Ethical Business: Learning from the Co-op

What an honour. This morning I was the first ever customer of a new Cooperative mini-market in Norwich: glad to be accosted by excited balloon waving, sash wearing staff, though slightly unsure about the one squashed into a squelching strawberry outfit.  There are now three Co-ops within a mile of my home.  The Co-op, a not-for-profit organisation, owned by its members and publicly committed to ethical business, is thriving.  Earlier this week the Co-operative group posted a 17% rise in first-half profits.  It has responded to recession with sales of its Simply Value range increasing by 80% and at the same time sales of its extensive fair trade range have gone up 35%, reflecting wider success of fair trade brands.

Ethics are big business. And they are an important driver for growing numbers of new businesses too, many of which unfortunately fail to get the balance right between passion and profit.  So what can idealistic start-ups learn from the success of the Co-op and the fair trade movement?

Quality Ethics on their own are not enough, the product or service also needs to be top quality.  Ten years ago the only local Co-op seemed chaotic and grubby and I gave it a wide berth.  Now it competes on every level, including price and service.  Its ethical values give it a winning edge in a tight market.

A clear message Fair trade is about fair working conditions and terms of trade.  It’s a simple and powerful message, which growing numbers of consumers are prepared to pay a small premium for. In contrast, the organic food industry has suffered from not being clear enough about the benefits of organic food. Focus on nutrition and ‘local’ back-fired as evidence showed little nutritional difference and supermarkets with massive organic food miles. Confused consumers won’t pay more for unclear ethical benefits.

Involvement Both brands work hard to build genuine relationships with customers and suppliers, or indeed members for the Coop.  When fair trade brand Café Direct decided to become a Plc, share offer applications were printed on the packs of coffee, raising £5million from 4,500 investors. It also invests half of its profits into the businesses of its grower partners.

Authenticity US based ‘Whole Foods’ retail chain, started thirty years ago as a vegetarian co-op buying from farmers, selling to students.  Today, it has almost 300 branches and an $8 billion turnover. Its customers are largely left-wing liberals. So when the Whole Foods CEO went public with his opposition to Obama’s health care reforms, it undermined the brand and enraged customers, many of whom joined online boycotts of the Company.

Companies that trade on ethical values need to be consistent and express those values through leadership behaviour, environmental and investment policies and how they treat staff.  Of course they won’t get it right all the time, what is important is the genuine commitment.  So, on this occasion I will forgive the Co-op for stuffing that poor employee into the strawberry outfit, but I might draw the line if it happened again!

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