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Consumer Co-Operative

Consumer cooperatives are businesses owned and operated by consumers for the benefit of those consumers. They are managed democratically, with each member getting one vote regardless of how much they use the cooperative. Consumer cooperatives take many forms, including food co-ops, retail stores, credit unions, and providers of services like healthcare and housing. Large consumer cooperatives may form cooperative federations or unions to collectively purchase goods and services.

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1K views14 pages

Consumer Co-Operative

Consumer cooperatives are businesses owned and operated by consumers for the benefit of those consumers. They are managed democratically, with each member getting one vote regardless of how much they use the cooperative. Consumer cooperatives take many forms, including food co-ops, retail stores, credit unions, and providers of services like healthcare and housing. Large consumer cooperatives may form cooperative federations or unions to collectively purchase goods and services.

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adv_j
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  • Introduction to Consumer Cooperatives
  • Governance and Operation
  • Finance and Approach to Capital Accumulation
  • Problems
  • Pursuit of Social Goals
  • Examples

Consumer cooperative

Consumer cooperatives are enterprises owned by consumers and managed democratically which aim at fulfilling the needs and aspirations of their members.[1] They operate within the market system, independently of the state, as a form of mutual aid, oriented toward service rather than pecuniary profit.[2] Consumers' cooperatives often take the form of retail outlets owned and operated by their consumers, such as food co-ops.[3] However, there are many types of consumers' cooperatives, operating in areas such as health care, insurance, housing, utilities and personal finance (including credit unions).

In some countries, consumers' cooperatives are known as cooperative retail societies or retail co-ops, though they should not be confused with retailers' cooperatives, whose members are retailers rather than consumers.

Consumers' cooperatives may, in turn, form cooperative federations. These may come in the form of cooperative wholesale societies, through which consumers' cooperatives collectively purchase goods at wholesale prices and, in some

cases, own factories. Alternatively, they may be members of cooperative unions.[4]

Consumer cooperation has been a focus of study in the field of cooperative economics.

Contents [hide] 1 Governance and Operation 2 Finance and approach to capital accumulation 3 Problems 4 Pursuit of social goals through consumer co-operatives 5 Examples 5.1 Australia 5.2 Europe 5.3 Japan 5.4 North America

6 See also 7 Notes 8 Further reading 9 External links

[edit] Governance and Operation

Consumer cooperatives utilize the cooperative principle of Democratic member control, or one member/one vote. Most consumer cooperatives have a board of directors elected by and from the membership. The board is usually responsible for hiring management and ensuring that the cooperative meets its goals, both financial and otherwise. Democratic functions, such as petitioning or recall of board members, may be codified in the bylaws or organizing document of the cooperative. Most consumer cooperatives hold regular membership meetings (often once a year). As mutually owned businesses, each member of a society has a shareholding equal to the sum they paid in when they joined.

Large consumers' co-ops are run much like any other business and require workers, managers, clerks, products,

and customers to keep the doors open and the business running. In smaller businesses the consumer/owners are often workers as well. Consumers' cooperatives can differ greatly in start up and also in how the co-op is run but to be true to the consumers' cooperative form of business the enterprise should follow the Rochdale Principles.

[edit] Finance and approach to capital accumulation

The customers or consumers of the goods and/or services the cooperative provides are often also the individuals who have provided the capital required to launch or purchase that enterprise.

The major difference between consumers' cooperatives and other forms of business is that the purpose of a consumers' cooperative association is to provide quality goods and services at the lowest cost to the consumer/owners rather than to sell goods and services at the highest price above cost that the consumer is willing to pay.[citation needed] In practice consumers' cooperatives price goods and services at competitive market rates.[citation needed]

Where a for-profit enterprise will treat the difference between cost (including labor etc.) and selling price as financial gain for investors, the consumer owned enterprise may retain this to accumulate capital in common ownership, distribute it to meet the consumer's social objectives, or refund this sum to the consumer/owner as an over-payment. (Accumulated capital may be held as reserves, or invested in growth as working capital or the purchase of capital assets such as plant and buildings.)

While some claim that surplus payment returns to consumer/owner patrons should be taxed the same as dividends paid to corporate stock holders,[5] others argue that consumer cooperatives do not return a profit by traditional definition, and similar tax standards do not apply.[6]

[edit] Problems

Since consumer cooperatives are run democratically, they are subject to the same problems typical of democratic government.[citation needed] Such difficulties can be mitigated by frequently providing member/owners with reliable educational materials regarding current business conditions.[7]

[edit] Pursuit of social goals through consumer co-operatives

January 1947 Co-op Magazine back cover designed as a promotional poster Many advocates of the formation of consumer cooperatives from a variety of political perspectives - have seen them as integral to the achievement of wider social goals.

