Co-op cost-cutting plan to save millions

The Co-operative Wholesale Society is planning a big cost-cutting programme designed to make the poorly performing business more efficient and help head off the approach from Andrew Regan's Lanica Trust.

However, the CWS denied that its plans were in response to Lanica's aim to cut pounds 10m from the society's central costs if its attempt to acquire parts of the division's non-food businesses proved successful.

The CWS said yesterday that its chief executive, Graham Melmoth, had set up working parties to cut costs when he took over last autumn.

"We will be taking out millions of pounds of savings across the board," a spokesman said. "Not in jobs but through better use of technology and centralising certain processes that may be duplicated in the regions."

Though there are no plans for mass redundancies the CWS conceded that the issue of staff numbers would be looked at. Any cuts are likely to be through voluntary redundancy or natural wastage.

In another move which mirrors Lanica's plan to incentivise the Co-op workforce, the CWS is looking at introducing staff incentives. These would take the form of staff discounts.

A profit-sharing scheme along the lines of the one operated by the John Lewis Partnership has not yet been considered. However, the CWS said it may be looked at as a way of improving accountability and increasing staff motivation.

The CWS said that though its costs could be cut it would not be possible to axe pounds 10m from central overheads without jeopardising the Co-op's traditional federal function within the movement.

"The CWS is the sheet anchor of the Co-op movement," a spokesman said. "It performs a whole range of roles for the other societies including the harnessing of the buying power as well as supporting the Co-operative Union, which is the administrative centre of the movement.

"You could start to reduce costs by chipping away at all of that. But in doing so you would have no CWS. You might as well pack up and go home."

Mr Melmoth is expected to say more on the issue of costs on Monday when he announces the CWS results for last year. These are expected to show that retained profits fell from pounds 49m in 1995 to pounds 30m last year.

As the Co-op Bank is thought to contribute some two-thirds of that figure, this means the remaining businesses such as the supermarkets, funeral parlours and travel agencies contributed just pounds 10m.

"You wonder if they are making a loss in food retailing," said Clive Vaughan of retail consultants Verdict Research.

The planned changes by the Co-op will be welcomed by retail experts who say the business has remained rooted in the past for too long.

Mr Vaughan said: "The Co-op's problem is that it doesn't seem to have moved with the times. And if it doesn't, it will start to look like the proverbial dodo. I don't think Andrew Regan will succeed but he will act as an agent to accelerate change."

A key part of the transformation would need to be the integration of the disparate group which is spread across 51 different regional societies. These range from tiny operations such as the Brixham Co-op in Devon, which has sales of just pounds 4m a year, to the CWS where sales top pounds 3bn.

It has also emerged that Lanica Trust has appointed Lowe Bell Financial as an additional public relations adviser. It already has Financial Dynamics acting on its behalf as well as an internal manager. The CWS also has three PR advisers - two external agencies plus an internal PR officer. The banks advising both sides are SBC Warburg for the CWS, and Hambros for Lanica.

Start your day with The Independent, sign up for daily news emails
Sport
Seth Rollins cashes in his Money in the Bank contract to win the WWE World Heavyweight Championship
WWERollins win the WWE World Heavyweight title in one of the greatest WrestleMania's ever seen
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Arts and Entertainment
tvPoldark, TV review
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor