Co-op seeks supply chain savings

9 March 2000
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09 March 2000 | Liam O'Brien

A crackdown on supply chain costs is planned when the Co-operative Retail Society (CRS) and the Co-operative Wholesale Society (CWS) merge in April, writes Liam O'Brien.

The combining of the two mutual businesses is on course, following approval from a special meeting of the CRS's regional committees last week. It will bring together more than 1,000 stores and create an organisation worth £4.7 billion.

Although job losses are expected to be limited to no more than 500 of the 50,000-strong workforce, the new business aims to achieve savings from its purchasing spend.

A CWS spokesman said: "The case for a merger is compelling because huge savings can be made throughout. The new business will be more effective and efficient and will have a more competitive stance."

Retail analysts agree that considerable savings could be made. The cost of bringing products to the shelf at the Co-op is said to be higher than its competitors because of the group's weaker purchasing clout.

An analyst at stockbrokers Philips & Drew said: "The company is pretty inefficient and even its retail side doesn't rate the supply side very highly."

The merger, which has already been attempted four times, has been hastened by the Co-op's steep decline. It has seen its marketshare in food retailing drop from a quarter to around 5 per cent.

SMmar2000

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