Retail Insider held its latest Breakfast Event with Richard Pennycook, CEO of The Co-operative Group, who recalled his early period at the company when there was a real chance the business would not survive the crisis at its banking arm.
The first six to nine months of any turnaround are focused very much on survival – and during this time he suggests that if you are not successful then you are probably not going to save a business.
Senior executives from Sainsbury’s, Marks & Spencer, Gap, Evans, Boodles, John Lewis and T2 were among those who heard how Pennycook successfully dealt with the bank’s restructuring and then also found the retail division was not in the best of shape.
Thankfully head of retail Steve Murrells was already in place and the business was “responding very well” to the changes he was implementing. These have included a radical overhaul of the stores with many sold including a block of smaller outlets to McColl’s.
He told those gathered at The Delaunay in central London about the various initiatives being introduced including the re-brand involving the heritage blue logo and the new membership scheme that rewards the purchase of own-label goods with a 5% return and 1% also given to the local community (via 4,500 different causes).
Another initiative Pennycook kick-started was the introduction of more digital practices that he admits the group had not been sufficiently pro-active about. Although much is being done he is resolutely against offering online grocery and delivery: “It’s a social service for the middle classes. There needs to be more of a pricing rationale with delivery charges rising. And customers need to pay for the picking and packing of goods.”
However, he says he is overseeing some of The Co-operative Group’s services such as the writing of wills (in its Funeral Care division) migrating over to digital. This is only one small part of what Pennycook sees as a big shift to digital that will have massive implications on things like employment as automation is introduced in stores and trucks become driverless.
“The shifts in employment will be sobering. It’s customer-driven, you can’t push against it. It’s a big question for all of us – what happens to these people and what jobs will they do in future?” he asks.
What will also change, according to Pennycook, will be the realisation that capital has simply been provided too cheaply to the “most exciting things” and many digital start-ups will evaporate as capital allocation becomes rational. “We’ll look back on this period and think ‘how did it happen?’ he suggests.
Retail Insider would very much like to thank Richard Pennycook and the sponsors PCMS Group, Worldline and Bond Dickinson. Without their much appreciated support this event would not have been possible.
Glynn Davis, editor, Retail Insider