Fensmark Brugsforening, one of Coop Danmark’s largest cooperative associations, has decided to leave the Danish grocery leader. Instead, the association is to become a wholesale customer of competitor Dagrofa starting next year, the Danish retail magazine Dansk Handelsblad writes. Jens-Christian Frederiksen, the chairman of Fensmark Brugsforening, claims the switch will give it greater flexibility and equip it to face the many ongoing changes within grocery retail.
Two of the stores will be converted to Meny supermarkets and one to a Letkøb minimarket, but the association and its stores will still remain in the hands of its members.
According to Dansk Handelsblad, many of Coop’s 345 independent cooperative associations would like to see a better franchise deal with the central organisation than the one currently in place. The 140 association-owned Superbrugsen stores have even given its chain association, SBK, a mandate to negotiate on this.
A shopper-owned association joining a chain of independent merchants like Meny is something you don’t see every day. The clash between the different modes of operation at wholesaler Dagrofa and its new customers could create some challenges. Also, no longer receiving central support from Coop Danmark entails great risk for Fensmark Brugsforening. This really goes to show the frustration that it must feel with Coop Danmark.
It’s understandable that some associations have grown restless with the central office and its aggressive path of change in recent years. Overthrowing much of the assortment, revamping all its formats, heavy price reductions on organic and an expensive new implementation of SAP Retail software are some examples. These initiatives have required investments that have impacted the bottom lines of both the central organisation and associations alike.
As LZ Retailytics numbers show, all Coop Danmark’s Danish banners experienced negative growth in 2016 and given the high level of investment, this is bound to have created some dissatisfaction among the ranks. The departure of one association now puts more pressure on Coop Danmark in negotiations with the others. This piles yet another problem onto the retailer’s plate, but it could also be a wake-up call to take association needs more into consideration in future. It’s likely that a compromise will be reached with those that remain and that we won’t see many other associations leaving Coop. After all, the parties are too dependent on one another for that to happen.