The Impact of Governance and Ownership Structures in the Swedish and UK Grocery Retail Market

Purpose of the Report

The purpose of this report is to investigate, understand and compare the governance structure of three democratically governed grocery retail businesses. The businesses are John Lewis Partnership (JPL) in the UK and ICA and Coop in Sweden. The intriguing part is that all three business have significantly different ownership. In the case of JPL the business is owned by its 91,500 employees, ICA is majority owned by its independent retailers representing 1314 stores and Coop is owned by its 3.4 million members of Coop.

The Cooperative model of Corporate Governance

There is a rich literature all the way back to the early 1900s when academics and economists debated the benefits or otherwise of cooperatively owned enterprises (Storey et al, 2014). This paper is concerned with democratically managed Corporate Governance structures in enterprises involved in retailing. Ekberg (2012) provides a review of three retail cooperatives in Europe 1950-2008 which includes both successes and failures. In recent times the John Lewis Partnership, who is owned by its employees through the John Lewis Trust Company, has been debated in the academic literature (Cathcart, 2009, 2013a, 2013b, Paranque and Willmott, 2014; Purnell and Davies, 2012) and in detailed accounts of the origins and thoughts of the founding farther Spedan Lewis (Cox, 2010; Lewis, 1948, 1954). The financial crisis 2008 and public outcry of the dark side of capitalism caused political figures, such as Prime Minister of the UK David Cameron, proposing that a “John Lewis economy” could be part of the answer. Although successful cooperative enterprises can be found the term “degeneration thesis” has been labelled on cooperative enterprises as these have a high likelyhood to fail commercially or the democratic characteristic abandoned (Storey at al, 2012).

Methodology

This study is the pilot study to inform further research into how Corporate Governance impact the performance of democratically managed organizations. It relies on desk research in the public domain such as company annual reports, research reports and the academic literature. The financial analysis is based on information in the public domain which has limited the depth of analysis since the structures of the democratic organizations are surprisingly opaque given the objective of being enterprises. A limited number of interviews with Partners of the John Lewis Partnership including observation at a JPL branch council meeting have been conducted.

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