Case Study - Sherburn-in-Elmet Co-operative Store

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A co-operative is defined by the International Coo-operative Alliance as 'an autonomous association of persons united voluntarily to meet their common economic social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise'.

The first successful co-operative shop opened in Rochdale, Lancashire in 1844 because local people were tired of being exploited by private shopkeepers when buying basic foods. Customers of the shop were invited to become members of the co-operative and work in partnership to run the business openly, honestly and democratically for the benefit of the wider community. Members shared the profits from the shop. Since that time the co-operative movement has grown tremendously. The Co-operative Group now includes over 1,700 food stores, 500 funeral branches, 380 travel shops and 300 pharmacies as well as the Co-operative Bank and Co-operative Insurance Society. Co-operatives don't exist to make a profit for shareholders but their priority is to provide the best possible service for members and to share savings with them.

Sherburn-in-Elmet Co-operative Store is one of 19 food stores operated by Leeds Co-op in and around the city. The Sherburn-in-Elmet store is a village shop that is larger than the average Leeds Co-op store. It is six years old and has just undergone a refit to help it to attract more customers. The store is open 7am - 10pm Monday to Saturday and 10am - 4pm Sunday. As a focal part of the village the store has a lot of loyal customers and is especially busy during school hours as it is situated close to the nearby primary school.

As a village store it attracts many local people and one of the features of the stores is that the shop assistants are familiar with most of the customers and understand their needs. The store attracts between 9,500 and 10,000 customers per week who spend on average £8-£9 per visit. The customer visits are a mix of the weekly shop, topping up of essentials and newspapers. The store has a number of competitors, including Tesco Express in Sherburn, Morrison's in Selby and Sainsbury's in Tadcaster.

The Co-op is often perceived to be old-fashioned and expensive but neither is the case. In recent years Leeds Co-op has decided to concentrate on the convenience store market rather than superstores because it felt that it fitted better in that area of the market. The Sherburn store is slightly larger than others because the village is growing, as a number of new houses have been built in recent years. It is also competing with a Tesco convenience store in the village.

Leeds Co-op is part of the Co-operative Retail Trading Group (CRTG). The CRTG operates as a club and so has certain rules. CRTG advises store managers what should be stocked and brings the financial savings of buying in bulk to Leeds Co-op. CRTG has carried out research in to what items should be sold and gives feedback to each store. CRTG regularly checks stores to ensure that store managers are following their rules although there is a certain amount of autonomy for store managers to ensure that they meet the needs of their local customers. Store managers allocate a certain amount of space to a product range, for example biscuits, and then ask CRTG for a planogram of how to set out the shelves. They may ask for a plan for 10 metres over 5 shelves when in reality they will be using 12 metres. This will allow them to stock more of the popular items in their particular store. In the Sherburn area home baking is extremely popular so the store stocks more of these products than would normally be the case.

Stores cannot discontinue products without approval but if they can prove that an item, for example bourbon biscuits, does not sell well at their store then managers can ask for that item to be taken off their stock list. Managers are also able to ask for certain locally popular items to be stocked. For example if the store would normally stock only short spaghetti and they receive a number of requests for long spaghetti then this information is passed to the regional managers for approval.

Each store manager decides where in the store product ranges will be located. In Sherburn wines and spirits are a high seller so the manager decided to put them in a central location with special lighting to highlight the stock. Gondola ends are often reserved for promotions. CRTG generates promotions of items and send packs to stores with details of them. Some companies pay CRTG to have their products placed at eye level on gondola ends. The local stores must comply with these orders as the companies carry out random checks and CRTG would incur a financial penalty if the products are not in place. If it is felt that the product would be better sited in another part of the shop the local manager can put it there but it has to be in addition to the promotion spot. For example if a crisp manufacturer wants multibuy bags of crisps on a gondola end but the manager knows that they sell better when near alcoholic and soft drinks, store staff can put them there so long as the products are also displayed on the gondola end as agreed.

Sherburn-in-Elmet Co-op orders all stock manually. The store used to have an automated system but has now reverted to a manual system because it is much quicker. The store manager explained that the manual system is better for his store because he is in control and can take account of promotions and changes in the weather when ordering. The store submits an order every day. It receives dried goods deliveries 3 times a week from the CRTG depot in Barnsley. The store has "slow lines", such as toiletries, which may take a long time to be sold to customers and "fast lines", such as baked beans, which have a quick turnover. The store orders goods on Tuesday, Thursday and Saturday that are delivered on Wednesday, Friday and Monday respectively.

The Leeds Co-op is currently reorganising its "slow lines" distribution network and a local depot is due to close in the near future and all goods will then come from Coventry. The store receives fresh goods such as yoghurts, meat and cheese from Associated Co-operative Creameries in Ossett each day. Bread comes direct from suppliers such as Warburton's. The store has a back-up chiller area at the back of the store to temporarily keep fresh food, which cannot be fitted on the shelves immediately after delivery.

The store manager is accountable for waste. To ensure that the majority of items ordered are sold and to reduce waste store managers have the authority to reduce prices on items that will shortly be past their sell buy date. The waste target for Sherburn in Elmet Co-op is 1%, which the store normally beats.

The Co-op organisation has a reputation for its ethical stance and is very proud of its involvement in the Fairtrade movement, which fits in with the ideals of the co-operative movement as a whole. Fairtrade covers human rights and ensures that farmers receive a fair price for their goods. It started in 1992 when the Co-op became the first major retailer to stock Café Direct coffee. Since then it has continued to increase its range of Fairtrade products as well as introducing its own brand of fair-trade goods. Co-op stores now stock over 100 items of Fairtrade goods including: wine, chocolate, fruit, footballs and Christmas crackers. The Co-op feels that it is involved for the right reasons not just to make money. In the case of Fairtrade wine, the Co-op not only pays the growers a fair price but also at the time of purchase. This means that the growers can plan ahead. Nationally the Co-op is involved in Fairtrade Fortnight during which stores highlight the goods and discount the products to attract more buyers. Local stores promote Fairtrade products by holding tasting sessions through a local schools programme. Staff take items to schools for students to sample and they try to encourage teachers to include the subject of Fairtrade in their lessons. The price of Fairtrade items is fast becoming more comparable and competitive with general goods.

The Co-op also takes an ethical and moral stance with other items. These decisions may harm them financially but the company believes that it should uphold its values. Examples of this stance include not stocking alcopops because of a concern about teenagers drinking them to excess and not stocking Cape apples during the apartheid regime in South Africa.

Sherburn-in-Elmet Village Co-op Questions

1. Leeds Co-op is a member of which group?
2. Why might Leeds Co-op have taken the decision to concentrate on the convenience store market?
3. Why do manufacturers pay for their products to be sited on gondola ends?
4. Why do the Co-op managers prefer to have a manual ordering system?
5. What other items may the Co-op consider it unethical to stock?
6. When did the Co-op become involved with the Fairtrade movement?
7. What is a planogram?
8. Why are fresh goods received every day?
9. What are the basic principles of Fairtrade?
10. Give three examples each of "fast" and "slow" items?

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