CO-OP REVIVAL
Chief tells how group rebuilt itself after slump and a drugs scandal
ALL companies must face highs and lows. But few arrive within days of each other and in such stark contrast as they did at the Co-op. ‘ The high point was when the Queen opened Angel Square in September 2013,’ says Co- op chief executive Steve Murrells, referring to the food and insurance group’s towering head office – which looks like the backdrop to a dystopian science fiction film as the night- time Manchester rain lashes down around it.
The gleaming building signified what was then the peak of the group’s ambitions.
Murrells continues: ‘Sadly that was brought back down to earth just a few days later with the crisis in the Co-op Bank – and equally some of the failings of the ex-Bank chairman.’
He is talking about Paul Flowers, who had left the bank just months earlier. Flowers became known as the Crystal Methodist after The Mail on Sunday revealed allegations of drug use. He was, in reality, merely an outward symbol of the group’s deeper internal woes.
The Co-op Bank was failing in the aftermath of the financial crisis and needed rescuing.
‘Aside from the personal tragedy, the business had lost its way. It just so happened that it was the Co-op Bank that failed first. The food business, when I first joined the year before, was on a similar trajectory,’ Murrells says with characteristic bluntness.
Fortunately, by the time the bank began to teeter on the edge, the £7 billion food business had already cracked on with a new strategy. It stopped trying to compete with the big supermarkets and returned to the local community convenience stores where its heart and its history belonged: people popping round the corner for a bag of shopping.
‘Crisis gives you permission to change things quickly and radically,’ says Murrells, who took the top job in March.
‘I believe that the Co-op still had a strong emotional connection with the country. It’s just that we’d failed for many years. We’d pushed customers away,’ he says.
A veteran of the cut-throat world of grocery retailing after lengthy stints at both Tesco and Sainsbury’s, he has suffered his own family tragedy. Two and a half months ago Murrells lost his wife Nicola at the age of just 42 after a long fight with bowel cancer. He has a five-yearold daughter from the marriage.
The couple were told last year that she may have had only nine weeks left to live, just as Murrells was offered the promotion. Bravely, she urged him to accept. Nicola died just two days before a dinner
VALUES: Co-op CEO Steve Murrells says the group will tackle loneliness and modern slavery to raise funds for her Kiss My Ass Cancer charity which has raised £2 million.
In what must have been a virtually impossible speech to deliver in front of an audience of hundreds, he described her as ‘a mother and a wife that taught me and our young daughter to never give up.
‘Nicola could persuade you to do anything. She would all too often say to me, “Everything is possible if you set your mind to it,” ’ he said.
IT’S a philosophy he is applying to the Co-op, which is firmly on the right track. The food business, which now has 3,200 small stores on its books after buying shop group Nisa this month, has now seen 14 consecutive quarters of underlying growth.
As evidence of the mounting success, Murrells points to the membership reward scheme which returns 6 per cent of all money spent on Co-op goods straight back to members’ cards and community causes. That has generated £90 million since its launch in January – helping to counter the dividend cut imposed in 2013. The majority of that has already been transferred back to members – with £30 million still remaining to be spent in stores in the coming weeks. But £20 million will be handed over to community causes.
‘You can look at it as an instant dividend – at a time when people really need help,’ he says.
He believes austerity and the continuing pressure on household finances leave no room for complacency. ‘Inflation is putting a lot of tension into people’s lives. I think it’s probably going to get a bit harder before it relaxes again,’ he says. He expects the squeeze to last another 12 to 18 months with the ‘premium retailers’ – Waitrose, Marks & Spencer and Wholefoods – now most vulnerable. Murrells, who wears a practical, cosy-looking blue sweater over the top of his work shirt, looks more like a sociology lecturer than
a CEO – and he can sound a bit like one too. Every thought and step the group makes must be consistent with the Co-op’s value system, he says.
‘The Co-op is about wanting to make a real difference in society. But we need to recognise that a strong, commercial Co-op allows us to be in communities com and do good.’
Co-op last week opened the door to dozens of tech start-up firms within its Manchester complex, which will be run as a not-forprofit project for firms. Its I funerals a business, n the biggest b in the t country, tr is doing its it bit.
funerals which was for ing in It extended children, is offer- free to year-olds include in 16 March. and 17He slams pressure selling in the market, which came to light last weekend. ‘ The market needs a complete review from top to bottom.’
He says: ‘When you are dealing with that really difficult moment of losing someone, I think standards, honesty, all those important ethical values, should be a given. Any flyby-night can get in, and I don’t think that is very good,’ he says, speaking with the authority of his own heartbreaking personal experience. He wants to see the market regulated and thinks it should be investigated by Business Secretary Greg Clark.
