A new report focussed on the UK co-operative market says the sector contributes £37bn to the economy, but many of the UK’s biggest co-ops are finding life tough.
The report by Co-operatives UK found that overall turnover in the sector rose 0.7% to £37bn by collating the UK co-ops most recently filed accounts. In total 15m people are members of Co-operatives and the number of societies increased last year to 6,323.
The study, The UK-Co-operative Economy 2014, did not provide year-on-year comparative financial data in the report, but comparing the figures against Co-operative UK’s previous annual report on the sector suggests that more than just The Co-op Group are facing tough trading conditions.
The 2014 report admits: “The troubles at The Co-operative Group and Co-operative Bank had a negative impact [on the sector] and attracted unflattering media attention”.
The Co-op Group remains the largest co-operative in the report’s run-down of the top 100 co-ops, but it saw its turnover shrink by 6% from £13.6bn to £12.8bn.
As the largest company the Co-op Group’s struggles had a statistical impact on the rest of the sector. Despite the next two largest co-ops growing (John Lewis Partnership by 6.6% and The Midcounties Co-operative by 23.8%), overall growth amongst the top 20 biggest co-ops with year-on-year comparable turnover figures was largely flat (a fall of 0.22%).
The overall performance of the sector’s largest companies drops further again once focus is purely the grocery sector (retailers and suppliers ).
Once construction and healthcare companies are stripped out, the total turnover growth of the rest of the top 20 co-ops drops to minus 0.41% (a mean average growth rate across these companies of -0.38%).
Of the grocery-related firms in the top 20 that have available comparable financial data, approximately 40% saw a fall in turnover and 60% saw a rise.
Without The Co-op Group itself being included in the figures, the total combined turnover of these firms grew by 4.5%.
Co-operatives UK secretary general Ed Mayo commented: “While it has undoubtedly been an awful year for the UK’s largest consumer co-operative, The Co-operative Group, away from this one business, the wider co-operative economy has proved itself to be dynamic, resilient and growing.”
The data does back up his assertion that the sector is in “good health” to an extent.
The major caveat would be that the analysis is based on the most recent filed accounts for the 2013 trading year, which is some cases does not take into account large chunks of the year (the most recent filing for a number of co-ops cited is March 2013).
Publicly quoted companies, particularly retailers, have seen the low inflation environment mixed with increased competition has put huge strain on sales and profits – there is no reason to think the co-ops have been immune to these trends.
Additionally, there is likely to be more negative financial newsflow to come for the sectors biggest co-op as it battles to rebalance its balance sheet to safeguard its future.
Nevertheless, the slew of negative headlines about The Co-op Group has seen the whole business model of co-ops called into question. There is plenty of evidence in the headline figures (particularly the performance of John Lewis and Midcounties) that the co-operative model still has plenty to offer.
Mayo concludes: “While co-operatives are not immune to the stresses and strains faced by conventional businesses, this report is concrete evidence that the expanding co-operative sector is made up of resilient, ambitious and profitable enterprises.”
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