As tough conditions continue in the retail sector, Lincolnshire Co-op has announced a programme of business transformation to ensure it is “sustainable in the long-term”.
The independent co-operative, which trades in Lincolnshire and surrounding counties, employs over 2,770 people and operates more than 200 trading sites including food, pharmacy, post offices, travel branches and funeral homes. It is owned by its 300,000 members and runs an extensive community support programme.
In the first six months of the society’s financial year, economic conditions and significant rising costs have seen the organisation’s turnover fall by 1.2% and its trading profit (EBITDA) drop by 35%.
It says its business strategy Purpose Beyond Profit 2030 includes a new focus on healthcare and housing, as well as substantial investment in systems and technology to make the society more efficient.
The society now hopes that investments and changes to the way the business operates “will help drive trading profit back up over the coming years”.
Around 300 people are employed at the society’s Support Centre in Lincoln, and it has recently been in consultation with 52 colleagues about proposed changes to their roles.
Working with union Usdaw, through a period of consultation, the society says it has been able to minimise compulsory redundancies to fewer than 10.
Lincolnshire also plans changes at its pharmacy warehouse in Lincoln, which employs 80 people. One part of the warehouse’s work is to supply prescription medication to the co-op’s pharmacy branches.
The society is proposing moving the supply of prescription medication to existing third-party suppliers which already make deliveries to its pharmacies. A collective consultation has started with 42 colleagues, on a proposal to remove 27 roles. The society says it is working with Usdaw to explore all options and mitigate compulsory redundancies. No other areas of the warehouse are involved in this process.
As well as proposed operational changes, the society says has also altered its property portfolio to enable a future investment focus on healthcare and housing. Ownership of the Waterside Shopping Centre in Lincoln was transferred in full to its partner, Wykeland Group, in May.
Mosaic Digital Hub, the co-working space on Silver Street in Lincoln, is being marketed for sale alongside the rest of the Thomas Parker House building. The society is looking for a new operator to develop the Mosaic facilities and the unused space in Thomas Parker House even further.
“Many businesses across the UK are experiencing challenges – and Lincolnshire Co-op is not immune to that,” said CEO Alison Hands.
Related: Financial results from the co-op sector
“Our costs continue to rise, including significant increases in the National Living Wage and National Insurance, and in the latest half year financial results we reported that our turnover and trading profit are both down.
“However, we do have a strong balance sheet and reserves, as well as an investment plan which supports growth of our business to ensure we are able to serve our communities for many, many years to come.
“This plan includes new technology such as electronic shelf edge labels and self-checkouts in food stores, and improved IT systems across all our business areas. We’re also developing future areas of our business in healthcare and housing and the refocus of our property portfolio is part of that work.
“To enable us to achieve our plan, we also have to make sure we are managing our costs carefully, balancing profitability as well as alignment with our strategy and community purpose, and our future direction and growth.
“It does mean having to take difficult decisions, including reviewing our ways of working. These are processes that are never easy, and we’d like to thank our teams for their professionalism and support for each other during this time.”
The news comes after a difficult period for the UK retail co-op sector, with impact from the cyber attack on the Co-op Group, rising costs and growing competition, and a series of mergers – between the Co-op Group and Southern, and between Central, Midcounties and Chelmsford Star to form OurCoop.
