A new power in the co-operative movement is established today with the completion of the merger of Oxford, Swindon & Gloucester and West Midlands Co-ops to create the UK’s fourth biggest society - the Midcounties Co-operative.
For Bob Burlton, chief executive of the new society until he retires next year, the merger works on every level. He says: “The creation of this society is excellent news for the movement as it will enable us to further both our aims of running a successful, values-driven business that also promotes co-operation and benefits local communities.”
The merger will strengthen the two societies, he says.
“The societies have many similarities but there are differences. We can use our complementary strengths to grow. West Midlands has a far bigger travel business, whereas we can bring the strength of our childcare and motor businesses into the mix. Food is a large part of both businesses and we will be learning from each other to make that area stronger.”
The deal is a further sign of how the co-ops are increasingly prepared to get together in a bid to beat the challenges of the highly competitive retail market.
Earlier this month, Ipswich & Norwich Co-op and Colchester and East Sussex Co-op became the lastest to announce a merger - creating a chain of 200 stores (116 of them food outlets) and sales of £400m, making it the country’s fifth biggest society. Then there have been the rumours, strongly denied, that United Co-operatives was keen to merge with Midlands Co-op to create another mega-society.
Experts agree that consolidation among the co-ops is vital, but say the process has some way to go. Even with the two latest mergers, there are 40 societies left, usually trading under different versions of the Co-op brand.
Andy Thornton, managing director of convenience consultancy Srcg, says the fragmented state of the movement cannot work in its favour.
He says: “This is a cut-throat market and the co-ops can benefit from a more co-ordinated approach.”
Thornton hopes that trials of the co-op movement’s new ‘The Co-operative’ brand, which was unveiled earlier this month, will result in the unification of the movement under one brand. And he explains: “The more they get together, the more co-ordinated the approach will be and the better the business.”
When it comes to food, the co-ops already trade through one source - the CRTG buying group. So combining that resource with a unified brand should help the movement’s trading prospects in the highly competitive food market.
But if they are to truly prosper, then the co-ops can’t ignore the benefits that will come with further consolidation. Expect to hear about more mergers between societies in the months ahead.