CEO Shirine Khoury-Haq on getting to grips with the Co-op

Co-op CEO Shirine Khoury-Haq is having “a week from hell”. This isn’t down to any problem with the business. It’s all about her first appearance on Good Morning Britain, fielding tricky questions on whether current egg shortages are due to supermarkets underpaying their farmers and explaining why The Co-op was ditching a glossy Christmas TV ad in favour of highlighting food poverty. Today, the media round continues as she’s “grilled” by The Grocer, as she puts it. It’s clear Khoury-Haq is not comfortable in the spotlight.

“I am far happier getting lost in an Excel spreadsheet than being on television,” she jokes. It’s befitting of a career spent largely in operational roles with IBM, McDonald’s and the insurance sector. And it was originally on the insurance side that Khoury-Haq first joined the Co-up, as CEO of its Life Services business. But after almost seven months in the Co-op Group CEO role, it does feel like she is warming to her position as a high-profile figurehead. Khoury-Haq was elevated on an interim basis to the top job in May after her predecessor Steve Murrells left the business. Only in August was she confirmed as permanent CEO. The delay was so everyone could “try before they buy”, she admits. “I knew there were big things we needed to do at Co-op and I needed to gauge the appetite for doing those.”

She doesn’t hold back on what they were. “We needed to cut costs. We needed to remodel ourselves financially. We needed to be much more commercially focused and reduce debt. There were big operational changes needed to make that happen and I also felt we needed a new strategy as well.”Once it was clear that she would get the support she needed Khoury-Haq says she got straight to work. And it’s involved some tough decisions.

As well as halting or slowing down some significant investment plans, 400 roles were cut through a round of redundancies at its Angel Square HQ in a major cost-cutting initiative.

“Our head office costs were too high,” she says. “We had to address that and decided to do that very openly, very collaboratively and quickly. My choice was to move on those changes fast. You might as well get them done quickly. So you can imagine leading up to the consultation morale isn’t great… and as people are leaving the business it is tough but now we have gotten over that period I am hearing positive messages and people seem incredibly energised about where we are going. They are understanding the vision and they are seeing successes along the way.”

Delivering on cost-cutting pledges hasn’t been the Co-op’s greatest strength in the past, she says. “We have had a history of saying we are going to make cost cuts but we never quite got there,” Khoury-Haq says. “This year we said that collectively we would get to £50m, then we saw 2022 becoming difficult. We saw what was going to happen with energy prices and so we decided to up that to £100m, so people came together and they delivered and this year we will make cost savings of £101m. Next year we said cumulatively we would get to £100m, but we will now deliver £150m and we are doing what we say we are going to do.”

These savings have come mainly from the headcount reduction and from a forensic approach to reducing energy costs. “The best way to save on energy is not to use it,” she adds, suggesting staff are getting used to working without turning the lights on. Added to this are operational efficiencies and trying to be more innovative in how the business uses its marketing budget.

The key to the success of this was that it applied to everyone across the business, helping to bring the leadership and staff together, she says. “There was a sense that yes it’s tough but it’s also fair.”

Pure Convenience team

Not that Khoury-Haq is afraid to spend cash where it’s needed. In September, days after announcing the Co-op’s forecourts business would be sold (to Asda), she unveiled plans to plough £37m into a new-look food strategy focused on making it the biggest convenience retailer in the UK. It would be, the retailer said, the “biggest shake-up in its near 180-year history”. And it’s growth, rather than cost-cutting, that’s at the heart of it.

The key elements of the strategy include a focus on franchise, with plans to treble the number of franchisees in the next couple of years, grow its e-commerce business by building on successful tie-ups with Uber Eats, Deliveroo and Amazon, and continue to prioritise its Nisa wholesale division. Despite persistent industry rumours, Khoury-Haq insists there are no plans to sell it, with Nisa “a critical part of our business”.

“There is a real advantage to having Nisa and a wholesale business within the Co-op family, but there is more work to do with the partners to make it even more valuable,” she says.

The other key strands of what has come to be known as its Pure Convenience strategy are a continued push on value and a plan to reduce 21% of its SKUs from its range. Meanwhile, a revamped loyalty and membership proposition is due next year.

