Over the last 12 months we have seen growing discontent across the world, with the economic and political structures that govern our lives. From the Arab Spring to the ‘Occupy’ movement to the demonstrations against cuts in public spending, people are frustrated with political and economic systems that benefit the few and impoverish the many. In the UK we are hearing calls for more ethical and responsible forms of capitalism to halt the growing loss of trust in all aspects of public life.
After many years in which ruthless competition, unbridled markets and the primacy of the individual have dominated the political landscape, we are now witnessing the rediscovery of social and community values. Co-operation, as an economic model, is being held up as one possible response to the current crisis.
However, we have some way to go before there is a real understanding among politicians and the general public about what the consumer co-operative business model actually means. It is neither capitalism (good or bad) nor state centralised planning (left or right). The consumer co-operative is instead a compelling alternative to both.
A customer-centred approach to our business
The Co-operative Group is different because it is structured to put the interests of customers at the heart of its business strategy. It is our members, rather than shareholders, who own the business and maintain its governance; this is what puts the needs and priorities of our customers at the very centre of our thinking. It’s what enables us to make decisions for the long term rather than be blown off course by the need to satisfy jittery, short term, stock-market investors or those seeking to make a quick profit from exploiting others. It is due to this customer focused approach to doing business that in 2011, in spite of the economic downturn, we were able to press ahead with our business strategy to unify our corporate structures, pursue growth opportunities, increase our membership and revitalise our social responsibility agenda.
Maintaining competitive performance in challenging conditions
The current economic conditions mean that in 2011 we did not quite match the exceptional performance we achieved in 2010. This was neither unexpected nor limited to ourselves, and our immediate priority has been to remain competitive in all of our markets. Our profits are still solid this year but we have taken prudent action to reduce costs where possible. We have also invested in promotions and deals that recognise the difficulties our members and customers are facing.
Meanwhile, we remain committed to growing our business to secure its long term sustainability. We continue to look for the right opportunities for mergers and acquisitions as well as the best way to achieve more organic growth. Our negotiations with Lloyds Banking Group demonstrate both our ambition and the care we take to ensure we act at all times in the best interests of our members.
We remain highly ambitious for the future of The Co-operative Group; this has led us to undertake significant research into our members and customers during 2011. Our aim is to understand more clearly what attracts them to us and how we should develop our Co-operative brand and membership proposition in the future. This research, the biggest of its kind in the UK last year, was undertaken as part of our Unity programme which is bringing the whole of the Group closer together through re-organising management structures and operations and changing the way we present ourselves to the public. The research findings will greatly inform our thinking during 2012 and allow us to develop the next phase of Unity, reflecting The Co-operative’s determination to act as one business and put our customers at the heart of everything we do.
Driven by our co-operative ideals
Despite the profound economic downturn we are living through – indeed, spurred on by its severity – we have stayed true to our co-operative ideals. Rather than play down our social responsibility agenda we have recognised the need to promote it even more strongly. In 2011 we launched Project Revolution, reminding people of our radical heritage and our commitment to responsible retailing and commercial integrity.
Behind the media campaign was our new three year ethical plan which is closely linked to our business planning cycle. The plan has reinforced the Group’s position as the most socially responsible business in the UK. Our practical and tangible commitments to local communities, tackling poverty, responding to climate change and promoting co-operation mark us out as leaders in this field. In February 2012 we announced the next set of targets for this vital area of our work.
2012 – The International Year of Co-operatives
In 2012 we have a unique opportunity to explain our business model and its associated values of honesty, openness, fairness, social responsibility and caring for others. The United Nations has designated 2012 as the International Year of Co-operatives and The Co-operative Group is playing a major role in promoting co-operation both in the UK and around the world. Over the next 12 months we are increasing our commitment to the local communities in which we trade, while supporting co-operative enterprise both in the UK and globally with financial help and strategic advice. In November in Manchester we will host one of the biggest gatherings of the worldwide Co-operative Movement ever to take place. It will be a chance to showcase to the world both our own achievements as the UK’s biggest consumer co-operative, and the benefits that co-operation can bring to individuals, families and communities across the globe.
Building for the future
As this report demonstrates, we continue to build for the future, creating a co-operative business that is leading the way in bringing trust and honesty to the market place and re-establishing public confidence in the integrity of commerce. Co-operation is an idea whose time has most definitely come.
This success has not been by chance and I want to take this opportunity to express my appreciation to my fellow directors, including Nigel Keane who retired in May and Richard Samson who retired in September, and all our elected members, for the role they have played. I also offer my thanks to Peter Marks, our Group Chief Executive, and his management team for their hard work and dedication in a difficult economic climate.
Len Wardle, Chair, The Co-operative Group