150 years

Co-oPeraTive grouP
of The

celebrating

Men on girders during construction of CIS tower in Manchester (Circa 1961)

PreParing for 2013: The 150Th anniversary of The Co-oPeraTive grouP
On 10 October 1863, the General Committee of the Co-operative Wholesale Society met for the first time in Union Chambers, Dickenson Street, Manchester. It was the first recorded meeting of the CWS, and although it did not open its doors to trade until the following year, the organisation had been born. In 2013, now operating as the Co-operative Group, that organisation will enjoy its 150th birthday. Moreover, if present trends continue, it will be able to look forward with great optimism to many more decades of successful trading. The momentous reorganisations of the 1990s and early 2000s have returned British co-operation to a state of robust health, after many decades of decline and weakness. As a result, 2013 will be an ideal time to take stock, placing the history of co-operation generally in the spotlight.

a Business hisTory of The grouP — Why? and Why noW?
Work is already under way on a new history of the Co-operative Group, the first for 40 years, to be published in 2013. Unlike its predecessors, this book will focus on the development of the CWS and the Group as business organisations, the first time such an approach has been attempted. A team of historians has been assembled for the task: Professor John Wilson and Rachael Vorberg-Rugh of the University of Liverpool and Dr Tony Webster of Liverpool John Moores University. All agree that British co-operation has been given a raw deal by the academic community (especially in the study of business) and the mass media. Three years ago, an article in the Cambridge Journal of Economics tracked how co-operatives and co-operation had, over a period of several decades, disappeared from economics text books used in schools and universities. Indeed, a review of the syllabi for GCSE history reveals an almost total absence of reference to co-operatives, while the situation at A level is scarcely better, with co-operation being treated as an afterthought in general reviews of social developments in Britain. Co-operative business practice is largely ignored by most undergraduate and postgraduate business courses at British universities. At times, co-operation even seems invisible to the media. The otherwise excellent BBC reality documentary series, Turn Back Time: The High Street, almost completely ignored the co-operative alternative — an omission that was made all the more regrettable by Shepton Mallet, the town in which the series was set, having boasted a very successful co-op from the 1860s, reaching a membership of more than 1,000 by the time it joined CWS Retail Society (the precursor of Co-operative Retail Services) in 1944. As early as 1867, this society was offering formidable competition to local bakers, based on honest dealing and quality produce, as the following extract from the newspaper The Co-operator shows: “We are now baking our own bread, and bake about 14 sacks of flour per week. We have experienced a great deal of opposition from the bakers in the town, and they reduced the price of bread the same day we commenced baking, although flour was getting dearer. We weigh all our bread on delivery, which no other baker in the town does. About two months ago most of the bakers in the town were fined for short weight, but we were not.” J. Higgins, secretary, Shepton Mallet (The Co-operator 15 November 1867) In view of this neglect of co-operation as an alternative business model, the aim is to produce a highly readable but academically respectable business history which will help to put co-operation right back where it belongs — at the centre of debate about how best to organise our economy and businesses.

(from top, clockwise) The CWS head office in Manchester; the first CWS offices, Cooper St, Manchester (with man stood in doorway); and ‘Come Co-operative Shopping’ was the first national advertising slogan from CWS, 1960s.

WhaT are The Team doing?
Together, the research team are working through the archives of the CWS and the National Co-operative Archive at the Co-operative College, researching how the organisation evolved, how it was managed, and how it adapted to the dramatic changes experienced in Britain during this period. They are also interviewing many people who were involved in the key decisions of the last twenty years including former and current members of senior management. But they are also very keen to gain the perspective of people from other parts of the hierarchy of British co-operation, people who worked in or were connected with the CWS, CRS, CIS, the Cooperative Bank or the independent regional co-operative societies. Already some interesting findings are emerging, and the team is engaged in delivering a programme of presentations to co-operative audiences (including Co-operatives 2010 in Plymouth) and academic conferences, to raise the profile of their work. So what insights have emerged so far?

