The decision announced last weekend by the Co-operative Group not to pay a members’ dividend this Christmas is a reminder that – quite apart from the Bank meltdown – the Group has quite significant trading problems. Almost all parts of the business are doing less well than a year ago. Only funerals are looking good…
The immediate response is to see the loss of the dividend as another example of the way that the Group is reneging on its ‘cooperative difference’. But I’m inclined to take a more nuanced approach: in a genuine cooperative business, members do well when times are good but can’t expect automatically to benefit if the business is doing badly. By this standard, the Group’s approach could be said to be in line with core cooperative principles.
Less satisfactory, I feel, is the way that the Group has previously been inclined to blur the line between the dividend on profits and its marketing initiatives to shoppers. Money-off vouchers and the like are a normal part of retailing; by contrast, offering the incentive of extra dividend points in exchange for buying, say, the latest Co-op ready meal strikes me as devaluing the concept of member profit-sharing and takes us rapidly into Tesco Clubcard territory.
The Group’s chief executive Euan Sutherland talked last week of moving towards a “much closer collaboration” with its members. Re-establishing the distinctive nature of the dividend should be part of this approach.