Britain's earliest loyalty promotion by a major retailer, a cashback dividend scheme first launched before World War One and popularly known as ‘the divvi’, is to be resuscitated by retail and banking giant, the Co-operative Group.
News of the revived divvi accompanied announcement by the group of a robust 48% uplift in operating profit– the best performance for many years by the group, which is seen by many as a sleeping giant capable of challenging for the nation’s number one retail slot.
Operating profit hit £164.2m ($241.29; €262.99) in its fiscal year ended 12 January. Although the Co-op is not a publicly quoted company, on an equivalent basis its pre-tax profits rose 15% to £150m. A massive £107.5m of this sum was contributed by the Co-operative Bank. Total group sales rose 4% during the year to £5.4 billion, with food sales leaping by 6.3% to £2.4bn.
Says group chief executive Sir Graham Melnmoth: “We now have a clear sense of co-operative purpose which chimes with the times and is increasingly commercial. It is appropriate that we start now preparing for a return of a true members' dividend.”
The divvi, which was discontinued in 1976, is unlikely to be relaunched until 2004 when it will replace the group’s current discount loyalty card. All Co-op members will be entitled to participate in the scheme.
Sir Graham summarised progress since the merger last year of the Co-op’s two disparate units – the Co-operative Wholesale Society and Co-operative Retail Services. “Following the merger ... the group wiped out inherited losses [from the retail services] of £54m [and] absorbed merger costs of £23.2m.
“In 2000, we stopped the [cash] bleeding and held our profits. In 2001, we pushed up trading profits and drew on benefits and synergies of integration.”
Data sourced from: BBC Online Business News (UK); additional content by WARC staff