The Co-operative Group
The Co-operative Group Limited, trading as Co-op and formerly known as the Co-operative Wholesale Society, is a British consumer co-operative with a group of retail businesses, including grocery retail and wholesale, legal services, funerals and insurance, and social enterprise.
The group has its headquarters located at One Angel Square in Manchester, England. The Group also manages the Co-operative Federal Trading Services, formerly the Co-operative Retail Trading Group.
History
Beginnings (1844–1938)
The Co-operative Group has developed over the years from the merger of co-operative wholesale societies and many independent retail societies. The Group's roots are traced back to the Rochdale Society of Equitable Pioneers, established in 1844. The Rochdale Society of Equitable Pioneers was based on the Rochdale Principles – which notably introduced the idea of distributing a share of profits according to purchases through a scheme which became known as the dividend or "Divi".Although the Co-operative Group incorporates the original Rochdale Society, the business's core for much of its history were its wholesale operations. This began in 1863 when the North of England Co-operative Wholesale Industrial and Provident Society Limited was launched in Manchester by 300 individual co-operatives in Yorkshire and Lancashire. By 1872, it was known as the 'Co-operative Wholesale Society' and it was wholly owned by the co-operatives which traded with it. The CWS grew rapidly and supplied produce to co-operative stores across England, though many co-ops only sourced around a third of their produce through the CWS. It was this continued and fierce competition with other non-co-operative wholesalers which led to the CWS becoming highly innovative. By 1890 the CWS had established significant branches in Leeds, Blackburn, Bristol, Nottingham and Huddersfield alongside a number of factories which produced biscuits, boots, soap and textiles. In an attempt to drive down the significant cost of transportation for produce the CWS even began its own shipping line which initially sailed from Goole docks to parts of continental Europe. One of the CWS' steamships, the Pioneer, was the first commercial vessel to use the Manchester Ship Canal. This rapid expansion continued so that by the outbreak of World War I the CWS had major offices in the United States, Denmark, Australia and a tea plantation in India.
There was a great deal of consideration on the role of the CWS in the British co-operative movement around the turn of the twentieth century. Many, fiercely local, societies saw the CWS as a valuable supplier but did not want to exclusively purchase produce from them owing to perceptions of high cost and unreliable quality – some things the CWS were at pains to resolve. In contrast to this, the CWS had its aim to be the centrepoint for the whole co-operative movement in the UK and lobbied hard for loyalty from co-ops. To this end, they started to assist the local retail societies in more ways than simply as a wholesaler. The CWS Bank, the precursor to The Co-operative Bank, financed loans for societies to use for expansion through purchasing new buildings, land or new equipment. After the acquisition of the Co-operative Insurance Society in 1913, the CWS also provided insurance services to members and the CWS also began providing legal services – all businesses which form parts of the Co-operative Group today. It was hoped that these financial ties, as well as the CWS corporate dividend, would increase loyalty to the CWS.
World War II and post-war decline (1939–1989)
During the Second World War, rationing led to an effective pause in any major changes to the co-operative movement in the UK with the CWS becoming highly involved in sourcing overseas goods for UK consumers and manufacturing wartime goods.During this time, the CWS began planning for the future, as even then they could see the potential disruption to the retail market that the new multiple grocers could have. What was less obvious at the time would be the impact of National Savings and national taxation on the movement, as Britain shifted from a country of friendly, building and co-operative societies, to one with a National Health Service, National House building programs and National Post Office Bank NS&I GPO. In 1944, the CWS published a report entitled Policy and Programme for Post War Development which focused on methods for revitalising the co-op movement after the war had ended. The report suggested merging the CWS with the Scottish Co-operative Wholesale Society ; reducing the number of co-operative societies through merger; moving into the manufacturing and production of white goods and the expansion of the Co-operative Bank.
