Which way now?

Which way now? - Its core product is in decline, and attempts to diversify have failed. Now the Consumers Association needs to find a new role. Stephen Cook reports.

by Stephen Cook
Last Updated: 31 Aug 2010

Its core product is in decline, and attempts to diversify have failed. Now the Consumers Association needs to find a new role. Stephen Cook reports.

You may not know it yet, but National Consumer Week is coming your way Later this month, pressure groups, lobbyists and campaigners will swing into action and the nation's thoughts will turn to the getting of value for money and the improving of statutory rights. For nearly half a century, one such organisation has stood head-and-shoulders above the rest, championing the rights of the downtrodden shopper and earning itself a special place in British society: the Consumers Association (CA), and its magazine Which?

Over the years it has tested everything from salad-spinners to wheelbarrows, and campaigned against abuses such as unfair contracts and extortionate car prices. It was started in a converted garage in east London by the late Lord Young of Dartington, one of the 20th century's great social innovators, and reached its heyday 20 years ago, when three-quarters of a million people were subscribing to the magazine so that they could flick earnestly through its pages when the time came to buy a music centre or replace the fridge. Since 1995 the association has had the formidable Dame Sheila McKechnie as director, and she's tackling everything from genetically modified foods to the financial services industry, even the giant electrical retailer Dixons. And Which? has great power: Nikon's Coolpix 3100 digital camera saw a 1,000% rise in sales month-on-month after being named as a best buy in the magazine.

This impressive track record means that most people agree automatically that the CA and Which? are a Good Thing, verging on a revered national institution, so criticising them feels a bit like rubbishing the Red Cross or suggesting that Mother Teresa was only in it for the money. But the fact is that the CA (the core campaigning institution, which is a charity) and Which? Ltd (the charity's business arm) have been going through a wobbly period in recent years. Like many other organisations, they were seduced by the dot.com bubble into peripheral activities that don't look so good in hindsight, and are now trying hard to get back on track, develop the things they know they're good at and make up for lost time.

They are even considering changing their name. McKechnie calls it 'going back to our knitting'.

What made the CA vulnerable to such seduction can be traced to the shifts in product quality, consumer behaviour and competition over the past 20 years. Partly as a result of the CA's work, consumer protection law has improved and the things we buy have generally become cheaper and more reliable, with the result that buyers are probably less concerned than they once were about doing their homework to avoid being sold a pup. In the past decade numerous magazines have been launched that test and evaluate everything from cars to personal computers, do it reasonably well, and can be bought from a newsstand whenever you need them for less than pounds 4.

Which?'s response to this has been to stick stubbornly to its traditional formula: the only way to buy its information is by annual subscription of pounds 75 for the magazine or pounds 93 for Which? Online, so you get lots of material you might not be interested in. Add to that the general decline in membership organisations, and the result has been a slide in Which? subscriptions from 683,000 10 years ago to 511,000 now, a fall of almost 25%, with a compensating growth to only 68,000 in people taking Which? Online.

The rise of the internet and the dot.com boom must have seemed like a heaven-sent opportunity to find new ways of replacing lost revenue so that the testing and campaigning could continue as before. Enter Taxcalc, Which? Web Trader and carbusters.com. Taxcalc, which charged a fee to help people with their taxes, was rapidly wound up when the press ran stories about a hacker obtaining customers' credit card details: McKechnie says this was the most embarrassing episode of all. Which? Web Trader, which gave Which? approval to selected web trading sites, helped more than 3,000 people with complaints, but eventually had to be closed because it proved too expensive to vet sites satisfactorily. Carbusters.com was higher-profile, but eventually also blew up in the CA's face.

When people began to dodge high UK dealer prices by using the internet to buy cars from Europe, the CA didn't confine itself to throwing its weight behind the campaign for lower prices in this country: three years ago, it started carbusters.com to help people make their purchases, arguing that the public didn't yet trust most other internet outfits. The difficulties really began after carbusters.com was sold to another company and put into administration soon afterwards, leaving 2,000 customers stranded without their deposits.

The CA no longer had legal responsibility but did the decent thing and helped them out, taking losses of pounds 700,000. 'This was a frequent topic for discussion at our meetings' was the classic understatement from Michael Moore, chairman of the Which? Ltd board, in the latest annual report.

McKechnie says these attempts to help consumers with what looked like the new electronic shopper's paradise, including a short-lived CA credit card, are part of a policy that has been ditched. The only survivor of those times is the increasingly successful Which? Online, the magazine's e-version, which also gives subscribers the content of CA books such as The Good Food Guide. 'That was all the old strategy,' says McKechnie. 'Then we began to realise that actually there wasn't a pot of gold in all these new income streams. The pot of gold was always going to be Which?, and therefore the new strategy was to pour everything back into Which? and Which? Online, and the other products on gardening, health, computing and so on.

'I'm not saying never. If something came up again like the car market and it wasn't working and there wasn't another company in the market able to give consumers power to break the monopoly or cartel, I would consider going in. But I'd go in with an exit strategy, and I would not go in with any money-making motive. I'd want it to wash its face, but as soon as we had busted the market and other companies started to come in, we'd get out.'

