Readers of this column will be aware of my passion for employee ownership as an alternative business model and of my interest in mutuality in general. In that context, it could be instructive to think further about the difficulties now faced by The Co-op Group.
For me the overriding lesson is also one which I hope I have consistently espoused at Parfetts: there can be no substitute for commercial success.
I continue to believe that employee ownership and mutuality can be a better way to do business and that they could play a much bigger role in the UK. However, they will never replace the need to concentrate on satisfying consumer demand better than your competitors do. In this sense, The Co-op Group experience is a big and very salutary lesson.
“The Co-op Group has become complacent about its right to exist”
Despite the best efforts of many very well-intentioned people, The Co-op Group has, in crucial areas, failed to make its proposition to consumers stand out. It has become complacent about its right to exist. A perfect example is the now-to-be-sold pharmacy business. In a modern society, and in a fiercely competitive market, it is crazy that many of its pharmacies continue to close at noon on Saturday, at 5pm on weekdays and in some cases to continue with half-day closing in the week. This must be regarded as a management failure.
It is sometimes thought lazy to use the John Lewis Partnership as the outstanding example of employee ownership, but in this case it is justified. John Lewis and Waitrose are on a roll precisely because they successfully balance commercial needs and employee engagement.
The customer experience is simply better at John Lewis than it is at other retailers. Its friendly and engaged staff succeed because they don’t indulge in hard sell but know their customers and their products, as well as the moral and ethical values of their company. Add to this potent mix very able, commercial and - when necessary - tough management who are prepared to make hard decisions and look to the future and you have a recipe for success.
It is a tragedy that the image of mutuality may be harmed by The Co-op Group as there are many different and successful models not in the spotlight. In our own sector, a fantastic example is the unique and inspirational wholesaler Suma Wholefoods.
I remain convinced that mutuality is a great way to do business, encompassing as it does both ethical values and a long-term attitude to achieving sustainable success. But I am equally convinced that a business has to be run in a commercial and professional way to succeed, whatever the ownership model.
Steve Parfett is chairman of AG Parfett & Sons
No comments yet