Aldo Soldi President National Association of Consumer Cooperatives

1. National Retail Consumer Society Conference 2010 The uniqueness of Consumer Cooperatives: the Italian case Aldo Soldi President National Association of Consumer Cooperatives Swindon, 28th February 2010

2. Dear friends cooperators, Thank you very much for having invited me. My report will briefly illustrate the situation of consumer cooperation in Italy trying to focus on its strengths and weaknesses. It is a success story and I believe that our success is strongly based on the uniqueness of cooperatives compared to other businesses on the market, on our different beliefs and on consistency in our daily activities. The uniqueness of Consumer Cooperatives: the Italian case

3. The uniqueness of Consumer Cooperatives: the Italian case

4. The uniqueness of Consumer Cooperatives: the Italian case

5. The uniqueness of Consumer Cooperatives: the Italian case

6. COOP IN 2009 MAIN ECONOMIC ORGANIZATIONAL FIGURES DISCOUNT 4.0% SMALL STORES 7.8% 12,744 BILLION € TURNOVER IN 2009 SUPER 47.0% HYPER 41.2% variation % 2009 2008 Cooperatives 120 124 -4 -3.2% 1,440 1,425 Stores +15 +1.1% sqM (x 1000) 1,705 1,685 +20 +1,2% 7,200 6,955 Members (x 1000) +245 +3.5% Employees 57,100 56,500 +600 +1.1% SALES 12,744 12,631 +113 +0.9% (€.000.000)

7. THE SALES NETWORK OF THE 9 MAJOR GROUPS IN 2009

8. MARKET SHARE - Hypermarkets and Supermarkets % June 2009 Grocery + Non food + Fresh products • The first two are cooperatives • Coop: for consumers • Conad: for retailers

9. FORECASTS FOR 2010 For 2010, Coop estimated an increase in turnover of nearly 3%, thus confirming an ambitious development plan with the intention of increasing its market share. Despite the economic crisis that was strongly felt also in Italy, development will continue: in the various different channels (discount, super, hyper) and throughout the national territory.

10. STRENGTHS Low prices Quality and safety Environmental protection Protecting member savings National and international solidarity Relations with members – participation Relations with the territory Focus on young generations Focus on its human resources

11. STRENGTHSPrices Coop has always been committed to protecting the purchasing power of its members and of consumers, the more so in difficult economic situations for families as the one of the last few years. In the last five years, Coop registered an average inflation rate significantly lower than the national general figure, since it did not add the high production increases to consumer prices. In 2009 Coop based its low price and uniqueness policy on Coop brand products and offered throughout the year over 100 important products with a 20% discount.

12. STRENGTHSProtecting consumer health and safety • 3,990,000 tests were carried out in 2008 to guarantee quality and safety of own brand products • 433 inspections were carried out with suppliers of own brand products to guarantee compliance with specific conditions that ensure exchange of know-how and experiences and respect of Coop values in products

13. STRENGTHSProtecting consumer health and safety • The Quality Project Through the Quality Project Coop guarantees that each product sold is safe and healthy (not only own brand products). Coop particularly monitors the most difficult products, the methods for processing and preserving internal fresh products.

14. STRENGTHS Contributing to environmental protection

15. STRENGTHS Contributing to environmental protection • Brand products: focus on saving resources and on reducing pollution during their entire lifecycle. • Stores: they are planned based on the most innovative solutions aiming at reducing their environmental impact. • Education and training of employees, members and consumers as well as the young generations. The entire Coop system aims at environmental protection and this is achieved through specific daily activities. Among these:

16. STRENGTHSFavoring member involvement and protecting their savings • Members lend their money to Coop and not even one euro was lost by members during the world financial crisis. • Thanks to their members who give up the distribution of profits, consumer cooperatives have significant economic assets to be used for development and for social purposes.

