Interview with Co-operative Group Chief Executive Peter Marks

Co-operative Group Chief Executive Peter Marks looks back at his three years in charge of the world’s biggest consumer co-op and focuses on the challenges ahead in this...

DAVE BOWMAN: It’s three years since you took over as Chief Executive following the merger with United, but does the amount of change that has been achieved in this time make it feel as though you have only been in charge a few months — or does it feel like a lot more than three years?

PETER MARKS: The three years have absolutely whizzed by. It’s been a fantastic, exhilarating and exciting three years and, overall, very rewarding. The business has been transformed; we have doubled sales and profits and, from a commercial standpoint, the business is very successful.

In the three years, we’ve invested £3 billion, but by the end of this year we will have rebranded and modernised all our 5,000 shops and outlets and that’s absolutely phenomenal. At the same time, we have strengthened our values and principles and our ethical dimension and we have done more in terms of our social goals than at any time in our recent history. Because we are now so profitable, we are allocating far more funds to community activities and our social goals programme than we’ve ever done.

People sometimes criticise me for being ‘too commercial’, but I only want to be commercially successful so that we can fulfill our social purpose in life.


DB: It’s hard to believe the Somerfield acquisition and Britannia merger were only finalised last year. But when will the integration process actually be completed?

PM: Somerfield was acquired around 17 months ago and we said we would fully integrate the business in two years. That’s a short amount of time for a project of this size, but it will be completed pretty much bang on target by the first quarter of 2011. As for Britannia, the integration process has been under way for about 12 months now and we believe it will be complete two years from now.


DB: As you have already mentioned, you sometimes get flak for being too commercially minded, but you have also been criticised for missing the annual Congress weekend this year and last. What’s your reaction to that?

PM: It’s really just been a case of priorities. It’s been a very hectic three years and it’s not fair on my wife to devote all my weekends and all my time to the Co-op Movement. I do have a life outside! 

And, in any case, I spoke at Congress three years on the trot, I think. So Congress probably heard enough from me for a while. Now that the dust is settling within the Co-operative Group a little bit, I will try to get to next year’s Congress in Birmingham.


DB: Last year also saw the last major society merger with Plymouth & South West Co-op joining the Group, but it’s hard to see another such transfer of engagements taking place soon, so is your dream of a single national society dead or just on hold?

PM: You’re right, I don’t see any potential mergers on the horizon either, but it’s not something I lose a lot of sleep about. My dream, as you put it, was to transform the Movement from being a business in decline to a business that is succeeding and I believe we are doing that.

We gained economies of scale via the amalgamations that have taken place and that’s all I wanted. I wanted us to be able to punch our weight against the very tough competition in the market in which we operate and we can do that now. I respect the views of those societies who have remained independent, and the good news is that most of the independents are now using the brand, so from a customer point of view we at least look as if we are one, which is something we really needed to do as we were projecting ourselves as a fragmented business.


DB: We’ve discussed the Group’s two big businesses — Food and Financial Services — but how are the other businesses faring in the downturn?

PM: Travel has clearly been a victim of the recession, plus the ash cloud, strikes and a whole host of disasters, so I 

feel really sorry for our travel team. They have worked incredibly hard almost just to stand still. It’s been very tough for them. However if you take all the other businesses together — pharmacy, funerals, travel, farms, legal services, electrical  — as a block they are on budget and performing extremely well during what is a very tough time.


DB: You’ve spoken previously about the need to turn up the volume on the Group’s value and values proposition. Other retailers have moved into the Group’s traditional territory on ethics, community, Fairtrade etc . . . so how can the Group and the Movement re-establish its position on these important issues?

PM: I don’t think it has to re-establish itself, it’s already well established and poll after poll shows we are regarded as the most ethical business. That isn’t going to change any time soon, but we’ve got to keep banging the drum and emphasise our credentials in these areas — and we do.

The fact that Waitrose, Sainsbury’s and others are selling Fairtrade products is good because it means that more farmers are getting better deals. Am I worried that they are parking their tanks on our lawn? No, because we will always occupy that territory in the minds of consumers.


DB: Can you update me on the new Manchester HQ? Is the construction work on schedule; when will staff be relocated  and can you say what will happen to existing premises in the Co-op complex?

PM: It’s a massive project, but the buildings in the current Co-op complex in Manchester are decrepit. They are not fit for purpose, so we need a more efficient service centre and that’s what’s being built on the Miller Street site.

It will be state of the art and the project will create value for the Group. The new HQ will be cheaper from an energy and an effiency point of view and it will allow us to release all the value inherent in all our freehold holdings in the important city centre area. Over the next few years, that will release massive value.

The project is on track. We said it would be ready and open for use midway through 2012 and that’s still the situation. It’s on budget too and I fully expect that to continue. We can start migrating from New Century House and the other buildings in less than two years time, but the move will take a few months to achieve. We are not all going on the same day!


DB: Given the Group’s commitment to equality and diversity, are there enough women in top roles in the society? 

PM: No, there’s not. Recently, I addressed a group of our female managers and I asked them how we can move this agenda forward. I did say to them that I believe in a meritocracy. I don’t believe in tokenism or quotas, but I do think the Group is missing out in the talent we employ.

Most of our employees are women, so you would think we would have more women in management than we have. But it’s a conundrum and there are no easy answers. It’s a whole host of things including the fact that some women don’t want that kind of career. 

I’m anxious to spread our net in terms of the Movement’s talent, but it’s not just about women; it’s about the entire spectrum of gender, sexual orientation, ethnic origin — the whole thing. Change will come slowly, but we are working at it — it’s work in progress — and it’s important that there are no barriers. It’s a wide cultural issue for most UK businesses, not just the Co-op.


DB: And finally, can you tell News readers — and the Group’s 5.5 million members and 120,000 staff — where the society will be in another three years?

PM: Once we’ve fully integrated Somerfield and Britannia, the next phase of our development is to leverage our diverse family of businesses and get them all gelling together. We will need to use our membership to do that. We have 5.5 million members, but we need to increase membership and get them all spending across all our businesses. We have a real opportunity to do that through the membership scheme and that’s a big push that’s coming in the next few years.

We have to continue to go forward with the same momentum as we have achieved in the past three years. By the end of this year, the Group will have doubled its profits since 2007 and by the end of the next three-year plan we will have quadrupled profits.

There’s only two ways businesses can go — backwards and forwards — so we have to continue to go forward at the same pace as before.


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