The Co-operative Group - Dividend and Membership Scheme

Dividend and Membership Scheme

The idea of co-operative trading revolutionized food retailing with the dividend, often known as "divi", and the "divi number" became a part of British life. The way in which co-operative retail societies are run for the benefit, and on behalf of their members sets them apart from their modern-day competitors. The dividend is a financial reward to members based on each member's level of trade with the society. The distribution of profits on the basis of turnover rather than capital invested is a fundamental difference between a co-operative and most private sector enterprises.

Historically, members' sales would be recorded in ledgers in society's stores and at the end of the collection period a proportional payment would be made to the member. As the societies grew, and the number of members increased, the method of using ledgers became cumbersome. As a solution, some societies, including Co-operative Retail Services, issued stamps to members for qualifying transactions. Members collected stamps on a savings card and, when the card was complete, would use it as payment for goods or deposit into their share account.

By the late 20th century the group's predecessors and then the Co-operative Group no longer paid true dividend as it had become a drain on limited resources, although several independent societies (such as Anglia Regional) continued to do so. In the mid 1990s a loyalty card scheme, in the style of the Tesco Clubcard, was introduced which used the dividend brand. These loyalty cards were inspired by the co-operative dividend but were little more than marketing exercises and a way to gather useful customer information. Co-operative customers, not just members, could sign up and receive a swipe card to record purchases with vouchers sent out twice a year which could be exchanged for cash or goods.

In September 2006 the Co-operative Group relaunched "true" dividend whereby a proportion of the profits of the Co-operative Group is returned to members. To emphasize the change, the scheme is now called The Co-operative Membership and members earn a "share of the profits". New members are recruited by allowing them to deduct the refundable subscription for a £1 share from their first dividend. Members can collect points to increase their share of the profits by using the services provided across the whole family of businesses. In 2008, the dividend almost doubled to £38 million, equivalent to 2.63p per point (one point being earned for each £1 food purchase), reflecting an 8% increase in underlying profit.

Group membership increased sharply in the first year after the relaunch, to 2.5 million with many more young people who have an affinity with the co-operative values and principles attracted to join.

In 2007, the Oxford-based Midcounties Co-operative joined the group's membership scheme allowing its members to earn dividend at Co-operative Group stores and vice versa. It was the first independent co-operative to adopt the new Co-operative branding. Since then, other independent co-operatives have joined the reciprocal membership dividend scheme, including Anglia Regional Co-operative Society (2008), Southern Co-operatives (2009), Chelmsford Star Co-operative Society (2009) and Midlands Co-operative (2010).