Co-op plans huge overhaul

Radical restructuring of society designed to pacify frustrated managers and deter future bidders

The Co-operative movement is planning a massive overhaul to improve profitability and restore some direction to the organisation in the wake of Andrew Regan's aborted bid.

The CWS, the largest element of the Co-op and the target of Mr Regan's attentions, is anxious to conclude a five-month strategic review of its operations to head off a more credible bidder and pacify a growing number of its managers who are looking for more radical solutions to the Co-op's current malaise.

Among proposals on the table are a closer marketing relationship between the various Co-op retail organisations, overseen by a "branding supremo". He or she would try to emulate the success of the Co-op Bank, which under chief executive Terry Thomas has succeeded in repositioning itself as an "ethical" institution.

The reformists are demanding a more focused retailing and branding effort by the entire Co-op, which would include rebadging many of the stores under a single brand name, better own-label packaging and the launch of a consumer rights campaign to improve food labelling.

They are also demanding that the CWS and the regional Co-ops centralise and possibly outsource functions such as wages, personnel and warehousing to reduce overheads.

The managers, many of whom have been recruited from other retailers such as Asda, Safeway and Marks & Spencer, have become increasingly frustrated at the inertia within the Co-op. Some secretly welcomed the Regan bid, seeing it as an opportunity to "light a fire under the organisation".

The group is said to include David Robey, the head of retail operations at Co-operative Retail Services (CRS), the second-largest element within the Co-op movement and the biggest shareholder in the CWS.

Mr Robey took up his post only 11 weeks ago, after a successful career at Tesco and Safeway. Senior figures in the Co-op also point to managers at leading societies, including United Norwest Co-op and Leeds Co-op, as catalysts for reform.

It has also emerged that Harry Moore, chief executive of CRS and Mr Robey's boss, held a previously undisclosed meeting with Mr Regan two weeks ago to discuss whether the CRS would support the young entrepreneur's proposed pounds 1.2bn takeover attempt.

The CRS, whose annual turnover from shops, funeral homes and motor trading is nearly pounds 1.6bn, owns 20 per cent of the CWS shares.

"I met Mr Regan at a hotel near Manchester airport about two weeks ago," said Mr Moore. This was some time after the CRS chairman, Peter Rowbotham, said publicly that his organisation would not support Mr Regan. Asked why Mr Regan had wanted to see him after the public rebuff, Mr Moore said: "I suppose he wanted to try to persuade me to support him."

Mr Moore is not a member of the CWS board and dismissed suggestions that he had provided Mr Regan with information. "I personally was not privy to the information Mr Regan had. That information was confidential to the CWS board and its management."