celebrating

150 YEARS OF THE

CO-OPERATIVE GROUP

Men on girders during

construction of CIS
tower in Manchester
(Circa 1961)

Preparing for 2013: The 150th Anniversary of The Co-operative Group

On 10 October 1863, the General Committee of the Co-operative Wholesale Society met
for the first time in Union Chambers, Dickenson Street, Manchester. It was the first recorded
meeting of the CWS, and although it did not open its doors to trade until the following year,
the organisation had been born. In 2013, now operating as the Co-operative Group, that
organisation will enjoy its 150th birthday. Moreover, if present trends continue, it will be
able to look forward with great optimism to many more decades of successful trading. The
momentous reorganisations of the 1990s and early 2000s have returned British co-operation
to a state of robust health, after many decades of decline and weakness. As a result, 2013 will
be an ideal time to take stock, placing the history of co-operation generally in the spotlight.
A Business History of the Group
— Why? And why now?
Work is already under way on a new history of the
Co-operative Group, the first for 40 years, to be published in 2013.
Unlike its predecessors, this book will focus on the development
of the CWS and the Group as business organisations, the first time
such an approach has been attempted. A team of historians has
been assembled for the task: Professor John Wilson and Rachael
Vorberg-Rugh of the University of Liverpool and Dr Tony Webster
of Liverpool John Moores University.
All agree that British co-operation has been given a raw deal
by the academic community (especially in the study of business)
and the mass media. Three years ago, an article in the Cambridge
Journal of Economics tracked how co-operatives and co-operation
had, over a period of several decades, disappeared from economics
text books used in schools and universities.
Indeed, a review of the syllabi for GCSE history reveals
an almost total absence of reference to co-operatives, while
the situation at A level is scarcely better, with co-operation
being treated as an afterthought in general reviews of social
developments in Britain. Co-operative business practice is largely
ignored by most undergraduate and postgraduate business courses
at British universities.
At times, co-operation even seems invisible to the media. The
otherwise excellent BBC reality documentary series, Turn Back
Time: The High Street, almost completely ignored the co-operative
alternative — an omission that was made all the more regrettable
by Shepton Mallet, the town in which the series was set, having
boasted a very successful co-op from the 1860s, reaching a
membership of more than 1,000 by the time it joined CWS Retail
Society (the precursor of Co-operative Retail Services) in 1944.
As early as 1867, this society was offering formidable
competition to local bakers, based on honest dealing and quality
produce, as the following extract from the newspaper The
Co-operator shows: “We are now baking our own bread, and bake
about 14 sacks of flour per week. We have experienced a great deal (from top, clockwise) The CWS
of opposition from the bakers in the town, and they reduced the head office in Manchester; the
price of bread the same day we commenced baking, although flour was getting dearer. We weigh all our bread on delivery, which no other first CWS offices, Cooper St,
baker in the town does. About two months ago most of the bakers in the town were fined for short weight, but we were not.” J. Higgins, Manchester (with man stood in
secretary, Shepton Mallet (The Co-operator 15 November 1867) doorway); and ‘Come
In view of this neglect of co-operation as an alternative business model, the aim is to produce a highly readable but academically Co-operative Shopping’ was
respectable business history which will help to put co-operation right back where it belongs — at the centre of debate about how best to the first national advertising
organise our economy and businesses. slogan from CWS, 1960s.

What are the team doing?

Together, the research team are working through the archives of the CWS and the National Co-operative Archive at the
Co-operative College, researching how the organisation evolved, how it was managed, and how it adapted to the dramatic changes
experienced in Britain during this period. They are also interviewing many people who were involved in the key decisions of the last
twenty years including former and current members of senior management. But they are also very keen to gain the perspective of people
from other parts of the hierarchy of British co-operation, people who worked in or were connected with the CWS, CRS, CIS, the Co-
operative Bank or the independent regional co-operative societies. Already some interesting findings are emerging, and the team is
engaged in delivering a programme of presentations to co-operative audiences (including Co-operatives 2010 in Plymouth) and academic
conferences, to raise the profile of their work. So what insights have emerged so far?

CWS and local co-operatives societies: a difficult relationship?

