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.

PROMOTED VIDEO
Arts and Entertainment
From Mean Girls to Mamet: Lindsay Lohan
theatre
Sport
Nathaniel Clyne (No 2) drives home his side's second goal past Arsenal’s David Ospina at the Emirates
footballArsenal 1 Southampton 2: Arsène Wenger pays the price for picking reserve side in Capital One Cup
News
Mike Tyson has led an appalling and sad life, but are we not a country that gives second chances?
peopleFormer boxer 'watched over' crash victim until ambulance arrived
Arts and Entertainment
Geena Davis, founder and chair of the Geena Davis Institute on Gender in Media
tv
News
i100
Travel
travelGallery And yes, it is indoors
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech
Arts and Entertainment
The Tiger Who Came To Tea
booksJudith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed'
News
i100
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
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

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Syria air strikes: ‘Peace President’ Obama had to take stronger action against Isis after beheadings

Robert Fisk on Syria air strikes

‘Peace President’ Obama had to take stronger action against Isis after beheadings
Will Lindsay Lohan's West End debut be a turnaround moment for her career?

Lindsay Lohan's West End debut

Will this be a turnaround moment for her career?
'The Crocodile Under the Bed': Judith Kerr's follow-up to 'The Tiger Who Came to Tea'

The follow-up to 'The Tiger Who Came to Tea'

Judith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed' - which has taken 46 years to get into print
BBC Television Centre: A nostalgic wander through the sets, studios and ghosts of programmes past

BBC Television Centre

A nostalgic wander through the sets, studios and ghosts of programmes past
Lonesome George: Custody battle in Galapagos over tortoise remains

My George!

Custody battle in Galapagos over tortoise remains
10 best rucksacks for backpackers

Pack up your troubles: 10 best rucksacks for backpackers

Off on an intrepid trip? Experts from student trip specialists Real Gap and Quest Overseas recommend luggage for travellers on the move
Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world