Murrells says its essential Co-op takes a different perspective: ‘We are not at the behest of large financial our 4.5 institutions. million members We are and owned we can by see that money goes to the communities in which we operate rather than seeing it all going back to the City of London. ‘Where we go next is where we feel markets are broken, where we feel trust is low and where they are not working for people – housing, education, care, energy, health.’ It’s a ‘long list’ he says – and he is not even ruling out a return to banking once the organisation fully separates from its existing financial division in three years’ time. ‘I think Brexit tells us we are a divided nation. I think the Co-op is starting to build this momentum and over the next five to ten years I hope we will achieve a movement again. on 10,000 i ng ‘I stage was about people at in the front water G20 tak- of poverty. annual meeting I want our to be as full and as dynamic as that, and to focus on future campaigns – modern slavery, loneliness – I think that will start to create that movement again.’ The closing speech sounds almost political in tone – presidential even? The group still maintains a political donation of £750,000 a year to the Co-operative Party, which famously never contests a seat against Labour. ‘I would be cautious about describing this as a political movement. We have deliberately stayed out of politics. This movement is about changing behaviour.’
We still had a strong emotional connection – it’s just that we had pushed customers away
PEOPLE searching for prepaid funeral plans online are being warned to avoid fake comparison websites that dupe customers into supplying names and telephone numbers. Most people looking to pay for their burial or cremation in advance do so to save their families the hassle, expense and heartache in future. But a lack of regulation over these plans and how they are sold has allowed for an eruption of websites claiming to be able to compare quotes.
In reality, many are predatory number-catching websites known as ‘ lead generators’. Telephone numbers entered into the website can then be passed on to companies that deliver a hard-sell.
The warning comes after The Mail on Sunday last week exposed aggressive and illegal sales tactics used by a call-centre selling funeral plans on behalf of provider Avalon. Staff were caught on camera boasting about bombarding people with nuisance calls despite pleas to be left alone.
Fake comparison websites can look authentic with big lettering inviting consumers to click on buttons saying ‘compare now’ or ‘compare quotes’. They fool people into believing they will see a panel of quotes after entering a few personal details. But instead they are directed to a page telling them to expect a phone call. Ensuing calls may come from a genuine broker, but more likely from a sales agent tied to one provider. The consumer has no way of knowing exactly who will call them once they hand over their details. James Daley, founder of consumer champion FairerFinance, is calling for regulation of funeral plans by the Financial Conduct Authority – which would impact how business is conducted online. He says: ‘These websites, which pose as independent, verge on being criminal. In a regulated market they would be shut down.’ Daley adds that people searching for a plan ‘need to be extremely careful’. Sally Hill spotted a gap for a genuine comparison service when her research demonstrated how unscrupulous t he online market was. She is now director and founder of FuneralPlanMarket, a website that shows whole-of-market funeral plan comparisons without customers needing to share personal details.
Hill says: ‘Lead generation websites dressed as comparison websites inconvenience customers twice over because the comparison tables they expect to see do not exist and they are then bombarded with unwanted sales calls.’
A HARD SELL DURING HARD TIMES
HEATHER Bridger says she was ‘hounded’ by sales calls after using a prepaid funeral website to compare prices. The 52-year-old department sales manager from Perth, Scotland, started searching for a deal after witnessing first-hand the emotional upheaval of planning a funeral. Earlier this year her best friend’s husband died suddenly from a heart attack at the age of 56, despite being a healthy sportsman.
Heather says: ‘The stress was horrific. He was self-employed for 14 years and had no life insurance, no funeral plans and no savings.
‘It was then I realised just how much I wanted to have my own funeral organised so my family would never have to go through that ordeal.’
But her search came to a halt after simple enquiries turned into nuisance sales calls. She says: ‘Every time I used a comparison website I was hounded by phone calls from different companies who really just wanted me to sign up. But I did not feel confident about it.’
After a second friend passed away recently, Heather returned to her search and this time used Funeral Plan Market. She has now found a plan with which she is comfortable.
LACK OF REGULATION
AVERAGE funerals in the UK cost more than £ 4,000 according to insurer SunLife. Costs are likely to keep rising. Funeral plans offer buyers the chance to pay for tomorrow’s costs at today’s prices.
But large sums of money to cover future expenses are given to providers of prepaid plans well in advance of their use.
Despite this fact, the products are not regulated. The Funeral Planning Authority oversees the industry with its own Code of Practice and rules for members to follow. Most large providers are signed up – including Dignity and The Cooperative Funeralcare – but membership is voluntary.
Daley says: ‘The main problem with this market is there is no proper regulation. It is clear from The Mail on Sunday’s story about Avalon that the voluntary regulator is struggling to keep on top of poor practice among members.
‘ We would also like to see the Information Commissioner’s Office doing more to tackle illegal practice around data handling that is prevalent among some third-party lead generating firms.’