This report received much criticism from the fiercely local co-operative societies and the proposals of the report were only partly and slowly implemented. The end of war allowed some attempt to modernise the co-operative stores around this time, while the slow demobilisation of the wartime boost of full employment and high wages partly waned consumer spending power. After the London Co-operative Society opened its first self-service shop in 1942, the co-operative movement led the way on the development of self-service stores to the point where, by the 1950s, 90% of self-service shops in the UK were run by co-operatives. Despite this the subscribed share capital available to societies to innovate and take risks dwindled causing market share and relative quality of the service societies could offer their members to dwindle. Consequently, this impacted the movement by reducing the number of society members willing to enter membership and then actively trade with their co-operatives, leading to further real terms falls in withdraw-able member share capital levels, and in the level or return generated co-operative investment in the form of lower interest and dividends. A corollary of falling market share was continued ownership of freehold land, property and infrastructure, such as warehouses, dairies and farmland built up by societies with accumulated surpluses from the 50 years of growth before the war.
The Co-operative Independent Commission was tasked with investigating the decline in the co-op movement and for making recommendations for revitalising the movement in the future. Its recommendations had two main thrusts: that a strong response to the emerging multiple-store supermarket chains was needed and that the Co-op needed to come to terms with the rise in consumerism and to move away from its association with the "working poor" rather than a more prosperous working class.
The CWS responded with operation facelift in 1968 which introduced the first national co-operative branding, the 'Co-op' cloverleaf.
Though Operation Facelift led to some improvements, the movement remained largely unreformed with its grocery market share continuing a downward trend. Again, it was suggested that societies merge to form regional societies to improve their competitiveness through enhanced economies of scale. Many local co-op societies strongly resisted such mergers but, as their financial situation declined, many were forced to merge to create regional societies or were absorbed into either the CRS or the SCWS to avoid failing. Consolidation within the movement was considerable, and in 1973 serious financial mismanagement of the SCWS Bank led to the SCWS and the CWS merging to form a single UK-wide wholesale society.
The merger did highlight the potential of The Co-operative Bank as it was building a sizeable base of customers and this became an increasingly significant proportion of the CWS's annual profits. The growth in the bank largely related to its aggressive expansion into the personal banking market and with the pioneering of free banking in the UK, nine years before any of its larger rivals.
The co-operative movement's marketshare and profitability continued to decline during the 1970s and 1980s, in part, due to a number of reasons.
Firstly, the process of deindustrialization, that had characterised the period led to serious economic difficulties in many of the movements heartlands, which disproportionally impacted on the societies through a decrease in consumer spending despite the British economy seeing a rise in overall consumer disposable income. This was largely due to the strong increase in wealth and social inequality in the UK at this time. The co-operative movement was not well placed to tap into this increase in middle class spending due to the geographic spread of its stores and The Co-op's historic association as the shop for the "working poor".
Secondly, redevelopment projects in many cities between the 1950s and 1970s often moved people from rows of terraced housing to newer purpose-built estates, with around 18,000 co-op stores closing as they had become redundant.
Thirdly, the time was a period of notable inflation and a strong pound, which had led to a wave of cheap imported goods – this devastated much of the UK's manufacturing industries. By the 1980s, it became clear that the trend in the retail sector was towards large supermarkets and hypermarkets with hundreds of them appearing across the UK.
The co-operative movement did build some superstores, having 74 by 1986, but often their development and competitiveness was hindered by the lack of a national distribution network and price competitiveness. In an attempt to improve the collective buying power of the movement the CWS acted to reposition itself from a wholesaler to a 'buying group', in order that CWS could increase the proportion of produce sold through co-operative stores that was sourced by itself. Though this did work to increase loyalty, it was not until the 2000s with the development of the Co-operative Retail Trading Group that the CWS became the de facto wholesaler for co-operative stores.
During the 1980s, the CWS began to merge with a number of failing co-operative societies, having returned to direct retailing after its merger with the SCWS the decade before. These mergers with consumers' co-operatives led to the co-op having both corporate and individual members, hence making it both a primary and secondary co-operative. The CWS's expansion into direct retailing led to the CWS becoming a highly visible business in the UK. The legacy of this was that many people perceive the British co-operative movement to be one business, The Co-operative Group, or co-op for short.