Co-op merger will happen says new chief

The new chief executive of Britain's largest Co-Operative Society said yesterday that a merger of the group's disparate parts remained a possibility as he sought to steer the 150-year-old Co-Op movement towards the 21st century.

Graham Melmoth, a 57-year- old Londoner, yesterday took control of the Manchester-based Co-Operative Wholesale Society, a huge but poorly understood organisation facing challenging times.

As the most senior executive within Britain's Co-Op, his brief is to modernise the movement, bring its various parts closer together and make it more competitive.

An attempted merger with its smaller counterpart, the Co-Operative Retail Society, failed last year when the two could not agree terms. Many see a merger as essential if the movement is to compete effectively against powerful competitors whose access to stock market capital gives them an advantage.

"I think a merger will happen," Mr Melmoth said. "The Co-Op has been fragmented but I would like to ensure that the operations of the regions are controlled more centrally."

He wants more emphasis on central management, more investment in its people and more emphasis on strategic planning.

Reinventing a colossus such as the CWS is a huge task. With annual sales of pounds 3bn, the CWS is the main supplier of goods and services to the individual co-operative retail societies. But it also owns Co-Operative Bank and the Co-Operative Insurance Society. Its high street portfolio includes more than 700 Co-Op shops, 241 travel agents, 346 funeral parlours and a chain of opticians. With 50,000 acres it is the country's biggest farmer.

"My priority is to improve the society's performance. We've got a good spread of assets but I am hoping to get them to perform better," Mr Melmoth said.

His challenge is to fashion a future for a movement which sometimes appears weighed down by its history. Born out of the original Co-Op movement which was started by a group of Rochdale pioneers in 1844, the CWS started life in 1863.