CWs and loCal Co-oPeraTives soCieTies: a diffiCulT relaTionshiP?
One theme which is emerging from the research is that from the outset, the relationship between CWS and local societies was frequently quite difficult. As early as the 1860s, CWS and many local societies disagreed with each other about what functions CWS should perform. The CWS was clear that it wanted to become the main, if not the sole, supplier of food and other goods to co-operative stores. In contrast, however, many societies regarded the CWS as only one source of supplies among many; and for reasons to do with the need to keep on good terms with local wholesalers and other influential business interests, many chose to source the bulk of their supplies from

private sources. Some societies even gave this as a reason for even refusing to join CWS. In September 1886, the views of Mr Brindle of the Brighouse Industrial Society reported in the Co-operative News were representative of the outlook of many co-operative society managers and buyers: “He believed they were better looked after in the open market, and he also believed that they would always find a market open to them in which they could obtain goods to supply their wants.” Research on the later twentieth century suggests that this uncomfortable undercurrent of conflict between CWS and co-operative societies was a constant in the movement’s history. By this time, the amalgamations of many local societies to form substantial regional societies seems to have made the relationship, if anything, even more difficult. Society mergers created regional giants with formidable assets and market share. Many regional societies felt that their increased size meant even greater independence from CWS. In fact, increasing competition between co-operative societies only exacerbated the overall movement’s deepening commercial difficulties. The fraught relationship was complicated further in 1973, when financial difficulties at the Scottish Wholesale led to merger, giving the CWS its first substantial retail operations and its first individual members. The remaining decades of the 20th century were marked by intensifying competition in UK food retailing, dominated by a few large grocery firms, and global changes in manufacturing and distribution. From the 1970s onward, co-operatives lost market share and faced increasing financial difficulties that led many retail societies to merge — many with the CWS. In this environment, the CWS moved away from manufacturing and emerged as a major retailer. With mergers also came an influx of individual members, and during the 1980s and 1990s new regional committee structures evolved. Finally, the CWS and independent societies began to pool their buying power through the Co-operative Retail Trading Group (CRTG). Thus, by 2002 the idea of many early CWS leaders — a sole supplier for co-operative goods — had at last come to pass. Partly by necessity (mergers) and partly by design (reorganisations), in the 1990s and 2000s the CWS/Group emerged as an effective leader and centre of power within the co-operative commercial empire.

The CWs, The Co-oPeraTive Bank and Co-oPeraTive ProduCTion.
Almost from the outset, the CWS saw itself not only as the key supplier for English and Welsh co-operative societies, but also as a major promoter of co-operative production. In the 1870s, the CWS Banking Department funded producer co-operative textile mills, coalmines, boot and shoe manufacturers and flour mills. As heavy losses were incurred in many of these investments, this led in the 1880s and after to friction between those who had become sceptical about producer co-operatives (mainly from among the consumer co-operative societies who formed the majority of the shareholders in CWS) and those who saw the rise of a strong producer co-operative sector as central to the movement’s historic mission. The sceptics tended to get the better of this debate, opening a serious political division over producer co-operation which was only reconciled partly in the 1960s and 1970s. The reasons for this split, and its long-term consequences, will form an important area of debate in the book. In fact, the CWS Bank (later the Co-operative Bank), formed in 1872, continued to provide financial support in the form of overdraft facilities and loans for producer co-operatives, sometimes provoking criticisms from the sceptical faction, and even occasional attempts to curb the Bank’s activities. The role of the Bank is an especially important area for further research, because from the outset it played an important role in cementing the often difficult relationship between the CWS and its member societies, providing overdrafts and loans which were essential for the smaller societies. Towards the end of the twentieth century, after it had moved into mainstream banking, it came to play a leading role in strengthening the modern co-operative movement’s credentials for ethical commerce; and following the reorganisations of the 1990s and 2000s, it emerged as a significant force in its own right in British finance.

fall and rise sinCe The 1940s.
When writing about the recent spate of reorganisations, it is vital to stress that these emerged in response to what by the 1990s was a crisis in CWS’s fortunes. Indeed, by that time only profits from the Co-operative Bank were keeping CWS in the black, while the CRS consistently reported losses and embarked on a severe rationalisation programme. The principal reasons behind this trend were a significant decline in market share and continued internal friction over strategy and structure. By the late-1990s, co-operatives could only claim 4% of the grocery market, compared to 20% in 1970, while its shops were regarded as drab and resonant of an earlier age, especially compared to the retail ‘palaces’ being built all over the country by the likes of Tesco, Sainsbury’s, Morrisons and Asda. These large multiples

