The Co-op Rebuild Plan: Strategy and Governance

The co-op Rebuild Plan Strategy and GovernanceCurrent position of the comp any3 Year Re-build PlanCo-op is presently in the midst of its 3 socio-economic class rebuild plan which was first presented in 2014 following the financial crisis related to their banking division. Since then there has been a wide-ranging investment into their workforce with as many as 5,400 managers attending Being a Co-op Leader events and over 70,000 members embarking on Back to Being Co-op sessions intending to revitalise and reassure them.There has also been a focus on giving back, instances of this include a partnership with the British Red Cross which has already raised over 1m in a span of 8 months raising awareness of loneliness and isolation as well as their commitment to annex their number of British suppliers. Backing British is a cornerstone of the Co-ops food strategy and the retailer has pledged to increase the number of small suppliers it works with to 1,200 by the end of 2017.These are pa rt of a number of aims Co-op has committed to achieving in the near future includingAiming to double their number of topical anaesthetic UK suppliersAiming to make 80% of packaging used recyclable by 2020Investing a minimum of 1.5bn in sourcing of UK meat and vegetablesCo-ops current focus lies in providing a convenience, own-brand led shop experience which has result in the sale of 298 of their smaller food stores to McColls Retail Group plc. This was spurred on by like-for-like sales growth of 4% in the year to April 2016.As part of this they have introduced a new membership reward scheme which launched in October 2016. Over 500,000 people have paid 1 to core the new Co-op membership scheme (over 250,000 people have taken out full membership and over 250,000 have taken out fugacious cards)Research conducted by the company has concluded that engaged customers are more likely to spend more and are less sensitive to price changes. As such the new membership is designed to get memb ers engaged with all Co-op subsidiaries due to the blanket 5% cash back reward for any purchases made of Co-op products or services. This will be the UKs biggest mutual and is estimated to hand back 100m in 2018.A further 1% will benefit local causes through a new community reward scheme. The Co-op has identified 1,500 communities around the Food stores and Funeral care homes in its trading areas where members will initially need the local cause they want to support from a list of three s elect by colleagues in that community.The scheme is backed by a commitment to stretching targets. By the end of 2018 The Co-op is aiming toRecruit one million new membersIncrease the percentage of sales coming from members to 50% from around 20% soonReturn an additional 3m in benefits to producer communities operating under the Fairtrade scheme by extending sourcing commitmentsMake digital work for members across our businesses and seeking new digital opportunities to Co-operate in communitiesOv er the first 10 weeks of the trial and based on year-on-year comparisons, transaction numbers, turnover and the sales of the Co-ops own-brand product range have all seen pronounced increases. The net affect has been that almost 100,000 has been generated through the 1% community element in support of local good causes.Co-op GovernanceIn solution to the previous financial crisis as part of their first Annual General Meeting a vote was passed to ensure that the board of directors will include a majority of independent directors as well as three positions for member-nominated directors. The new rules were introduced to also protect against de-mutualisation.The recent elections at the last AGM in 2016 were aimed at alter their governance and oversight. The overview of appointments wereMargaret Casely-Hayford and Hazel Blears were elected as Member Nominated Directors to represent members interests on the Group Board.Lord Victor Adebowale, Simon Burke, Peter Plumb and Stevie Spring wer e elected as Independent Non-Executive Directors.Richard Pennycook and Ian Ellis were elected as Executive Directors.CEO Richard Pennycook has also requested that his remuneration package be reduced substantially as a result of the company turning a corner from rescue to rebuild and that the current calm waters do not necessitate his current remuneration. undermentioned discussions, and with the full agreement of the Board, his maximum total remuneration will fall by nearly 60% falling below organisational median for his position.