UK Co-Op extends dividends across all its businesses
The UK-based Co-operative Group is to bring a new identity to over 3,000 high street and village outlets and return to its roots by giving its customer members a share of profits across its entire family of businesses for the first time.
The group is making what is regarded as the largest ever re-statement of the co-operative difference. The group is owned by its customer members and seeks to return a share of its profits to the people who trade with it rather than a group of distant shareholders whose main interest is financial gain. It is the UK's largest consumer-owned retailer with annual sales of almost £8 billion.
Main developments The key developments announced include:
- For the first time members will receive an annual share of the profits based on their trading with the group's entire range of businesses, which include convenience stores, funeral homes, pharmacies and travel outlets, as well as the Co-operative Bank and Co-operative Insurance (CIS).
- The group is to roll out its new brand identity - The Co-operative - across its entire estate of more than 3,000 UK outlets. Adoption of the single brand will run in conjunction with a renewed commitment to maintain high product and service standards. The group expects that raised customer awareness, in addition to its well-known approach to ethical trading, will help to significantly grow membership from 600,000 consumers in 2005 to 4 million by 2010.
- Members will be encouraged to support a 'social goals agenda' that will collectively assert pressure for change within a range of public issues including climate change and social exclusion. This aims to build upon The Co-operative's existing initiatives such as responsible food retailing, responsible shareholding within Co-operative Insurance, and The Co-operative Bank's Customers Who Care campaigns.
- Members will also have the opportunity to provide extra support for local projects by choosing to donate their share of profits to the group's Community Dividend scheme, which distributes grants to community groups throughout the UK. In 2005, more than 2,000 community organisations and causes benefited from the programme.
Consumer interests at heart According to group chief executive, Martin Beaumont, "There are millions of consumers across the UK who share our belief in self-help, social responsibility and democracy and like us, are prepared to take a stand on consumer and social issues. At a time when communities are becoming increasingly dominated by a handful of large and impersonal businesses, we want to show UK consumers that there is a better alternative, one which is ultimately owned and controlled by them."
Indeed, Beaumont stressed that the group will not rely on the "blind loyalty" of its members, and will continue to offer the products and services members want, as well as intensively aiming to increase standards of service and presentation. These initiatives will be monitored through independent audits.
Membership Becoming a member of The Co-operative costs £1.00. Under the terms of the new profit-sharing scheme, members will earn dividend points for purchases from all group businesses, including food retail, travel, pharmacy, funeral outlets, Co-operative Bank, and Co-operative Insurance.
These dividend points will be converted into a share of the entire group's profits, with payment being made twice each year (in June and December). Because the payments are linked to the future profits of the group, the actual value of the points will vary from year to year.
Long-running loyalty rewards The history of the group's fore-runners, as detailed in The Loyalty Guide reports, shows how the front end of its Dividend loyalty programme has changed over the years (Volume I, page 229)...
"In 1844, in a mill town in the North of England, a store was opened by 28 socially aware people who had formed the 'Rochdale Equitable Pioneers Society'. The Co-operative movement had begun. Rather than focusing on profit, its objective was to sell good food at honest prices. Its principles were: voluntary and open membership, democratic control, and to divide the profits among the members in proportion to the amount they had spent. over the year. By 1900, there were some 1.7 million members of such societies in Britain. According to an acquaintance with a long memory, his mother was given a six-digit number to remember. Every time she bought something, the number was quoted. The sales assistant wrote the number and the total paid on a small ticket which was given to the her as a receipt. The carbon copy was retained to allow the amount to be added to her dividend account. The programme has become much more user-friendly since then."
The group grew over the centuries and, by 2001 (after several mergers with other co-operative societies) it had become what it claims is the world's largest consumer co-operative. And the Co-op Dividend became one of the longest-running loyalty rewards in history.