Customers wanted us to pull through, Co-operative chief tells IGD Convention
Customers wanted The Co-operative to pull through its recent crisis, according to its chief executive Richard Pennycook.
Customers wanted The Co-operative to pull through its recent crisis, according to its chief executive Richard Pennycook.
Speaking at the 2014 IGD Convention, Pennycook said the resilience of customer loyalty meant the scandal did not translate into sliding sales in its food business.
"Despite all of what was happening, customers had an enormous amount of good will to the Co-operative," he said.
Pennycook said the focus was now on rebuilding.
"We are now stable again and have embarked on a journey of rebuilding, which will continue for the next three years," he said.
Pennycook said the retailer's True North strategy, which aims to transform its food business, demonstrates it is in control of its largest business. The True North strategy is reported to be driving 4% growth in convenience stores, said Pennycook.
"The challenge now is to rebuild the trust of our customers," he said. "We need a new purpose and we are championing a better way of doing business."
Pennycook spoke candidly about the banking crisis, which hit the business in the spring of 2013, leaving a £1.5bn black hole in the company.
The first few months were spent working out how to avert disaster.
"It was text book crisis management," Pennycook said. By November 2013, The Co-operative thought it was through the worst and had a solution to save the Co-op Bank and rest of the group. But then the Paul Flowers scandal hit.
"We had a financial scandal, now we could add sex, drugs and religion to the mix," Pennycook said. Flowers, the former banking chairman, resigned after being filmed allegedly buying drugs.
The group chair stepped down as a result of the scandal, said Pennycook, and The Co-operative found itself "subject to a divided and leaky boardroom".
Pennycook said the disruption allowed the business to a build a case for a "radical change" in its governance but stressed disruption at The Co-operative should not be the way changes come about. And he revealed managing the crisis cost the business £125 million in professional fees alone.
Pennycook urged delegates that spot the signs of a crisis to start to do something about them now.
"Don't worry too much because there are always people that can come in and fix it but, if the seeds of the disruption take place on your watch, it will be someone else leading the rescue team," he warned.
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