Customers can bite back – Co-op supremo

THE chief executive of the Co-operative Group has advised business leaders to ‘listen to the river’ and make sure they really know what customers want, or risk them biting back.

Speaking to an audience at the CBI North West annual dinner at The Point in Old Trafford, Manchester, Richard Pennycook said the signs of what was to come for the Co-op were there before 2013, but no one listened until it was almost too late.

He said: “A financial crisis was followed by a reputational crisis, when it was revealed that the chairman of the bank had been a layman with little knowledge of banking but a lot of knowledge of how to throw a party.

“These crises nearly killed the Coop, and did result in half the assets accumulated over 170 years being written off – a loss of £2.5bn.”

He added: “All the signs of impending crisis were there before the downgrade, but no-one internally was listening. Sir Christopher Kelly, who produced the independent report into what went wrong, called it ‘a failure of management and governance’.”

Pennycook, who earlier this year took a voluntary £500,000 pay cut as the group continues with its £1bn three-year Rebuild programme, said that the Co-op had not been listening to the river – just like the politicians who did not foresee Brexit or Trump’s victory.

“When I was out and about in our stores over the spring, it was clear that the mood on the ground was for Brexit. That wasn’t heard in Whitehall.

“A colleague of mine on another board runs a large chain of depots in the US. For months, based on what he heard on the ground, he was telling us that Trump would win. That wasn’t heard in the White House.

“It begs the question, are you listening to the river in your business. Do you really, really, know what your customers, colleagues or suppliers think of you?  If not, as the politicians and pollsters have seen, they can bite.”

Profits at the Co-op Group more than halved to £17m in the first six months of this year, as the group continues with its three-year plan to rebuild the business.

The latest bump in the road was yesterday’s news of a further 200 job cuts in Manchester and Stockport, which it blamed on continued low interest rates affecting its money-making potential.