Engaging with ‘reluctant co-ops’

As the co-operative economy grows, so does the phenomenon of co-operative denial. While many businesses see the benefits of marketing themselves as a co-op, other will simply not use the ‘c’ word.

The John Lewis Partnership, for example, is listed in the Co-operative Economy 2014 as the UK’s second biggest co-op, with a turnover of £10bn. But, says its principal spokesperson Neil Spring, “while we fall into the very broad category of being a co-operative, we’re principally and constitutionally an employee benefit trust, and identify as such”.

Co-operatives UK engages with co-ops whether they promote their co-operative credentials or not. New entries in its Co-operative Economy Top 100 include hotel chain Best Western and a clutch of housing associations with a combined turnover of almost £150m.

The reaction of these businesses to being ‘a co-op’ has been lukewarm. Melin Homes calls itself a registered social landlord, not a co-operative. Clwyd Alyn, like many housing associations, abides by co-operative principles, although its plans to develop co-operative housing in Flintshire are on hold due to lack of community interest. Judith Gavin of Pennaf Housing Group, which includes Clwyd Alyn, says: “Clwyd Alyn isn’t a ‘co-operative’ as such. It remains a charitable industrial and provident society.”

Grand Union Housing Group, Hexagon Housing and Argyll Community Housing were not moved to comment.

Best Western, turnover £17m, considers itself a non-profit membership association, but is classed by Co-operatives UK as a consortia co-op, enterprise-owned.

Best Western’s spokesperson said promoting the chain as a co-op would risk alienating some of its members. However, individual hotels were free to promote their co-operative credentials.

Pamela Wood, Co-operatives UK’s communications manager, says: “Best Western here in the UK is actually part of the wider Best Western in the United States – and our American counterpart, the National Cooperative Business Association, treats them as a co-operative as well.

“At present, they’re not a member of Co-operatives UK but we’ve spoken to them about the service we offer. Even though we classify them as a co-op, as do our counterparts in America, they themselves don’t recognise themselves as a co-op, similar to John Lewis.”

Co-operatives UK is constantly discovering new co-ops, through everything from co-operative development bodies to social media. Organisations which adopt its model rules, or those drawn up by its partners, are included in the Co-operative Economy automatically. Secretary Helen Barber checks whether others abide by co-operative rules and principles.

She applies decades of experience to what can sometimes conclude with a judgement call. Co-ops can take up to seven legal forms, including society, company and partnership, and are not expected to fulfill all seven principles.

Pamela Wood says: “We recognise that new, formative co-op businesses will have to focus on getting their business of the ground and may not comply with all seven immediately, but that they will as their co-operative journey progresses.

“It’s up to the entity and its members, as with the principles, to determine how much emphasis they place on using the term ‘co-operative’,” she adds.

HF Holidays has been member-owned and a co-op for over 100 years, but only discovered this recently. Five years ago, it was not on Co-operatives UK’s radar, but the holiday provider is now active in the co-operative movement. “Where HF Holidays were five years ago is probably where Best Western are today,” Pamela says.

John Atherton, Co-operatives UK’s membership officer, comments: “We asked whether they [Best Western] wanted to join Co-operatives UK and the answer was no. Are we going to give up offering them our services? No. In time do we hope we will engage with them? Yes.”

He says being a co-op often meets a need rather than being an aim in itself: “Most new co-ops aren’t setting out to be a co-op because they’re interested in co-ops, they’re thinking ‘we need to save our pub’. Our job is to engage with them and help them be a really good co-operative.

“The first four principles are practical, the final three are what makes you a good co-op. Not every co-operative will hit all of the principles all of the time.”

Co-operatives UK members decide whether and how to promote their co-operative status. John explains: “Whether they use it in their branding depends on whether they think it’s a marketing advantage or it’s going to help them in some other way. We’ll work with them whether they call themselves a co-op or not.”

Dave Hollings of Co-operative and Mutual Solutions says: “There are two separate issues here: how ‘co-opy’ co-ops are, and how public they are about it – the two aren’t necessarily linked.

“Some societies are very clear their name is ‘such and such a co-op’, but when you look at their governance it’s questionable. Some co-ops don’t publicise that they’re a co-op but are very co-operative. It depends on the market.”

He points to one of the world’s oldest agricultural co-ops, Aspatria Farmers in Cumbria. “They’re passionate about being a co-op, it’s at heart of their business, but you could look at their website and think they’re not a co-op.”

Other agricultural co-ops, including First Milk and Arla Milk Link, are becoming more vocal about their co-operative values. James Graham, of the Scottish Agricultural Organisation (SAOS) Society, says: “There’s more of an interest recently in the fact that they’re co-operative and farmer-owned.

“This is driven initially by consumer interest in the supply chain. Customers want to be connected with sustainable supply chains that are fair and just to those involved in them, and co-ops are that.”

He agrees that co-ops are driven by business, not how they are constituted. “That’s why in terms of branding most don’t have co-op in their name. For many agricultural co-ops, it’s not necessarily apparent that they’re co-operatives, but we would argue it’s an important point of distinction and a promotional advantage.

“The name is usually decided when it’s first formed, and after that it’s too late to change it. From my point of view nothing would be more effective in raising the status of agricultural co-ops than if every one of them had the word co-operative in its name.”

He says that while co-ops with branded products are increasingly using being a co-operative as marketing advantage, SAOS has to work hard to encourage primary producers and co-ops delivering a service to do the same. “The co-operative constitution is becoming a more obvious marketing advantage than it was, and we have to build on that,” James says.

“Unless they are provided with some support and expertise, then agricultural co-ops tend to concentrate on the day job. We need to constantly remind them to drive their business using their co-operative advantages.”