Speaking before the Competition Commission announced it would investigate the deal, Mr Reid asked rhetorically: “Who ever could have predicted that, having developed a brand and invested significantly in establishing its credibility, The Co-operative would decide to licence an element of it to a plc?”
Midcounties’ travel business is not part of the joint venture arrangement and Mr Reid revealed that his society declined to be involved because directors felt that “allowing a plc to present itself as a co-operative was too great a price to pay” — even though he admits the deal offers significant financial rewards and that Midcounties will face problems by opting out.
“This is treating our brand as a franchise which can be available for hire,” said Mr Reid. “There is a bit of smoke around the fact that this will be a joint venture with a minority co-operative interest, but is anyone really fooled? I suspect there were a number of co-operators who have been unable to reconcile the decision. The decision has put at risk the whole integrity of the brand project and it has to be hoped that this is the limit of the dilution.”
Added Mr Reid: “Midcounties is not going to be part of the Thomas Cook transfer, which leaves us in an unfortunate position. For the last 20 years, we have been part of the Co-op Travel Trading Group, which has been carrying out joint buying and marketing for the Movement’s travel businesses.
“All that is now lost to us and we will have to set up a whole new infrastructure to negotiate terms with tour operators and create a Travel Marketing Department, and, of course, we will lose the benefits of buying that flow from being as big as CTTG.
“We have spent the last five years converting ourselves to Co-operative Travel, having incurred considerable costs to rebrand our stores. We have a brand licence for the next ten years, but have to consider whether it is possible to continue to trade as Co-operative Travel.
“We will probably have to rebrand as Co-opTravel.co.uk, with all the costs this will bring, so we will be withdrawing this element of our society trading from the brand project. We will no longer be able to claim we are 100 per cent brand compliant as a society.
“This will be a great shame and contrary to the spirit and the intention of the brand project.”
However, despite what he called the “diversion” affecting the travel business, Mr Reid insisted the Co-operative brand has been a huge success within his society. He recalled that when Midcounties was established in 2005 as a result of the merger between West Midlands and the Oxford, Swindon & Gloucester co-operatives, the new society was one of the first to embrace the brand. Said Mr Reid: “However it became clear early on that this was a far bigger project than just changing the look of our stores. This was about the creation of a whole new culture — one built on co-operative values and principles.”
Mr Reid said the impact of the brand on sales and profits had been positive from the word go, with branded stores increasing sales faster than non-branded outlets and this gave the society confidence to roll it out to all its businesses. He commented: “The whole journey has been truly transformational. We have developed a strong co-operative identity that is underpinned by the actions of our colleagues on a day by day basis, creating a very strong platform on which to build a successful co-operative future.”
Commenting on Mr Reid’s remarks about the proposed travel deal, a Co-operative Group spokesman told the News: “This is not a view shared by the Group’s Board and management. On the contrary, in this struggling market sector, the JV makes absolute sense — commercially and co-operatively.
“It secures a profitable future for the business, safeguards jobs and is good news for members who will be able to continue to book holidays at Co-operative Travel while still accruing the dividend.”