Beaumont’s ?tough and tender’ route to success

A HARD-HEADED business approach coupled with a renewed commitment to the Movement&#039s social goals will ensure that the hope for co-operative renaissance becomes a reality. That&#039s the view...

A HARD-HEADED business approach coupled with a renewed commitment to the Movement&#039s social goals will ensure that the hope for co-operative renaissance becomes a reality.
That&#039s the view of Co-operative Group Chief Executive Martin Beaumont, who told the society&#039s half-yearly meeting in Manchester on Saturday: "We are not in business to lose money or to underperform. The only way to deliver the social goals on which co-operation is based is by ensuring that we are successful.
"For many years the Co-operative Movement seemed to be in a genteel decline into irrelevance. There was an assumption by many within the Movement that we were doomed to play a marginal role in a society dominated by shareholder capitalism."
Mr Beaumont said that despite much progress in recent years, he was not arrogant enough to claim that the Movement has turned that assumption round.
"We have to do a great deal more to show that we are capable of being not only good in whatever sector we choose, but the best. That is our challenge," he said.
Added Mr Beaumont: "The market is already taking note of the way in which the Co-operative Group is performing and, if we continue to deliver on that progress, we will make the greatest possible contribution to the future of the Movement. I genuinely believe that a co-operative renaissance is under way."
Mr Beaumont said the past six months had shown the Group was doing more to leverage its opportunities by acting as a Group, rather than a series of individual enterprises.
"So far, so good," said Mr Beaumont. "But if you were to ask whether I am satisfied with what we have done, then I would reply that we have to do much more."
Mr Beaumont claimed that it would be impossible to deliver added value to members without an integrated Group strategy.
He explained: "The vision for the integrated strategy is simple. We have an immense variety of skills and businesses within the Group. The more we learn from one another and the better we share information on opportunities and strategies, the more we will unlock possibilities to succeed."
Mr Beaumont insisted that both existing businesses and possible new ventures and acquisitions have to be judged according to whether they deliver the right return on capital; have a defensible market position and a strong customer base.
He said: "That may mean difficult decisions, but they will be the right ones if they are founded on a clear vision. The good signs are that in food retailing, banking, property, and pharmacy, we are not only making good profits, but we are doing so when measured against external benchmarks. That is absolutely crucial.
"On the downside, the recovery in the travel business still seems to be more talked about than real, while Farmcare remained in the doldrums with the rest of the UK agricultural sector in the first half of the year, though the situation improved over the summer."
Mr Beaumont praised the ?outstanding performance&#039 of Malcolm Hepworth and his team in food retailing for outperforming the market, but admitted that in other areas, notably specialist retail, production and other trading, the Group&#039s record has been mixed. He hinted that the society may consider disposing of some of its farm assets and smaller Travelcare branches in the wake of the recent decision to sell off the West Yorkshire-based Goliath specialist footwear business.
Mr Beaumont said the new Co-operative Travel Trading Group would give member societies a more powerful buying and marketing position, but he added: "We still have much to address with our retail branches, many of which are too small and do not produce a sufficiently profitable level of sales."
Turning to the Group&#039s agricultural interests, Mr Beaumont said the society had taken steps to improve matters by building links between its farms and stores and by increasingly growing crops to order.
But he warned: "In future, we will focus on being Britain&#039s best farmer, rather than being necessarily Britain&#039s biggest.
"The difficulty we face in many of our other businesses is that, even if they produce profits, they will struggle to achieve an acceptable rate of return on capital employed.
"I think of our department stores; Priory Motors; our engineering business Syncro; Robert Howarth in corporate clothing. In these sectors we need to look at how we can increase co-operation with other societies to increase scale and improve returns.
"Sadly, that has not proved possible at Goliath, which we are now selling. That decision illustrates that where we have to take difficult decisions in the interests of our members, we will do so.
"We can only be a successful and world-class co-operative business if the commercial fundamentals ? sustainable profits, market profile and return on capital ? are all in place. That is not the case in all our businesses at present, and ensuring that it becomes so is my central priority over the next few years."

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