Co-op businesses have a better chance of weathering the economic storm expected to hit the UK as the country emerges from lockdown, according to a new study published today.
The annual Co-op Economy report revealed mutuals had almost double the chance of surviving the first five years after formation when compared with other startup businesses.
Compiled by sector body Co-operatives UK, the study showed 76% of co-ops (up from 72% in 2019), were still operating after the difficult first five years of existence. In contrast, just 42% of all new companies make it beyond five years.
Collective decision-making, a more rounded approach and not being fixated on maximising profits would give co-ops, which are owned and controlled by members rather than shareholders, a distinct advantage as the UK economy recovered from the effects of the coronavirus pandemic, the report said.
There are more than 7,000 co-ops in the UK, operating across all sectors, from community-owned pubs to multibillion-pound high street retailers such as the Co-op and John Lewis Partnership.
Taken together, the UK’s mutuals have a turnover of £38.2bn – £500m higher than in 2019 – and count 14 million people as members.
The Co-operative Group is the largest co-op in the country, with a turnover of £10.9bn, followed by the John Lewis Partnership, which has revenues of £10.2bn, and the farmer-owned Arla Foods, with sales of £2.6bn.
Co-op CEO Steve Murrells said co-operatives played an important role in the social and economic fabric of the UK and were well placed to face the difficult economic conditions in the post-lockdown world.
“Co-ops are in existence to create value for their members and their communities and are not just about maximising profits for shareholders,” he added.
“All businesses now face unprecedented challenges, but the fact that many co-ops have community-based ownership means more people are invested in their long-term success.”
The Co-op has launched a number of new funds and support initiatives to help struggling communities and charities during the coronavirus outbreak, including a Members’ Coronavirus Fund to support food banks and address funeral poverty. The retailer also created more than 7,000 temporary jobs in its food shops across the UK.
“Our response to the emergency in the last few months was built upon our Co-op values and principles and ongoing commitment to our members across the UK,” Murrells said. “When this crisis broke, we weren’t starting from scratch, we were already ‘on the ground’ with good relationships and existing resources in place.”
Co-operatives UK chairman Nick Matthews said there was an appetite for a different economy to emerge from this crisis.
“If we are to rebuild a fairer economy, provide decent livelihoods and support communities we need more co-ops, mutuals and social enterprises, not less,” he added.
“And there’s compelling evidence to show that new co-ops are built to last.”