17. Coop develops the solidarity spirit of consumers and members, their families and employees through organizing their free time and promoting cultural, leisure and socially useful initiatives. STRENGTHS Solidarity

18. STRENGTHSLocal solidarity • The “Buon fine” project (“Useful in the end”) aiming at recovering unsold products in favor of Bodies, Associations, etc. • Home delivery of grocery for the elderly and disabled people. • Education and training courses in collaboration with social cooperatives, aiming at identifying hiring options for people with disabilities.

19. Coop supports developing countries and socially needy communities also through the promotion of fair trade. STRENGTHS International solidarity

20. Stop world poverty (2008-2010) A three-year project to favor development in southern countries STRENGTHS International solidarity • 14 projects in 14 different countries (Africa, Latin America, Asia) • The projects were selected and evaluated by a specific committee • Over 1,400,000 Euros were granted (collected by cooperative members) • Nearly 100,000 people are benefiting from these projects

21. STRENGTHS Coop Solidal Products Coop contributes to developing fair trade in favor of small producers from southern countries and offers them autonomous development opportunities, guaranteed fair prices, favorable preliminary financing, long term purchasing contracts. • 90 Solidal Coop products (29 more compared to 2008)

22. STRENGTHS Member relations and involvement Relations with members are deeply rooted, nearly 70% of sales occur with members.

23. Participation and democratic organization: members appoint their territorial representatives, organize social activities, take part in the most important decisions regarding their cooperative’s life. Information: through a monthly magazine that is home delivered (now also published on the Internet). It includes information regarding the cooperative, consumption and consumer rights. STRENGTHS For members only

24. In the stores: areas devoted to information exchange and dialogue Frequent offers of discounted products Collecting points: they are distributed on the basis of the volume of purchases and are used to receive gifts or coupons or are allocated to solidarity initiatives STRENGTHS For Members only • Member loan: it is more advantageous for members compared to other similar savings plans • Financial products to support the needs of families (loans, housing loans, financing, etc)

25. Goods and services at favorable prices thanks to agreements entered between the cooperative and external bodies Approved by members! Binding opinion by member representatives before marketing any Coop brand product STRENGTHS For Members only Two novelties: • An online community on specific issues. Successfully tested with an energy saving initiative for families. It will be used for other initiatives. • Vote for your store. With an opinion based on prices, services, customer service, etc. Great member involvement when it was launched (February 2010)

26. STRENGTHS Involving citizens By establishing local contacts with suppliers, associations, public authorities and citizens, Coop contributes to planning and developing shared activities having a social, cultural and sports nature. Coop represents a social cohesion element in the territories where it is present.

27. WEAKNESSES Governance mechanisms are slow and avoid responsibilities Complex decision making processes High total costs

28. ANSWERS Strengthening our Governance

29. ANSWERSA new Governance Consumer cooperation is divided in three fundamental bodies: cooperatives, the National Association of Consumer Cooperatives (ANCC), Coop Italia. The ANCC has been entrusted by the cooperatives with political and official representational powers, to carry out controls and assessments also with reference to consistency with values and business models. ANCC coordinates national policies in particular those relative to employees and members.

30. ANSWERSA new Governance Coop Italia: is the consortium that helps and supports cooperatives in their typical trading activity; it mainly carries out the following: • Joint purchases • Marketing and commercial communication • Brand products Coop Italia is managed by a dual system in which the Presidents of the 10 major cooperatives form the Supervising Committee and the Directors of the Consortium form the Management Committee with specific duties.

31. ANSWERS Reviewing strategic choices and growth models, including consumer needs and their trends. Within this context: • Hypermarkets continue to be a driving force • Development of neighborhood stores • Discount stores are slowing down

32. ANSWERS Coop’s assortment is increasingly oriented towards new consumer trends and lifestyles: private labels, discount products, ecological products as well as quality products with prices that are on average high (focus on consumption as a consequence of the crisis).