Thus, the founding document of the Rochdale Pioneers, who established one of the earliest consumer cooperatives in England in 1844, expressed a vision that went far beyond the simple shop with which they began: "That as soon as practicable, this society shall proceed to arrange the powers of production, distribution, education, and government, or in other words to establish a selfsupporting home-colony of united interests, or assist other societies in establishing such colonies."[8]

Cooperative Federalists, a term coined in the writings of Beatrice Webb, were advocates for the formation of federations of consumer cooperatives as means of achieving social reform. They anticipated such a development as bringing a broad set of benefits including economic democracy and justice, transparency, greater product purity, and financial benefits for consumers.[9]

The Neo-Capitalist economic doctrine seeks to transfer the provision of almost all government provided public goods and the conversion of any large privately owned monopolies into consumer cooperatives.[citation needed]

[edit] Examples

[edit] Australia University Co-operative Bookshop Ltd, Australia's largest consumer cooperative, established by students in 1958, has grown to become the largest provider of educational, professional and lifelong learning resources in Australia. With over 40 branches across Australia, a comprehensive website and presence on the internet since even before the web,

numerous additional services and over 1.3 million lifetime members, the Co-op is more than just a bookshop. The Wine Society (Australian Wine Consumers Co-operative Society Limited), established in 1946, now has over 58,000 members. Also sources and sells premium wines under the Society label, runs comprehensive wine education courses and recognises excellence from young winemakers.

[edit] Europe

In the United Kingdom, the nationwide Co-operative Group, formerly the Co-operative Wholesale Society (or "CWS"), owns many of its own supermarkets, as well as supplying goods wholesale to the majority of British cooperative societies, providing a common branding and logo.

In Ireland the Dublin Food Coop has been in operation since 1983.

In Scandinavia, the national cooperations of Norway, Sweden and Denmark joined as Coop Norden in January 2002.

In Italy the Coop Italia chain formed by many subcooperatives controlled 17.7% of the grocery market in 2005.

In Finland the S Group is owned by 22 regional cooperatives and 19 local cooperative stores, which in turn are owned by their customers. In 2005 the S Group overtook its nearest rival Kesko Oyj with a 36% share of retail grocery sales compared to Keskos 28%.*10+

In France Coop Atlantique own 7 hypermarkets 39 supermarkets and about 200 conveniences store.

[edit] Japan

Japan has a very large and well-developed consumer cooperative movement with over 14 million members; retail co-ops alone had a combined turnover of 2.519 trillion Yen (21.184 billion U.S. Dollars [market exchange rates as of 11/15/2005]) in 2003/4.[11] In Japan, Co-op Kobe () in the Hygo Prefecture is the largest retail cooperative in Japan and, with over 1.2 million members, is one of the largest cooperatives in the world. In addition to retail co-ops there are medical, housing and insurance co-ops

alongside institutional (workplace based) co-ops, co-ops for school teachers and university based co-ops.

Approximately 1 in 5 of all Japanese households belongs to a local retail co-op and 90% of all co-op members are women. (Takamura, 1995). Nearly 6 million households belong to one of the 1,788,000 Han groups (Japanese Consumers' Cooperative Union., 2003). These consist of a group of five to ten members in a neighbourhood who place a combined weekly order which is then delivered by truck the following week. A particular strength of Japanese consumer co-ops in recent years has been the growth of community supported agriculture where fresh produce is sent direct to consumers from producers without going through the market.

[edit] North America

In the United States, the PCC (Puget Consumers Cooperative) Natural Markets in Seattle is the largest consumer-owned food cooperative.[12] The National Cooperative Grocers Association maintains a food cooperative directory.

Seattle-based R.E.I., which specializes in outdoor sporting equipment, is the largest[citation needed] consumer cooperative in the United States.

Similarly, outdoor retailer Mountain Equipment Co-op in Canada, is one of the country's major consumer cooperatives. In the Canadian Prairie provinces, gas stations, lumberyards, and grocery stores can be under the coop brand.

All credit unions in the United States and Canada are financial cooperatives.[13]

[edit] See also

Cooperatives portal

Cooperative Food coop National Cooperative Business Association Neo-Capitalism Worker cooperative Health food store History of the cooperative movement Credit union Healthcare Co-operatives movement in India

