strategy

Enabling consumers' cooperatives

Synonyms:
Endorsing consumers unions
Promulgating consumer associations
Empowering buying clubs
Promoting purchasing cooperatives
Description:

Uniting consumers for joint purchases and/or for the production of consumer goods and subsequent sales of these goods to its members and the population at reduced prices.

Context:

The first consumer cooperatives appeared in the late 18th and early 19th centuries in the UK as a response to increasing urban economic development at the expense of rural areas. Farmers and other rural residents sought to lower costs of basic commodities, especially food, clothing and building materials. This movement spread across Europe and was heavily institutionalized in socialist countries during the early 20th century. The main goal of the cooperatives was to fulfill state target figures for the exchange of industrial goods with agricultural surpluses. In recent decades, more informal buying clubs and urban neighbourhood groups have emerged to provide fresher, lower cost, or organically grown foodstuffs.

Implementation:

Consumer's cooperatives may required large organizational and publicity efforts to encourage interested parties to join and invest together. To continue operating viably, members may be educated in the economic principles of cooperatives and involved in the management of the enterprise.

In 1965, a small group of Tokyo housewives, known as the Seikatsu Club, began to campaign to force local shops to stock healthier food. They formed their own cooperative to pay for better quality milk to be brought into the city in bulk. The club is still organized at street level, where families pay for the food they want. It numbers over 175,000 members in the Tokyo region and runs its own bakery and series of farms. Seikatsu is the biggest consumer cooperative in the world, where members work part-time from home as suppliers or sandwich-makers. It has managed to get members elected to local government bodies, under the slogan "political reform from the kitchen".

Coop Schweiz runs a network of food stores, mini-markets, and petrol stations through 16 regional cooperatives in Switzerland. The country's second-largest food retailer is also its largest consumer electronics supplier. The co-op, which has about 1.5 million member households, has reduced its seven tiers of management to four to increase employee participation and responsibility. Sales in 1998 grew by 14.8% to EUR 2 billion, and resulted in a profit of EUR 32 million. Coop Schweiz employs 35,000 people.

Claim:

Lower commodity costs, greater economic awareness and a sense of economic independence among members often result from consumers' cooperatives.

Counter Claim:

Consumers' cooperatives often fail due to the inexperience or dishonesty of managers, undercapitalization, or opting for short-term gain versus long-term viability.

Type Classification:
E: Emanations of other strategies