Co-op pays out £38.1m in 'divi'

The Co-op is run on behalf of its members

The UK's largest co-operative society is to pay out £38.1m to customers under its profit-share dividend scheme - almost double last year's total.

The Co-operative Group said it would pay out 2.63 pence for every point earned across its businesses - from its shops to travel and funeral services.

The dividend scheme has more than 2.5 million members.

The windfall comes after the Co-op reported a 35% increase in profits to £322.7m for the year to 12 January.

The dividend is linked directly to the firm's profits. Before the 2007 relaunch it ran a loyalty card scheme.

"It is only right that our members, who ultimately own and control the business, share in our success," said marketing director Patrick Allen.

"At a time when communities are becoming increasingly dominated by a handful of large and impersonal businesses, we are showing consumers that being a member of the Co-operative is a totally different experience from being just a loyalty cardholder with another retailer."

Eyeing rival?

The profit-share scheme, relaunched in 2006, was a return to the "divi" that ceased 30 years ago - with customers paying £1 for membership.

The Co-operative Group was formed from the merger of the two largest societies, the Co-operative Wholesale Society and Co-operative Retail Services, in 2000.

But its roots go back to the Rochdale Pioneers co-operative of 1844, whose founding tenets included the idea of sharing profits according to purchases.

This idea developed into the "divi" or dividend, a cash-based loyalty payment which became a popular form of saving for millions of shoppers.

The paper-based system was phased out by some of the larger Co-op groups in the 1960s and 70s because it was expensive to operate, but is still used by many of the more than 30 remaining independent Co-op retail societies.

Co-operative retailers had a 20% share of the British grocery market in the 1950s, but have lost ground to supermarket giants such as Tesco, Sainsbury's and Asda.

The Co-operative Group is, however, still the UK's fifth largest supermarket.

In April this year, the Co-op said it was in talks about buying rival Somerfield.