The legacy of Shirine Khoury-Haq at The Co-op Group is complex. Announcing her departure (with immediate effect) today, the CEO looked back with pride on her achievements, citing in particular her vital role in sorting out the balance sheet, paying down debt levels from a perilous £1bn in 2022 to a more orderly £45m, and increasing profits by 35% in that hallowed period up to the end of 2024.
She could also add sorting out the mess the group had made with its SAP implementation. And latterly she referenced the Co-op’s response to the cyberattack last year, the recovery in its market share (albeit that the pie itself has shrunk), and the strategy it implemented post-cyberattack to achieve more (sales) from less (staff) and continued investment in propositions.
It’s a moot point as to whether the new strategy will work, however. As we’ve reported, the early implementation has been characterised by ‘chaos’ and a ‘toxic culture’ (internally) and widespread confusion (among suppliers).
Together with her team, Khoury-Haq today offered a robust defence, insisting that she didn’t recognise the toxic culture allegations; that, despite some teething trouble, the strategy was now delivering “significant category improvements”; suppliers were now on board; and she was “increasingly confident we can create the UK’s second-largest buying group”.
No new order
Still, it’s early days and quite an assumption to believe that Khoury-Haq’s successor (as and when a successor has been hired) will “see through” the strategy – rather than rip it up and start again. And the claim that the interim handover to Kate Allum represents an “orderly transition” is even more tenuous. Allum may have 20 years of experience within the food industry, including a CEO role at First Milk (the largest UK-owned dairy co-operative), and inside knowledge as a member-nominated director on the Co-op Group board, but she has zero retail experience.
It’s a criticism that can also be levelled at Khoury-Haq, of course, whose career previously spanned roles in QSR (McDonald’s), technology (IBM) and insurance (Lloyd’s of London). And she was particularly exposed when she took temporary charge of Food as MD Matt Hood was moved across to run the new commercial and logistics division.
He’s now back running Food in addition to his new responsibilities, because six months on a replacement hasn’t been found. So there’s an interim CEO with no experience, and another vacancy for a Food MD. Orderly? I don’t think so.
The leadership capability issues don’t end there however. Debbie White, who replaced Allan Leighton as non-exec chair two years ago, also offers no retail experience (with a CV that includes executive roles at AstraZeneca, Sodexo, BT Group and Interserve – including an unsuccessful turnaround at the latter that resulted in her leaving the business – and non-executive experience at Spire Healthcare, Howdens Joinery, Xanitos, Lucid Diagnostics and APCOA).
Retail detail
In fact, until ex-Lidl UK CEO Ronny Gottschlich joined the board as a non-exec director in late January, not a single representative on the Co-op Group board had a background in bricks & mortar retailing.
This matters, firstly because Food accounts for two-thirds of sales and over 90% of employees, but also because the Co-op’s operational retail smarts aren’t good enough, resulting in often poor availability and store standards, and insufficient demographic range differentiation. In other words, it lacks the sort of retail detail that the board has insufficient knowledge or understanding of.
Not surprisingly, Gottschlich’s appointment has raised hopes internally that he might be the white knight to fix the Co-op Group’s operational and retailing issues.
Such an idea was quickly dispelled by Khoury-Haq herself today, who stressed that Gottschlich was “very clear about his work-life balance and where he wants to focus”. But whoever the Co-op Group board picks, it needs to bulk up its retail operational skills at every level: board, senior leadership, buying and ranging, delivery, and in-store execution. To do that, it needs to be run by a retailer.
No comments yet