Just how many businesses are there that trade using the ‘co-operative’ branding, yet are not co-operatives? The situation has reached what some might call crisis point, and others might play down as ‘merely’ misleading marketing.
The reason we have reached a crucial moment is the programme of disposals being undertaken by the Co-operative Group. Several businesses in recent weeks, months and years have been sold by the Group, many of which traded using the co-operative name and branding. In some instances, they continue to use that name and branding, despite becoming in one case a plc, in another a ‘joint venture’ and in some others privately owned businesses without any ownership association with co-operatives.
We all know the saga of the Co-operative Bank – in which hedge funds and other financial institutions have a bigger equity stake than does the Co-operative Group – so let us move beyond that. We can instead start with Co-operative Pharmacy. This was formally acquired by the Bestway Group on 6 October this year for £620m. The Bestway Group is one of the UK’s largest privately owned businesses.
A spokeswoman for Bestway says: “Under the terms of the sale agreed with the Co-operative Group we are allowed to use the [Co-operative Pharmacy] brand for 12 months. We will now work on the rebranding for next year.” In fairness we should emphasise what while the website of Co-operative Pharmacy uses in part the Co-operative branding, it does also say clearly under the ‘Co-operative Pharmacy’ heading that it is ‘part of the Bestway Group’.
No such clarity exists on the website of Co-operative Travel Management – which is a shame, because this business was sold by Thomas Cook to Al Tayyar Travel Group in July of this year. The website is completely in the house style of the Co-operative Group and would suggest to anyone visiting it and who did not know better that this is a division of Co-operative Group – which it was once, but not for several years.
Instead the business called Co-operative Travel Management is a part of Mawasem Travel & Tourism Ltd, a division of Al Tayyar Travel, a Saudi Arabian based but global travel business. It was sold by Thomas Cook Group plc for £13.5m. Harriet Green, group chief executive officer of Thomas Cook Group plc, said: “This sale enables us to further intensify our focus on those key brands and products that are core to delivering our strategy for sustainable profitable growth.”
Co-operative Travel Management is the corporate travel business that had been part of the joint venture between Thomas Cook, the Co-operative Group and Midlands Co-operative. Clients include companies and trade unions. Several long-standing Co-op Travel managers transferred with the business to its new owners.
Sue Chapman, commercial director of Co-operative Travel Management, explains: “There is a transitional agreement in place regarding the brand, which was set at six months from the sale -therefore we will be rebranding.” She adds that no decision has yet been taken on the new name.
Thomas Cook explains that the arrangements on the continued use of the Co-operative branding identity were handled by the Co-operative Group, which specified the terms of the transitional agreement.
This inevitably leads us onto the issue of Co-operative Travel itself. It is now three years since the Co-operative Group and Midlands Co-operative pooled their retail operations into a single business. The ownership structure provides Thomas Cook with a 66.5% interest, the Co-operative Group retaining a 30% stake and the Midlands (which is now part of Central England society) holding 3.5%.
Readers who visit the UK’s city and town high streets will be familiar with the Co-operative Travel brand. In some instances these travel stores are owned by regional independent co-operative societies, such as Mid-Counties and East of England. For the most part, though, these are part of Thomas Cook. The online presence of the Thomas Cook version of ‘Co-operative Travel’ also suggests the business is part of Co-operative Group.
Worse still, there is a link from the website of the Thomas Cook version of ‘Co-operative Travel’ to explain what a co-operative is. This states: “A co-operative is a group of people acting together to meet the common needs and aspirations of its members, sharing ownership and making decisions democratically. Co-operatives are not about making big profits for shareholders, but creating value for customers – this is what gives co-operatives a unique character, and influences our values and principles.”
To describe what is in effective a part of a plc in these terms is more than misleading, I suggest.
So when will this erroneous branding come to an end? In the case of Co-operative Travel, we are already far beyond the six and 12 months transitional periods arranged with the Bestway Group and Al Tayyar, yet it seems that the misleading use of the ‘Co-operative’ name will continue for some time. A spokeswoman for Thomas Cook explains: “The brand ‘Co-operative Travel’ will continue be used in our retail stores in accordance with our JV agreement with the Co-op Group and Midlands Co-op.”
It is worth reminding ourselves at this point of the scale of disposals conducted by the Group in recent times. As well as the Bank, Pharmacy and retail travel and corporate travel divisions, there was the life insurance and asset management businesses that were sold to Royal London. The farms have gone to the Welcome Trust. Sunwin, a security business specialising in the transfer of money, has just been sold to US corporation Cardtronics for £41.5m. Further back, the Group sold its opticians business in 2005 (though East of England and Central England still run co-operative optician businesses in their regions). The most profitable part of the Co-operative Motor Group, the Farnell business, was sold last year for £31m to Vertu, a Newcastle based dealership.
It can be argued – as former Group chief executive Peter Marks repeatedly did – that the Group’s attention became diluted because of the unsustainable spread of its commercial interests and that smaller, non-core, businesses had to be sold, irrespective of the financial crisis that hit the Group. But what is surely unacceptable is to have businesses that are not co-operatives calling themselves that. Consumers and the co-operative movement both deserve better.