Central Co-op – creating a sustainable society

Selina Butterfield-Mashoofi is CFO at Central Co-Op. She speaks to World Retail Insights about the company’s business model, and how the retailer is finding opportunities amid challenging economic times. 

Tell us about yourself and about Central Co-op. 
I am an ACA fellow with a 15-plus year career in finance leadership roles and also briefly as a buyer. I have worked for retailers including Amazon, Burberry, Cath Kidston and Very. I joined Central Co-op as CFO in June of this year, which is a society that is independent to Co-op Group. It has over 400 trading outlets covering food stores, petrol stations, coffee shops, funeral homes and florist shops. We generate £1 billion turnover a year and have 7,500 colleagues. 

Central Co-op is very different from most retailers – including the retailers that you've worked for before. How does that uniqueness affect the way you do business? 
We operate as a member-owned, community-based cooperative society and so we are guided by our purpose, which is to create a sustainable society for all. And our purpose is underpinned by the internationally recognised cooperative values, together with our mission to provide a cooperative difference and member benefits, with fully engaged and inspired colleagues who are intent on making a difference to the communities and in the operation of our business activities.  

Those cooperative values cover self-help, self-responsibility, democracy, equality, equity and solidarity. So not that dissimilar to certain purposes and values in some organisations. But globally it's estimated by the International Cooperative Alliance that 12 per cent of humanity is involved in cooperative working practices and Cooperative UK report that cooperatives were more resilient during Covid so it makes for an interesting model. Operationally we gear around a scorecard that delivers to our core purpose and in that scorecard we consider four areas; better every day financial performance, working together with purpose, making a difference to our members and customers and the impact on our communities, such as moving to green energy and self-sufficiency. These are what shape both our short and long-term priorities. 

Customers and retailers are facing many challenges at the moment, particularly the cost-of-living crisis. How are you addressing those challenges? 

The recent challenges have certainly had far-reaching impacts. Rising product costs have meant that a basket of items costs more – or that you get less items for the same spend. Higher food prices may well be here to stay with a decline in food inflation not expected for a while yet, according to the Bank of England's Chief Economist. Equally the Institute of Grocery Distribution forecasts food inflation to decline slowly to 8 to 10 per cent by the end of the year, before returning to zero next year. But slowing inflation is quite different to deflation.  

We have also seen changes in behaviours around eating out versus at-home entertaining and the convenience model, as people's discretionary spend has changed. There have also been societal impacts, such as increasing theft and anti-social behaviour in stores, strikes across certain sectors and gaps in supply.  

At Central Co-op, we have invested in member pricing so that we have brilliant prices across over 100 everyday staples – milk, eggs, butter, loaves of bread. And this is alongside the dividend that we pay to members and the investment we make into community initiatives.  

Continuing to stay close and listening to our members is really important to us; we are doing a piece of research at the moment to really dive into the proposition and understand what their membership means, and the best value that we can create for them.  

We are focusing on providing a welcoming and accessible experience across both our digital and physical journeys; this could include the further rollout of self-checkouts, our FCA-regulated funeral plans website or home delivery through digital partners to allow the convenience and access that our customers want. We are also investing in our colleagues with hourly wage increases exceeding the national living minimum wage – with more to do. And we are focused on young people, routes into employment via debt-free degrees, apprenticeships, work experience and education partnerships.  

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You’ve said food inflation and prices are unlikely to come down anytime soon. How do you foresee the Co-op developing over the coming years to cope with that challenge? 

Retail is a sector with a long history of turbulence and change. In some senses the new normal is just another period in this long history for us to adapt to with the resilience that we have shown many times before. So I would flip the perspective to the opportunities in the sector and how to look ahead.  

First is to double down on customer experience and what matters most to your customers and delivering to your proposition. That will be different across different retailers. At what point in the journey are you going to differentiate from the pack and really stand out? How this plays into the value, or the perception of value, becomes really important at this time where discretionary spend is more squeezed. So that may be something like adjusting opening hours, or it could be ancillary services like click and collect, but will vary from retailer to retailer.  

Second is delivering ease for customers. We look at things like providing sustainable choices where we have assessed the credentials, so the customer doesn't have to do the hard work, or ancillary services that build convenience and comfort to help people go about their day-to-day business.  

Third is investing for the future. Times like this can really encourage a response to squeeze gross margins by reducing the costs. But it is important to resist a one-dimensional urge and think how to grow out and win in these sorts of times too. It could be technology, it could be people, it could be test and learn, or it could be simply bad costs that don't serve. And then investing into capabilities, whether it is people, supply chain or the offer itself. 

And finally, it is important just to understand the levers in your business. We have spoken about resilience, but to have agility, you have got to know what levers you can pull and the elasticity of them. I have to say that as a finance person, but it becomes more and more important as a capability in our teams of having this ability to really understand what matters and then how able you are to actually influence them. 


You’ve already touched a little on sustainability. What is Central Co-op doing to improve sustainability, both in the way that it does business and in its products? 

When our purpose is to create a sustainable society for all, sustainability is far reaching for us at Central Co-op. So that starts from our strategy and it goes through all of our decisions, with customers and members at the heart of everything we do.  

For ranging and operation specifically, we focus on delivering value with cooperative difference. For example, that is growing relationships with local suppliers, offering greater choice and supporting customer health and well-being, continuing to promote ethical and sustainable trading and presenting the best value possible for our members and customers. 

For example, our Malawi range, where 800 Malawi farmers were trained to produce organic fertiliser and planted over 400 coffee trees. That was shortlisted for Retail Week’s ‘Sustainable Retailer of the Year’. We've got eco coffins and caskets, solar powered sites and numerous local projects such as helping schools to identify pathways to sustainability. We have managed to reduce our carbon footprint by 80 per cent since 2011 from a continued focus on reducing energy consumption and from photovoltaic rollout. We have redistributed over 800,000 meals in partnership with Fair Share and we are targeting reinvestment of £350,000 from the carrier bag levy into community sustainable spaces and a commitment to be carbon neutral by 2030. So big ambitions to deliver to over the years ahead. 


Selina Butterfield-Mashoofi is speaking at ThinkTanks on 26 September.