APRIL 2018

Steve Murrells on how
to close the gaps in the
Co-op virtuous circle
Steve Murrells
RETAIL CONFERENCE
BY ANCA VOINEA
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Retail Conference
at s.coop/26bbg
The Co-op Group is not working effectively enough
to explain the virtues of its business model, its
chief executive told delegates at the Co-operative
Retail Conference in Warwickshire.
In his speech at the industry event, organised by
Co-operatives UK, Steve Murrells said he wanted to
close the gaps in the society’s “virtuous circle” as
it continues its reinvention in the wake of its nearcollapse
following the crisis at the Co-op Bank.
Having sold its remaining stake in the Bank last
year, the Group is now focusing on growing its core
businesses while exploring new markets.
Mr Murrells said the virtuous circle idea is an old
but relevant one, and he wants to fill the gaps in
the circle to keep it turning. The Group is making
profit again and rewarding members and their
communities, he added, but its specific business
model is yet to be fully understood by members
and customers.
“We are not cutting through as much as we
want and not proving why the co-op model of
doing business is better,” he said, adding that the
Group needed to be “properly joined up” and work
together more effectively.
Mr Murrells pointed to the structure of
independent societies, with their strong regional
identities, which gave them a great strength.
And he said those societies might be able to use
a new centralised service centre the Group was
developing, if it suited their needs.
“We have to look outside the Co-op at real
competition and realise the market is moving fast
and we need to come out stronger and better in the
eyes of members and customers,” he said.
He revealed the Group is testing click-and-collect
options as well as ways to integrate digital into its
offer to respond to generational shifts. Earlier this
month the Group announced it was piloting digital
technology, allowing customers to avoid checkouts
by using a smartphone app to pay for what they
bought in the aisle.
Mr Murrells said the Group would continue to
lead on Fairtrade and buying British products
while addressing the investigation by the
Groceries Code Adjudicator into its treatment of
suppliers. It has already given back £500,000
to 110 suppliers and continues to work with the
regulator on the issue.
In November 2017, the Group struck a deal to
acquire mutual Nisa and also reached agreement
to become the exclusive wholesale supplier to
Costcutter, both pending regulatory approval. In its
funeral division, the Group is focusing on keeping
the cost of funerals down, while in insurance it is
aiming to be more competitive by asking members
for feedback.
Mr Murrells said the Group is also looking at
new opportunities in health, financial services and
providing a broader digital offer.
In terms of community engagement, he said
the business needs to do more to demonstrate
its impact, particularly since other retailers were
running similar initiatives. But, he added, the
business is demonstrating its difference through
its campaign on modern slavery.
The Group is also campaigning for the rights of
EU employees and a “co-operative Brexit”. But he
warned that speaking on behalf of members, who
are diverse and may have different opinions, was a
“difficult decision”.
With the Co-op reinvesting profits into the
business, it has not been in a position to pay
dividends to members. “That can be a difficult
message to explain to our members,” he said.
“We need to get better at explaining how the
Co-op creates value that is additional. We need
to get better at expressing shared value to
our members. A co-op only works if we prove
ourselves to be relevant and persuade more people
to shop with us but we have to find truly co-op ways
to achieve this. That’s how the virtuous circle keeps
turning, that’s how the gaps will be closed.”
26 | APRIL 2018