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Co-op goes back to its roots with move into academy schools | Business

Young people in Co-op branded uniforms are chatting among themselves as they walk along brightly painted corridors to work – but this is not a grocery shop or warehouse.

It is the Co-Op academy Manchester, a secondary school that forms part of the mutual’s latest effort to put itself at the heart of local communities.

When a bunch of young weavers in the Rochdale Pioneers Society opened their first grocery store on 21 December 1844, their hope was to promote ethical trade and share profits with their members and community. It was their response to a divided country rocked by economic problems with the poor suffering.

Exactly 175 years on and the Co-op says it is taking inspiration from those founder members, not only through selling Fairtrade goods and funding local charities through its membership scheme but also by putting itself at the heart of communities through the sponsorship of 24 academy schools.

Steve Murrells, the chief executive of the Co-operative Group, says that as many as 40,000 kids at 40 schools will be wearing a uniform sporting the company logo by 2022.

The mutual, which had a reading room above its first shop so that Co-op members could educate themselves, is now planning to become one of the largest multi-academy trusts in the country.

“It goes back to where it all began when school classrooms were above the shop,” Murrells says as he tours the sharp modern buildings of the academy in Blackley, Manchester. “A hundred and seventy-five years later we are refocusing back on that very much within the market of education. There is a full end-to-end solution for them with a modern twist.

“We are taking things done in the past and making them modern and relevant. Schools and education are something we are quite uniquely placed to do.”

Some may question the basis of the academy system, which gives businesses sway over schools funded entirely by the state, taking them out of local authority control where resources and best practice can be shared. But Murrells says the Co-op can give education a multimillion-pound boost through the use of its executives’ expertise and contacts.

“We are trying to put more of the wealth we create back into communities,” he says.

In a fast-changing market where new skills are in demand, Murrells suggests the idea that education is the sole responsibility of the government doesn’t make much sense. He says the Co-op’s work with schools is part of a wider aim to help foster strong communities.

“At a time when the country is in disarray, divided between the haves and have-nots, the country needs more Co-ops showing doing good is good for business,” says Murrells.

“Inequality is really opening gaps between the haves and have-nots in communities in a way it has not had before. Brexit has distracted the government from focusing on communities. We are focused on communities and that can only be helpful.”

Steve Brice, the principal of the academy in Blackley, says the Co-op’s contacts and expertise have helped the school get better value for money on a recent expansion project, helping it install a theatre, climbing wall and gym. He says its links with the mutual also offer pupils high-quality work experience and access to apprenticeships, which are valuable in a community challenged by lack of resources.

Six years ago, schools wanting to raise children’s aspirations were hardly likely to be knocking on the Co-op’s door. The mutual’s name was mud after a period of mismanagement and missteps led to the near collapse of its now sold bank under a chairman accused of taking class A drugs and paying for sex.

Since then, the Co-op has trimmed down, also selling off farms, pharmacies and travel agencies to focus on a revamped grocery chain, insurance and funerals. The retailer is outgrowing many bigger grocery stores with its mix of fresh veg, Fairtrade goods and modernised own-label food, such as tempura prawns and woodfired pizza.

Operating profits rose 44% to £78m in the latest results for the half year to the end of July as group sales rose nearly 12%, although pretax profits were hit by higher finance costs.

The group is also reviving its image with campaigns on loneliness, modern slavery, knife crime and mental health

Murrells is also aiming to broaden the Co-op’s appeal with pop-up stores at music festivals including Glastonbury and franchise outlets on university campuses which he says are going “phenomenally well”. Franchise outlets will be a key part of the group’s expansion plans with the aim of opening 150 franchises by the end of 2020, up from seven at present.

“Two years ago we spread ourselves too thin, trying to do too many things,” he says. “In the last 12 months we have started to articulate a clear vision for the Co-op which centres around our point of difference. We have been able to work out what’s really meaningful and important for us to do in communities to play a major role.”

He says the Co-op grocery chain’s stores are partly protected from wider difficulties in the retail industry because they are mostly based in local communities rather than on high streets, which are suffering from falling numbers of visitors.

Murrells expects the Co-op to trade well over Christmas but says the festive season is likely to be “bloody hard” for retailers in general amid the fallout from Brexit and the general election. “The mood of the country is still low,” he says.

The Co-op’s history as community champion will help it stand out in difficult times, he says. “It’s about recognising the community needs us. Our ability to put real support and funding back into local life and the things people want us to do that government has been unable to focus on.”

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