One theme which is emerging from the research is that from the outset, the relationship between CWS and local societies was
frequently quite difficult. As early as the 1860s, CWS and many local societies disagreed with each other about what functions CWS should
perform. The CWS was clear that it wanted to become the main, if not the sole, supplier of food and other goods to co-operative stores.
In contrast, however, many societies regarded the CWS as only one source of supplies among many; and for reasons to do with the need
to keep on good terms with local wholesalers and other influential business interests, many chose to source the bulk of their supplies from
 private sources. Some societies even gave this as a reason for even
refusing to join CWS. In September 1886, the views of Mr Brindle
of the Brighouse Industrial Society reported in the Co-operative
News were representative of the outlook of many co-operative
society managers and buyers: “He believed they were better looked
after in the open market, and he also believed that they would
always find a market open to them in which they could obtain
goods to supply their wants.”
Research on the later twentieth century suggests that this
uncomfortable undercurrent of conflict between CWS and
co-operative societies was a constant in the movement’s history.
By this time, the amalgamations of many local societies to form
substantial regional societies seems to have made the relationship,
if anything, even more difficult. Society mergers created regional
giants with formidable assets and market share. Many regional
societies felt that their increased size meant even greater
independence from CWS. In fact, increasing competition between
co-operative societies only exacerbated the overall movement’s
deepening commercial difficulties. The fraught relationship
was complicated further in 1973, when financial difficulties at
the Scottish Wholesale led to merger, giving the CWS its first
substantial retail operations and its first individual members.
The remaining decades of the 20th century were marked by
intensifying competition in UK food retailing, dominated by a
few large grocery firms, and global changes in manufacturing and
distribution. From the 1970s onward, co-operatives lost market
share and faced increasing financial difficulties that led many retail
societies to merge — many with the CWS. In this environment, the
CWS moved away from manufacturing and emerged as a major
retailer. With mergers also came an influx of individual members,
and during the 1980s and 1990s new regional committee structures
evolved. Finally, the CWS and independent societies began to pool
their buying power through the Co-operative Retail Trading Group
(CRTG). Thus, by 2002 the idea of many early CWS leaders — a
sole supplier for co-operative goods — had at last come to pass.
Partly by necessity (mergers) and partly by design
(reorganisations), in the 1990s and 2000s the CWS/Group emerged
as an effective leader and centre of power within the co-operative
commercial empire.

The CWS, the Co-operative Bank and co-operative production.

Almost from the outset, the CWS saw itself not only as the key supplier for English and Welsh co-operative societies, but also as
a major promoter of co-operative production. In the 1870s, the CWS Banking Department funded producer co-operative textile mills,
coalmines, boot and shoe manufacturers and flour mills. As heavy losses were incurred in many of these investments, this led in the
1880s and after to friction between those who had become sceptical about producer co-operatives (mainly from among the consumer
co-operative societies who formed the majority of the shareholders in CWS) and those who saw the rise of a strong producer co-operative
sector as central to the movement’s historic mission. The sceptics tended to get the better of this debate, opening a serious political
division over producer co-operation which was only reconciled partly in the 1960s and 1970s. The reasons for this split, and its long-term
consequences, will form an important area of debate in the book.
In fact, the CWS Bank (later the Co-operative Bank), formed in 1872, continued to provide financial support in the form of overdraft
facilities and loans for producer co-operatives, sometimes provoking criticisms from the sceptical faction, and even occasional attempts
to curb the Bank’s activities. The role of the Bank is an especially important area for further research, because from the outset it played an
important role in cementing the often difficult relationship between the CWS and its member societies, providing overdrafts and loans
which were essential for the smaller societies. Towards the end of the twentieth century, after it had moved into mainstream banking, it
came to play a leading role in strengthening the modern co-operative movement’s credentials for ethical commerce; and following the
reorganisations of the 1990s and 2000s, it emerged as a significant force in its own right in British finance.

Fall and Rise since the 1940s.