[edit] Notes

1.^ Euro Coop. "Consumer Co-operatives: Democracy Development - Employment". p. 4. Retrieved 2011-06-07. 2.^ Warbasse, James Peter (1950). Co-operative Peace. 3.^ Sullivan, arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. p. 203. ISBN 0-13-063085-3. 4.^ Gide, Charles; as translated from French by the Cooperative Reference Library, Dublin, Consumers' Co-

operative Societies, Manchester: The Co-operative Union Limited, 1921, p. 122, ISBN 1-116-75261-1 5.^ "The Farmer Takes a Town". Time. December 25, 1944. 6.^ (DjVu) Attacks Splutter. CO-OP Magazine. January 1946. p. 17. 7.^ James Peter Warbasse (1942). "Problems of Cooperation" (DjVu). Retrieved 2007-11-22. 8.^ David Thompson (July/August 1994). "Co-op Principles: Then and Now". Cooperative Grocer. 9.^ "What Consumers' Cooperation does". Cooperation. May 1934. 10.^ Retailing in Finland. London, UK: Euromonitor International. October 2006. Retrieved 2007-06-28. 11.^ Japanese Consumers' Co-operative Union., 2003 12.^ Cooperative Grocers' Association website 13.^ "The Credit Union Movement: Origins and Development 1850 to 1980" by J. Carroll Moody and Gilbert Fite

[edit] Further reading Consumers' Co-operative Societies, by Charles Gide, 1922 Co-operation 1921-1947, published monthly by The Cooperative League of America

The History of Co-operation, by George Jacob Holyoake, 1908 Cooperative Peace, by James Peter Warbasse, 1950 Problems Of Cooperation, by James Peter Warbasse, 1941 Why Co-ops? What Are They? How Do They Work? A pamphlet from the G.I. Roundtable series by Joseph G. Knapp, 1944

Common questions

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Consumer cooperatives offer an alternative to monopolies by fostering competition through collective ownership, enabling consumers to receive better quality goods at lower prices. By operating under the principles of economic democracy and mutual benefit, cooperatives can prevent the accumulation of market power and wealth concentration seen in traditional monopolistic entities. This model also encourages economic justice and transparency, aligning with broader social objectives .

The ownership structure of consumer cooperatives, where earnings benefit member-owners rather than external stakeholders, can lead to different interpretations of profit. Some argue these surpluses should be taxed like corporate dividends, while others maintain that co-ops should be exempt from such taxes since surplus returns do not equate to traditional profit. This debate reflects differing views on how cooperative capital, being reinvested or refunded, affects tax obligations .

Large consumer cooperatives like R.E.I. have significant market presence and can set standards for ethical consumer practices and corporate responsibility. Economically, they redistribute earnings to members or reinvest in business growth, deviating from profit-maximization to benefit member communities. Socially, they promote sustainable practices and community engagement, potentially influencing broader market behaviors and policies toward consumer and environmental welfare .

Consumer cooperatives can contribute to broader social goals by adopting practices that emphasize economic democracy, transparency, and product purity. The cooperative model allows for financial benefits to be more equitably distributed among members. Federations of consumer cooperatives may further enhance these benefits by pooling resources and achieving greater economies of scale. Historically, cooperatives have been seen as instruments for social reform, aiming to provide alternatives to government-provided public goods and privately-owned monopolies .

Consumer cooperatives face challenges similar to those in democratic governments, such as decision-making gridlocks and conflicts among members. Frequent provision of reliable educational materials to members can mitigate these issues by keeping them informed about current business conditions, thus fostering cohesive decision-making and strategic planning .

Japanese consumer cooperatives have a large membership base with over 14 million members and include diverse cooperative structures such as medical, housing, and insurance co-ops. Their organizational model involves smaller neighborhood groups, enabling more direct engagement and support for local agriculture. In contrast, European cooperatives, like Coop Italia, tend to focus more on retail operations and are influential in the grocery market, with group purchasing power and coordinated branding as seen in Coop Norden and the Co-operative Group in the UK. Member engagement in Europe is often through larger, centrally organized entities .

Consumer cooperatives prioritize providing quality goods and services at the lowest possible cost to their consumer/owners, differentiating them from for-profit enterprises that aim to sell goods and services at the highest price consumers are willing to pay. Instead of focusing on financial gains for investors, consumer cooperatives may use surplus revenue to accumulate capital for common ownership, distribute funds to meet social objectives, or refund consumers for over-payments .

Consumer cooperatives utilize the principle of democratic member control, where each member has one vote, ensuring equal participation in decision-making. The board of directors, elected by the members, handles management responsibilities and maintains accountability through bylaws that may include democratic functions like petitions or recalls of board members .

Consumer cooperatives in Japan play a key role in promoting community-supported agriculture by connecting producers directly with consumers, bypassing traditional market routes. This model encourages sustainable agricultural practices and supports local farmers, allowing consumers to access fresher, often organic produce, and fostering community ties. The cooperative structure facilitates these relationships by organizing neighborhood groups with systems like the Han groups .

In North America, consumer cooperatives have grown beyond food markets to encompass a diverse range of industries, such as sporting goods with R.E.I. and gasoline with co-op branded gas stations. Member engagement has increased through diverse product offerings and services tailored to member needs, fostering a sense of community and shared ownership. They also leverage cooperative networks to enhance buying power and market influence .

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