As part of the new strategy, the magazines were redesigned and Which?

Extra was launched, an online resource offering magazine subscribers more information and a large archive. A 26% price rise was the first for eight years. The organisation had sustained damage, not least because ill-fated forays into pastures new coincided with challenges to the scientific accuracy of a Which? vacuum cleaner test, which had to be re-done.

Some people think, however, that the greatest damage was to a principle: the CA had laid itself open to allegations of a conflict of interest by going into business competition with organisations that were potentially the subjects of its own magazine's assessments and investigations.

It still owns another venture, Anglia Business Associates, which sells advice on banking to small businesses, which were getting a raw deal and being overcharged. But ABA has failed to take off, mainly because the banks - again, partly as a result of the CA's work - have improved their act and traders can get decent advice elsewhere.

'I don't want to be over-critical of the CA because they have a good record of campaigning and being taken seriously,' says Stephen Alambritis, head of Parliamentary affairs at the Federation of Small Businesses. 'But my word of caution to them would be: independence.'

One of the harshest assessments comes from the Society of Motor Manufacturers and Traders (SMMT), which took the brunt of the CA's campaign against high car prices when McKechnie invaded the Motor Show with film crews in tow to denounce 'rip-off Britain'. Al Clarke, head of communications at the society, says the progress of EU competition law would have brought car prices down without the CA campaign, and complains that the association has disengaged from the motor industry in the past four years to 'go ranting off on a wild-goose chase of its own.'

He says: 'It's a great name, the Consumers Association, because it suggests that it has quasi-official standing.

But what is it really, a charity or a business? If it's a business, OK, it's fine for it to compete and have prize draws and so on, but if it's a consumer platform, what's it doing getting involved in the marketplace?

It seems a little odd when you're a consumer champion to set yourself up in competition with an industry you're beating round the head - it leaves a nasty taste in the mouth that you're trying to make a fast buck.

'We used to have a reasonable relationship with the CA, but it has broken the bond of trust and we're on the opposite side of the fence now, which we regret. But if we sat round a table with them again, anything we said would be used against us when it next went on a publicity hunt. It's largely down to Sheila McKechnie, who in our view has pursued an aggressive rather than an evaluative approach. She clearly took the view that she was going to make her mark and take the CA to a different level.'

McKechnie is unrepentant about the campaigning style she brought to the CA, which until her arrival consisted solely of low-key conventional lobbying and briefing. The CA still has that approach, she says, and is highly respected by Parliamentary select committees and civil servants. Much of its reforming work is behind the scenes, away from public attention.

But sometimes the quiet approach doesn't work and she invokes a management mantra she calls 'storming, norming, forming and performing'.

'Sometimes,' she says, 'as with endowment mortgage shortfalls, we just had to storm. And when I storm, I storm. If I come after you, you'll bloody well know it, yeah? And I'll throw the bloody book at you until I've got the issue on the agenda. Once I've got everybody angry and on the agenda, we then move into phase two, which is when the people on the receiving end suddenly realise they do have a problem and they have to sit and talk to us.

'So we go through the talking phase. And then we go through the appropriate 'norming' phase - what have you got to do to put this market right? And then we see if they get on with it. And if they don't, we hit them again.'

Over the past few years there has been a steady increase in the proportion of the CA's resources that go into campaigning, which stood at 11% of the charity's expenditure in 1998-99, has risen to 17% this year and is projected to rise further in the coming years. At the moment, McKechnie is fighting hard on the issue of extended warranties for household equipment - which are widely considered to be poor value - and is involved with other major consumer-related issues that require a solution at either government or inter-governmental level, including GM foods and the regulation of world trade.

She also promises new campaigns soon about the advertising of financial products, 'which gets away with murder', and the business practices of estate agents - 'You watch this space. I've had enough of these rip-off merchants.'

But her biggest beef is with the Financial Services Authority - and this time, she says, it's personal. She is hopping mad over a speech by recently departed FSA chairman Sir Howard Davies about the CA's campaign for compensation for people who were mis-sold endowment mortgages: Davies said that the effect of her proposal would be that the cost of compensation would have to be borne by other policyholders, whereas McKechnie says the industry could and should use its own funds. A further offence, she says, is that the FSA rejected a sensible plan for dealing with the issue earlier this year. 'We worked out a whole way of doing it, we went in and they said, no, we're going to do it our way, piss off, CA. I don't get told to piss off - it's as simple as that. Nobody tells me to piss off. If I think it's right, nothing will stop me. I will not be bullied - CA's culture is that you will never be able to bully anyone at the CA.

'We had a little problem with a drug company recently that threatened to sue us. Well, make my day. See you in court.' She claims, only half joking, that the threat of 'we'll put McKechnie onto you' is often enough to bring wayward opponents into line. It's clear, then, that the CA considers itself at its best when campaigning, and McKechnie, now 55, is eager to press on with it in her trademark over-the-top style.