When writing about the recent spate of reorganisations, it is vital to stress that these emerged in response to what by the 1990s
was a crisis in CWS’s fortunes. Indeed, by that time only profits from the Co-operative Bank were keeping CWS in the black, while the
CRS consistently reported losses and embarked on a severe rationalisation programme. The principal reasons behind this trend were a
significant decline in market share and continued internal friction over strategy and structure. By the late-1990s, co-operatives could only
claim 4% of the grocery market, compared to 20% in 1970, while its shops were regarded as drab and resonant of an earlier age, especially
compared to the retail ‘palaces’ being built all over the country by the likes of Tesco, Sainsbury’s, Morrisons and Asda. These large multiples
had over the same period increased their market share from 30% to almost 60%, reflecting their highly competitive strategies and integrated structures.
Such was the perceived weaknesses of CWS that in 1997 a thirty-one-year-old entrepreneur, Andrew Regan, launched a bid to buy the business for approximately £1.2
billion. Regan had in 1994 purchased CWS’s food manufacturing operations, and used this inside knowledge to offer to buy the entire range. This came as a great shock to
CWS executives, especially the chief executive, Graham Melmoth, who had launched his own recovery strategy in November 1996. Regan’s aim was to carve up CWS into
palatable proportions for his network of business contacts, in the process generating £2 billion from the sales and making himself extremely wealthy. However, although he
raised a lot of support from leading City names such as Hambros Bank, Schroders and Nomura, when Melmoth discovered that Regan had been supplied with confidential
CWS material by two executives, this was used as damning evidence to undermine the bid.
Having defeated Regan, and in the process hugely embarrassed his City supporters, Melmoth set about implementing his recovery strategy, reorganising CWS, and merging
with the CRS (in 2001). Although it is important to stress that a process of consolidation had been underway since the 1960s — the number of co-operative retail societies fell
from 562 in 1955 to just fifty-five in 1995 — it was only in the last decade that effective integration of the sprawling business empire was achieved. Similarly, the development
of the ‘ethical trader’ brand can be traced back to the 1970s, when several leading figures instigated radical changes to the marketing campaigns. This ethical stance was also at
the heart of the Co-operative Bank’s growth from the 1990s, reinforcing the movement’s image as pioneers in this respect.
Over the last decade, the foundations developed in the 1990s have been extensively developed, resulting in further consolidation of the movement and acquisitions to boost
core areas. For example, in 2002 Co-operative Financial Services was formed to bring together the banking and insurance arms, while the merger in 2009 with the Britannia
Building Society added even greater strength to this activity. Similarly, in 2007 United Co-operatives merged into what after the CWS-CRS merger was known as the
Co-operative Group, while the acquisition of Alldays (2002) and Somerfield (2008) boosted retail coverage.
Many now speak of a ‘renaissance’ in the Co-operative Group’s fortunes under the leadership of Peter Marks, especially compared to the 1990s, with turnover and
profitability surging to unprecedented levels, even in the teeth of a global recession. The history will attempt to analyse how and why this ‘renaissance’ occurred, looking
specifically at the nature of leadership over a period that witnessed the rise of aggressive competitors capable of eating decisively into CWS’s market share.
This study will consequently help us to achieve the aim of placing the study of co-operatives back onto the curriculum, given the success with which the Group has not
simply recovered from potential disappearance, but also demonstrated that it represents an alternative business model to the one that was so damningly at fault for the recent
global recession. There is, indeed, much that students and practitioners can learn from studying the history of the Co-operative Group, providing us with a massive incentive
in completing this commission.

A selection of historical co-operative advertising includes (from left) ‘Defiant’ radio receivers produced
by the CWS from the 1930s after electronics firms boycotted co-op stores over the issue of dividend; Luton
Cocoa, jointly manufactured and sold by CWS and its Scottish counterparty; Co-operative Travel Service
poster from 1940; and ‘We Give Dividend Stamps’ advert displaying the new Co-op logo (circa 1968)

Other Initiatives
The business history of the Co-operative Group is not the only initiative aiming to turn the spotlight on
the heritage of the co-operative movement. In the summer of 2009 a major international conference was held
at New Century Hall in Manchester, on the theme Can Values Make a Difference? Co-operatives — moving from
the Rochdale Pioneers to the 21st Century. Over 100 delegates attended from 32 different countries, and the event
made such a major impact among academics and co-operators that Manchester University Press has agreed to
publish a selection of the conference papers in a book to be called The Hidden Alternative: Co-operative Values,
Past, Present and Future, which will be published in 2012, the United Nations Year of Co-operatives.
2010 also witnessed the success of the Co-operative Heritage Trust’s bid to the Heritage Lottery Fund
to develop Toad Lane and the archive. Associated with this are a range of projects designed to use the new
facilities, and the Co-operative College’s developing links with schools and FE colleges, to promote wider
awareness of co-operative heritage and history.
The business history team remains committed to working with co-operative members, employees and
former employees in developing the project. We are certainly open to suggestions and comments are always
welcome. We will be providing regular updates at various co-operative events over the next few years, but
we are always ready to heed good advice! To get in touch, please email: rvr@liverpool.ac.uk.

Design by Co-operative Press; all photos courtesy of National Co-operative Archive.