had over the same period increased their market share from 30% to almost 60%, reflecting their highly competitive strategies and integrated structures. Such was the perceived weaknesses of CWS that in 1997 a thirty-one-year-old entrepreneur, Andrew Regan, launched a bid to buy the business for approximately £1.2 billion. Regan had in 1994 purchased CWS’s food manufacturing operations, and used this inside knowledge to offer to buy the entire range. This came as a great shock to CWS executives, especially the chief executive, Graham Melmoth, who had launched his own recovery strategy in November 1996. Regan’s aim was to carve up CWS into palatable proportions for his network of business contacts, in the process generating £2 billion from the sales and making himself extremely wealthy. However, although he raised a lot of support from leading City names such as Hambros Bank, Schroders and Nomura, when Melmoth discovered that Regan had been supplied with confidential CWS material by two executives, this was used as damning evidence to undermine the bid. Having defeated Regan, and in the process hugely embarrassed his City supporters, Melmoth set about implementing his recovery strategy, reorganising CWS, and merging with the CRS (in 2001). Although it is important to stress that a process of consolidation had been underway since the 1960s — the number of co-operative retail societies fell from 562 in 1955 to just fifty-five in 1995 — it was only in the last decade that effective integration of the sprawling business empire was achieved. Similarly, the development of the ‘ethical trader’ brand can be traced back to the 1970s, when several leading figures instigated radical changes to the marketing campaigns. This ethical stance was also at the heart of the Co-operative Bank’s growth from the 1990s, reinforcing the movement’s image as pioneers in this respect. Over the last decade, the foundations developed in the 1990s have been extensively developed, resulting in further consolidation of the movement and acquisitions to boost core areas. For example, in 2002 Co-operative Financial Services was formed to bring together the banking and insurance arms, while the merger in 2009 with the Britannia Building Society added even greater strength to this activity. Similarly, in 2007 United Co-operatives merged into what after the CWS-CRS merger was known as the Co-operative Group, while the acquisition of Alldays (2002) and Somerfield (2008) boosted retail coverage. Many now speak of a ‘renaissance’ in the Co-operative Group’s fortunes under the leadership of Peter Marks, especially compared to the 1990s, with turnover and profitability surging to unprecedented levels, even in the teeth of a global recession. The history will attempt to analyse how and why this ‘renaissance’ occurred, looking specifically at the nature of leadership over a period that witnessed the rise of aggressive competitors capable of eating decisively into CWS’s market share. This study will consequently help us to achieve the aim of placing the study of co-operatives back onto the curriculum, given the success with which the Group has not simply recovered from potential disappearance, but also demonstrated that it represents an alternative business model to the one that was so damningly at fault for the recent global recession. There is, indeed, much that students and practitioners can learn from studying the history of the Co-operative Group, providing us with a massive incentive in completing this commission.

A selection of historical co-operative advertising includes (from left) ‘Defiant’ radio receivers produced by the CWS from the 1930s after electronics firms boycotted co-op stores over the issue of dividend; Luton Cocoa, jointly manufactured and sold by CWS and its Scottish counterparty; Co-operative Travel Service poster from 1940; and ‘We Give Dividend Stamps’ advert displaying the new Co-op logo (circa 1968)

oTher iniTiaTives
The business history of the Co-operative Group is not the only initiative aiming to turn the spotlight on the heritage of the co-operative movement. In the summer of 2009 a major international conference was held at New Century Hall in Manchester, on the theme Can Values Make a Difference? Co-operatives — moving from the Rochdale Pioneers to the 21st Century. Over 100 delegates attended from 32 different countries, and the event made such a major impact among academics and co-operators that Manchester University Press has agreed to publish a selection of the conference papers in a book to be called The Hidden Alternative: Co-operative Values, Past, Present and Future, which will be published in 2012, the United Nations Year of Co-operatives. 2010 also witnessed the success of the Co-operative Heritage Trust’s bid to the Heritage Lottery Fund to develop Toad Lane and the archive. Associated with this are a range of projects designed to use the new facilities, and the Co-operative College’s developing links with schools and FE colleges, to promote wider awareness of co-operative heritage and history. The business history team remains committed to working with co-operative members, employees and former employees in developing the project. We are certainly open to suggestions and comments are always welcome. We will be providing regular updates at various co-operative events over the next few years, but we are always ready to heed good advice! To get in touch, please email: rvr@liverpool.ac.uk.
Design by Co-operative Press; all photos courtesy of National Co-operative Archive.