She's also keen to pursue the new policy of getting back to basics and making the most of the core products. There's a three-year plan to get Which? magazine subscriptions back up to 600,000, using TV, radio and e-mail advertising methods as well as the traditional direct mail and prize draws - which McKechnie agrees are widely disliked both inside and outside the CA but remain the route by which more than 90% of new subscribers arrive. She says the association is desperately trying to set up a system for 'single sales' or 'pay per view' to compete directly with new rivals, but the attempt is 'a nightmare', even with the new information technology system that is now being installed.

Meanwhile, as a halfway house, there are plans to sell larger packages of consumer information of relevance to people at crucial stages in their lives, such as the birth of a child or the purchase of a first home. McKechnie even talks of a possible new name for the CA because of confusion with the National Consumer Council and ignorance about the structure of the charity and its trading arm. 'That's our short-term strategy to get around this bigger problem,' says McKechnie. 'We've been a little slow, I think - and I'd be very happy to admit this - to get all the tools in that we need for web technology - because, remember, all my IT staff are big systems people, and the web is a new world.'

Susan Baker, a lecturer at the Cranfield School of Management and a member of the CA council until 2001, thinks that the single most important issue for the association's future is the pay-per-view question. 'The CA grew out of the production-driven economy of the 1950s and is now having to come to terms with a modern consumer-led economy. What it's finding, like other membership organisations, is that it's hard to maintain its membership.

Consumers of all services have become more demanding, more market-literate, and live more fragmented lives. They want pay-per-view, and the challenge is to connect with them in a meaningful way.

'I think the CA has to look harder into providing people with what they want, when and where they want it, and at a price they're prepared to pay,' she adds. 'It does have to grasp this nettle of pay-per-view and offer its service in a way that meets people's needs.'

CONSUMER - CHAMPIONS

LORD YOUNG OF DARTINGTON

The CA was the brainchild of the brilliant and many-sided Michael Young, who wrote Labour's seminal 1945 election manifesto and also thought up the Open University. He began his quest to inform the nation's buyers of durable goods by testing washing machines and fridges in a converted garage in Bethnal Green. Despite being told that the British libel laws would defeat him, he went ahead and published the first issue of Which?

in 1957, its enthusiastic reception proving that he had put his finger on the anxieties of the developing postwar consumer society. By 1961, Which? had 250,000 subscribers, and by the 1970s the CA had become a respected consumer rights organisation that governments ignored at their peril.

Young stayed on the CA council until 1965, was created a life peer in 1978, and continued as sociologist, author and 'ideas man' right up to his death at 86 in January 2002.

PETER GOLDMAN

The second key figure in shaping the CA was Young's political opposite.

Peter Goldman was one of the Conservative's brightest hopes when the 'safe' seat he was contending in Orpington was snatched by the Liberals in the shock 1962 by-election. He left politics and in 1964 became the CA's director.

His political skills, and 13 years' administrative experience at Conservative Central Office, helped turn the association into an effective campaigning outfit with growing international links. He is also credited with putting the CA on a more commercial footing, branching out into book publishing and health and lifestyle issues. He had a reputation for wit and flamboyance, daily driving to his job as the country's consumer champion in his Bentley.

Just before his death at 62 in 1987, he was appointed director-general of the International Organisation of Consumer Unions.

DAME SHEILA McKECHNIE

Sheila McKechnie is a feisty, no-nonsense Scot who inspires strong feelings in supporters and critics alike. She became CA director in 1995, after a successful and high-profile decade (being awarded a CBE) with the charity Shelter. Under her direction, the CA reflects her campaigning instinct by involvement in a range of issues, from the consumer implications of world trade restrictions to GM foods and the mis-selling of pensions and endowment mortgages. She recently referred to herself as 'just an old '60s radical', but added that protest alone cannot provide answers. 'To deserve our seat at the table, we must do more than criticise. We must come up with solutions. We need to negotiate, to compromise to get the best deal we can for our consumers.' She was created a Dame in 2001 in recognition of her work on their behalf.

< THE SUBSCRIPTIONS SLIDE Which? Which? Online Others 2003 511,000 68,000 397,000 2002 531,000 54,000 389,000 2001 542,000 44,000 396,000 2000 534,000 31,000 406,000 1999 538,000 24,000 420,000 1998 573,000 9,000 433,000 1997 593,000 3,000 443,000 1996 625,000 - 457,000 1995 668,000 - 474,000 1994 683,000 - 503,000 HOW THEY SPEND IT Total expenditure 2002, CA plus Which?, including overheads: pounds 50.7m Total charitable expenditure, CA: pounds 10.3m Of which: Which? research 45% pounds 4.64m Other research 16% pounds 1.65m Campaigning 15% pounds 1.6m Gardening research 14% pounds 1.4m Holiday research 7% pounds 0.7m Health research 3% pounds 0.3m CAMPAIGN EXPENDITURE 1998-1999 11% of charitable expenditure 1999-2000 13% of charitable expenditure 2000-2001 15% of charitable expenditure 2001-2002 15% of charitable expenditure 2002-2003 17% of charitable expenditure Source: Consumers Association

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