Co-op passes the financial test but what about its much vaunted values?

The latest set of results are impressive but this business isn't only judged by reference to its profits

The Co-operative's strategy of focussing on convenience stores like this one has been a success (Alamy)

The dark cloud over much of the retail industry hasn’t got as far as the Co-operative Group, which will have aroused the envy of its peers with its latest results.

The latest financial year (to January 5) saw it serving up a 14 per cent rise in revenues and a 4.4 per cent uptick in food sales at stores open at least a year. Most of Britain’s grocers, with the exception of Aldi and Lidl, would be more than happy with half that.

The days when there were very real questions over whether the group could survive are receding into the rear view mirror, but that doesn’t mean the organisation is resting on its laurels.

Last year saw the acquisition of wholesaler Nisa, which has given the group a strategic shot in the arm.

CEO Steve Murrells was also keen to talk about the group’s future interest in home delivery this morning, which is where much of the rest of the grocery market is finding growth.

If the Co-op takes the plunge, however, it plans to turn the model on its head, relying not on the very big basket sizes the existing players need to cover their costs, but on a smaller scale convenience model in keeping with the group’s highly successful convenience store based grocery business.

A range of initiatives are being trialled, including the use of robots in Milton Keynes, and partnering with a delivery company to offer an electric bike based service in London.

One of the things that characterised the Co-op in the bad old days was how far the behaviour of its management was from the community values it has long espoused.

The business has been keen to stress how that’s changed, trumpeting its sponsorship of academy schools, investing part of its pension fund into social housing, the funding allocated to community projects. It’s the return of your caring, sharing and cuddly Co-op.

This has only been facilitated by its rebirth as a successful business. But the group should still have a care.

Take the convenience delivery model. It will only be pursued if it can pay for itself, which is only right. But if it is, and if it involves the group becoming involved with the gig economy to pursue those cycle based deliveries London, then how does that align with co-operative values?

Then there is the funeral business, which will be part of a Competition & Markets Authority investigation into the entire sector. It was a notably gloomy part of the results: revenues fell. The CMA is concerned that grieving families are being ripped off, pointing to above inflation price rises across the sector. There is nothing caring, sharing or cuddly about them.

Murrells says the Co-op is responding, offering cut price funeral plans and being transparent about charges when it comes to those after a more traditional (and expensive) ceremony. He says the group “welcomes” the CMA’s interest. But that’s what they all say.

The investigation could also serve up a challenge to those values.

The group is charging ahead when it comes to financial performance. But that isn’t the only way this business is, or should be, judged.