“I had a gun pulled on me at work once. The memory of that feeling has stayed with me for 30 years”

Before kicking off the strategy, she says the board consulted with employees across head office, stores and supply chain including part-time staff, weekend workers and those on the night shift.

“We got some really clear views on that, such as we needed to be more focused on customers with certain missions. We needed to be more focused on convenience because we’re trying to be too many things. They said that our membership proposition needed to be looked at again and we are working on that right now – our promos, our range, the entire business.”

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With Pure Convenience led by new Food MD Matt Hood and Co-op COO Chris Whitfield, Khoury-Haq has also been getting to grips with the thorny SAP issue that has bedevilled the business. “When I was at IBM I was the person who used to go in and fix failing SAP projects,” she says. “So when I took on this role I was able to get my hands on SAP.

“In my first week as interim CEO I got in touch with the CEO of SAP and the CEO of TCS, who are our systems integrators, and within a week we had the SAP developers here in Manchester working with us. They were here with our technology teams, our operational teams and in our stores.

What the Co-op learnt was that rather than having issues with the configuration of SAP, more of them were around the process changes required to actually adopt it. “That’s generally the issue in any case study you read,” says Khoury-Haq. “So we combined teams working intensively on the issue, the system is now in a good place, she says, with availability “in a better place than before installing the system in the first place”. She adds: “We have just implemented SAP for our franchise operations and that was delivered on scope, on time and under budget, which is how I am used to working with SAP.

Campaigning

So with that out of the way, will Khoury-Haq pick up the campaigning mantle left by Murrells? There is a feeling that Murrells, who championed a number of causes, became a presidential figure at Co-op. Khoury-Haq’s operational background seems to indicate she is likely to remain primarily concerned with the nuts and bolts of running the business.

That’s not to say the Co-op is abandoning its social conscience. This Christmas, for example, it opted to ditch a glossy Christmas TV ad (which could have cost up to £10m) in favour of highlighting food poverty. Khoury-Haq will support causes that are important to her – it will just be in her own way.

“I think if someone in my role takes a personal stance on an issue outside of business, it has to come from within, and the advocacy needs to have depth and authenticity for them to be able to help make real change happen.”

A safe working environment is clearly high on her list. Co-op’s store workers are regularly in the line of fire, an issue on which it continues to campaign for greater protections from government. And Khoury-Haq is only too aware of the terror it can cause.

“I had a gun pulled on me at work once and the memory of the feeling at that moment has stayed with me for 30 years and will never go away. I believe everyone has the right to earn a living in an environment where they feel safe. Co-op has long campaigned for safety for retail workers, and this is something I will continue to drive with passion.”

Her support for equality and equity also comes from personal experience.

“I feel very strongly about equality and equity for my colleagues on every level and have supported these issues through my entire career. It comes from not having always felt that I was treated fairly as I moved around the world and across sectors due to gender and ethnicity, and wanting to make the workplace and society fairer for when my children are older,” she says. “For me this covers equity across gender, ethnicity, age, disability, sexuality and socio-economic background. It also means being an ally for those who are often marginalised, like my trans colleagues.”

More opportunities for young people, tackling poverty and, of course, the climate crisis are also on the agenda. Khoury-Haq recently attended a Cop27 event (virtually) on the importance of people around the world being able to access clean water, and argues the retail industry has a big part to play in addressing the climate crisis as individual organisations, but more importantly, in partnership with others.

“As professionals with a part to play in this crisis, we have a duty to educate ourselves and know that inadequate and delayed action will result in the ultimate destruction of our beautiful planet. We owe it to our children to behave expediently and responsibly in business, and in our personal lives, to change the course we are on. In the meantime, I am very proud of the work Co-op is doing to alleviate and address the impacts of the climate crisis on people across the globe facing famine from droughts and floods or vulnerable to disease.”

Co-op is clearly heading in a new direction under its new leader, adding value to its strategic and social agenda and steel to its cost control. Khoury-Haq is shaping up to be far more than just a bean counter with a balance sheet.