters, online retailers and potential trade tariffs post Brexit, co-op retailers are exploring how working together could enhance selling margins and enable affordable prices. In a separate session at the Co-operative Retail Conference, delegates looked at opportunities for collective buying both within the UK and abroad.
In 2015 consumer co-operatives in the UK formed Federal Retail Trading Services Ltd (FRTSL), as a successor to the Co-operative Retail Trading Group, which formed in 1992. The buying group is collectively owned by independent societies and the Co-operative Group.
Adrian Digby, director of strategy and change at FRTSL spoke at the Co-operative Retail Conference on 4 March. He revealed the buying group was looking to make annual savings of £100m this year through range optimisation, promotional effectiveness and improved buying.
The FRTSL team carried out a review of the distribution network, looking at where to set up depots and stores in the future, how to improve picking processes and provide better technological support to staff. FRTSL is also looking at eradicating member confusion regarding the Co-op brand.
“There was a real need to look at how to become more effective as a buying organisation,” said Mr Digby. He added that the programme of savings would continue over the next three years, seeking to make sure retail co-ops would not miss out in the market place, particularly in terms of food to go or strategies for larger stores.
Co-ops running funeral businesses also face considerable competition in a market worth £2bn. As pre-need funerals are becoming more common, funeral businesses are extending the services offered. “There is significant competition coming in, if we don’t get on the journey now and do that together we’ll miss out in the future,” said Mr Digby.
Learning from co-ops in Italy and Denmark
In 2016 FRTSL agreed terms of reference for a project to explore potential co-operation with other European co-operative buying groups.
“We decided to explore with caution, focusing the exploration on areas where we, collectively as FRTSL, had opportunities to improve and learn,” explained Colin Macleod, chief executive of the Channel Islands Co-operative and director of FRTSL.
As part of the project, members of the FRTSL team visited Denmark and Italy last summer to explore key opportunities in the areas of non-food products in food stores, investment goods, entry price points and own brands.
With 1,100 stores and a 37% market share, Coop Denmark is a leader in food and non-food. The co-op invested in a non-food category to support the message of its food range. Mr Macleod thinks that UK co-op retailers could adopt a similar approach to fill unprofitable space in larger stores.
Coop Denmark forms part of Coop Trading, a buying group which it co-owns with Coop Norway, Coop Sweden and SOK Group in Finland. Coop Trading negotiates purchase agreements with suppliers on behalf of its partners & customers. FRTSL is exploring the potential to buy a partner share in Coop Trading or to become a customer with a fee structure based on volumes purchased.
Coop Italian Food is a new company established by Coop Italia to offer knowledge to export market. It aims to be the most qualified and reliable link between Italian food producers and international buyers, and to support the export of Italian food. As a result of the visit, FRTSL is now considering including Coop Italian Food in its tendering process as existing contracts are being reviewed.
Euro Coop as an exchange facilitator
Another key player in facilitating better relationships among European consumer co-operatives is Euro Coop, a sectoral body of the International Co-operative Alliance representing over 5,000 member co-ops from 19 countries.
Euro Coop is currently looking at establishing a European consumer co-operative Erasmus Programme to enable staff members to work in different co-ops in Europe. As well as engaging with EU bodies, the apex body is also preparing a tool to share information on consumer co-ops in Europe, which members will be able to receive for free.
A vice president of the Euro Coop board, Mr Macleod said: “Principle Six is alive and well in Europe. Euro Coop is starting to position itself as a facilitator of positive change.
“When the UK was looking at going out of Europe we [FRTSL] were looking to go in; it is not just about improving commercial terms, but sharing knowledge, experience and knowhow as well. That opportunity is still there. I feel that the currency impact reduces the size of the opportunity for us, but it doesn’t extinguish it. The opportunity to share knowledge across Europe is a big one.”
Massimo Bongiovanni, president of Euro Coop and vice president of the National Association of Consumer Co-operatives (ANCC), which has merged with Coop Italia, also contributed to the session. He spoke about some of the challenges faced by consumer co-ops in Italy, including changing dietary requirements and older demographics.
“Innovation is vital for future of co-ops. The ability to explore new options, doesn’t always guarantee success but it’s the only way to put in practice,” he said.
In this article
- Adrian Digby
- Channel Islands Co
- co-op food
- Co-operative Federal Trading Services
- Co-operative retail conference
- Colin Macleod
- Consumers' co-operative
- Convenience stores
- Coop Denmark
- Coop Italia
- Coop Italian Food
- Coop Norway
- Coop Sweden
- Coop Trading
- Euro Coop
- European Union
- Federal Retail Trading Services Ltd
- International Co-operative Alliance
- Massimo Bongiovanni
- National Association of Consumer Co-operatives
- SOK Group
- United Kingdom
- Top Stories