The Co-operative Group is to relaunch its membership programme next year with the aim of making its customers more engaged with the business, which runs supermarkets and funeral homes.
Speaking at the Co-op’s annual general meeting, Richard Pennycook, the chief executive, said a series of pilot programmes would begin around the country during the summer with a view to making customers want to take out membership.
The Co-op – which plunged to a record £2.5bn loss in 2013 amid a scandal in its banking arm – is owned by its 7 million members and also by independent societies, which together control 22% of its operations.
Pennycook, whose £2.5m pay deal was criticised by members at the AGM on Saturday, said “right now the majority of customers don’t see the point” of taking out membership.
“Getting our proposition right is the challenge we are working on right now,” he said.
The supermarket sector is undergoing intense pressure because of customers’ changing shopping habits and the rise of discounters such as Aldi and Lidl. Co-op has stepped back from a rapid expansion into supermarkets to focus more on convenience stores.
The pay of Pennycook and former directors of the Co-op came under sustained criticism during the AGM, the first to be held under a one-member-one-vote system that replaced the block vote process used in the past. Anout 2.5 million members met the criteria to vote and around 90,000 did so on a range of topics, such as remuneration, boardroom elections and whether to keep subscribing to the Co-op party, which is aligned to Labour.
Pennycook became chief executive after Euan Sutherland walked out last year in a row over his £6.6m pay deal over two years. Pennycook said the Co-op was becoming a role-model for how to turn around businesses but said it would be some time before the dividend – known as the divi – could be restored.
“There are no quick fixes. Wouldn’t it be lovely if there were. The damage has been too great and too deep,” Pennycook said.
The four hour AGM was chaired by Allan Leighton, the former Royal Mail chair who is best known for turning around Asda, and was constantly interrupted by hecklers raising subjects from pay to the process used to name three new member nominated directors to the board.
Protests were registered against Leighton’s re-election to the board, as well as Pennycook’s. Some 17% voted against Leighton and the dissent rose towards 30% when deliberate abstentions were included. Some 35% of members voted against Hazel Blears, the former Labour MP, taking up one of the member-nominated directors seats.
Leighton has pledged to hold an election for a fourth member-nominated director in six months and make efforts to hold contested elections for the roles in the future after the Midcountries threatened the Co-op with an injunction over the process this year.
There were two motions on political donations. The one brought by the board failed but the one brought by members, to keep giving £1m a year to the Co-op, passed with a narrow margin.
