Wednesday 12 March 2014

Co-operating with the Co-op - the challenge for suppliers

Given several years of producing results like a ‘normal’ retail multiple in terms of net margin, stockturn and ROCE, and suppliers having responded by upgrading their Co-op NAMs to pro-active business managers of the account, and factoring increasing market share into trade strategies aimed at long term collaboration, yesterday’s developments on top of a catastrophic loss of Co-op banking credibility, means that the clock has been set back twenty years…minimum.

The co-operative model works well in other countries, all based on the Rochdale pioneers approach. However, the UK Co-op is a business with deep problems, a long history of under-performance, an outdated board structure and far too much debt. This latest crisis may have convinced those in charge that Sutherland’s resignation should be "a catalyst for the real and necessary change which the group must go through"…

The problem for suppliers in these unprecedented times is that they cannot afford to wait for the evolution of a new Co-op model that reflects the competitive, consumer-savvy, ROI and fast pace of retailing today.

Also, suppliers cannot hope to change to Co-op, and instead have to revert to short-term transactional management, dumbing down the supplier-retailer relationship, minimising service level, reducing exposure, and deploying talent elsewhere.

If the Co-op survives this challenge, muddles through and begins to show signs of improvement, then suppliers will begin to cautiously re-invest, using performance-based reward, and insisting on 100% compliance…

That is the price the Co-op must pay for 2014’s mis-steps….

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