33. ANSWERS NORTH WEST DISTRICT ADRIATIC DISTRICT Three districts were established to concentrate policies and services, the next step is to unify the major cooperatives: work is in progress! TYRRHENIAN DISTRICT OTHER

34. ANSWERS Reduced costs for managing the sales network (labor, energy, building costs). Reduced transportation costs for products in the network (transportation, head office, commercial, system costs).

35. COOP BRAND PRODUCTS Coop Brand Products express the Cooperative Mission Coop Brand Products are good - safe and quality products – affordable – environmentally-friendly - ethical Good products: they are approved by the members

36. COOP BRAND PRODUCTS Safe and quality products: • Limited use of chemicals, no colorings, reduced use of additives, pesticides and animal drugs • “Precautionary principle” applied to GMOs • More restrictive health rules as provided by law • Definition of Guidelines with suppliers to increase guarantees and the safety level

37. COOP BRAND PRODUCTS • Ethical: SA 8000 • Environmentally friendly: reduced impact throughout the product’s entire lifecycle, reduced packaging, organic farming, products made of 100% recycled paper • Affordable: -25% compared to leading market brands (important above all in periods in which families are affected by the economic crises)

38. COOP BRAND PRODUCTS Coop brand products are 2006 and represent over 20% of Coop’s turnover. Both the number of products and the turnover are increasing.

39. SUPPLIERS OF COOP BRAND PRODUCTS Selected on the basis of strict criteria, suppliers must comply with specific agreement conditions directly managed by Coop Italia. For Coop, suppliers must: respect laws on labor, human rights, environmental protection, all over the world. Relations between Coop and its suppliers must be characterized by ongoing contacts, by exchanges of know-how and experiences to guarantee compliance with Coop values in all products.

40. HUMAN RESOURCES Coop is committed to strengthening and favoring its employees’ training and growth aiming at both professional quality and at sharing cooperative values.

41. THE COOP SCHOOL The school was created by cooperatives with the objective of spreading cooperative culture among employees with highest responsibilities. Its activity: • Training: the school represents a reference point for the whole system • Research and innovation on relations with the staff • Internal communication

42. NEW GENERATIONS Relations with the young generation is a fundamental element. With its projects for Responsible Consumption, Coop has been committed since 1980 to train active and responsible citizens who also have a critical and civic attitude. Intergenerational aspects are at the basis of the creation and development of the cooperative movement.

43. THE LATEST INNOVATIONS Coop bookshops There are presently 23. They are managed by young specifically trained shop keepers and are innovative in their proposals and services offered; book presentations and cultural events are organized in these bookshops. They interact with the territory, society, young generations and schools.

44. THE LATEST INNOVATIONS Pharmacies 95 Coop Health Corners are present within Coop stores. Over 2,100 drugs and over the counter drugs are sold. The cost of these drugs is 22.5% lower than on average compared to traditional pharmacies. 280 pharmacists were hired.

45. THE LATEST INNOVATIONS Coop Voice The first Italian virtual mobile operator, created in 2007 based on an agreement between Coop and Telecom Italia. Reserved to Coop members and their families. Coop Voice is low cost, easy, fast and transparent.

46. COOP IS DIFFERENT After having come this long way, we should ask ourselves the following question: does a cooperative uniqueness still exist? I believe so, it exists in our specific daily activities. The cooperative presence is useful to the market, it is an element of efficiency, transparency and democracy. Capital-based companies do not represent the only way of doing business: pluralism is useful and within it cooperation plays a very important role.

47. Within the economic and social context, it is often difficult to maintain our own uniqueness. However, Coop strength and success are strictly connected to the coherence between its values and its organizational and entrepreneurial capacity. We must succeed in maintaining what is very important for us: TRUST on the part of members and consumers. Trust that we achieved with decades of strong commitment and work. Trust which is very deeply rooted, which is an asset not only for us but for the entire country. The uniqueness of Consumer Cooperatives: the Italian case

48. Thank you for your attention! The uniqueness of Consumer Cooperatives: the Italian case