Co-op chief calls on rivals to follow lead of its founders

The chief executive of the Co-operative Group has celebrated the company’s 175th anniversary by calling on rival supermarkets to do more to follow the example set by the 28 weavers who founded his business.

Steve Murrells said connecting with local communities is more important than ever and urged other companies to transform their boardrooms to truly represent the customers they serve.

He told the PA news agency: “The parallels with 175 years ago are very stark. They’re still there, it’s just in a contemporary setting. So, we’re actually just delivering what the pioneers were doing all those years ago.”

Steve Murrells, CEO of Co-op
Steve Murrells, CEO of Co-op

Co-op grew out of a community shop opened in Rochdale on December 21 1844 to help families in the run-up to Christmas during mass unemployment.

He added: “If the Co-op is to be a success, it has to be a reflection of the society it serves. I see the opportunity I have running the Co-op to orientate the movement towards these issues of the day – face into youth inequality, as well as inequality in the round.”

The Co-op has managed to turn itself around following one of the darkest periods in its history.

It culminated in 2014 with its former bank chairman, Methodist minister Paul Flowers, being convicted of possessing cocaine, methamphetamine and ketamine. He earned the nickname the Crystal Methodist.

Since then, Mr Murrells, who joined as Co-op food boss in 2012 and has previously worked for Tesco, said only moving back to a more cooperative model, instead of trying to copy a PLC – big salaries and acquisition sprees – has led to changing its ways.

13 Co-op pioneers in 1865
13 Co-op pioneers in 1865

He said: “We’re not a PLC and that was one of the reasons why we ended up where we were in the last 25 years. We thought we were a PLC but we weren’t and we lost our direction.”

To highlight the difference, he claimed a far higher portion of Co-op’s profit is reinvested into the community compared with its competitors.

He explained: “I think our model of working is something that’s really resonating. The country needs more Co-ops, not fewer.

“Whatever we are doing must be resonating better than whatever they (Tesco, Sainsbury’s, Asda and Morrisons) are doing, because if you look at all of their performances over the last four years, they’ve all gone backwards and Co-op’s gone forward.”

In September Co-op revealed a 3% increase in sales during the first half of the financial year – recording a 22nd consecutive quarter of growing sales.

The boss added that supermarkets also need to ensure bosses at the top – who can earn millions of pounds a year – listen to the voices on the ground.

Ministers had previously called for employee representatives in boardrooms, but only a handful of companies have followed the voluntary advice.

Since the crisis at Co-op, the company has overhauled its corporate governance in an attempt to avoid the problems of the past.

Mr Murrells said: “Moving from a traditional white Anglo Saxon society, we are doing lots of work to make sure that we’re not just that, and that actually we are a real cross section of life.

“If the Co-op is to be a success. It has to be a reflection of the society it serves.”

Six years ago, the executive team were all men. Today, out of seven positions, five are women.

Every non-executive in the boardroom – who are responsible for independently scrutinising the business – is matched with a director from within the business to “be the voice” of the moment in discussions.

Mr Murrells added: “I think people work out that others do it because they have to, rather than do it because they want to.”