IGD convention 2014
Richard Pennycook
The Co-operative Group’s chief executive, Richard Pennycook, spoke candidly about the struggles of reversing the fortunes of the retailer amid a divided boardroom and a shocking sex and drugs scandal.
Pennycook: “Three days after the Queen’s visit, the roof fell in. We’d had a financial scuffle and we thought that was bad enough, but now we could add sex, drugs and religion to the mix – thanks to our former bank chairman Rev Paul Flowers.
“Our group chair stepped down as a result of the scandal and the entire Co-op moved itself and its business models under the microscope for reviewing. The drama still wasn’t over by the time Paul Flowers finally slipped from the headlines, as we began to deal with our deep-seated governance and management issues.
“We found ourselves subject to a divided and leaky boardroom, with some determined to undermine our efforts of reform and the tough decisions needed to be taken to get us back into shape.
“Even given how bad the headlines were, it turned out that cross-contamination was less severe than you might have expected and, indeed, almost non-existent in our biggest business – food.
“Despite all that was happening to the Co-op brand, our customers had an enormous reserve of good will towards the Co-op. When the chips were down, 150 years of behaving in the right way did stand for something.
“During the crisis we used our food strategy to demonstrate that we were in control of our biggest business and successfully cut through the noise of the crisis to tell customers about new products, better formats and reduced prices.
“Our challenge now is to rebuild the trust and live up to our promise of being a different kind of retailer.”