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What Is a Consumer Cooperative?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 16 November 2016
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    Conjecture Corporation
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Consumer cooperatives are organizations that are actually owned by the consumers who choose to be members of the cooperative venture. Known as cooperative retail societies or retail co-ops in some countries, these cooperative enterprises often appear to function just like any other type of business, operating stores and sometimes even factories. The difference is that the organization structure of the consumer cooperative is different from that of a corporation, and the members have greater involvement in what goods and services are offered and in general how the organization is ran.

A consumer cooperative is often organized in a manner that includes the use of a board of directors elected by the membership. With most cooperative organizations of this type, each member is granted one vote on any given issue facing the organization, including the election of individuals to the board. Any employees of the cooperative, including executives, managers and staff who work in the stores or factories are accountable to the board. The board of directors in turn is accountable to the membership for the financial health of the cooperative, as well as how the board works to move the organization closer to achieving its goals.

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From the outside, a consumer cooperative will often look like a business, in that retail outlets are staffed and operated, allowing shoppers to purchase goods. The difference is that the shoppers are usually members of the cooperative that have chosen to combine their buying power in order to stock the shelves with goods that can be purchased at very competitive prices while also generating income that the collective membership can then use to pursue some type of goal. For example, a small local consumer cooperative that has the goal of promoting local business enterprises may combine their resources in order to offer local producers of select goods and services the chance to market their wares at the cooperative’s store, at prices that are agreeable to everyone concerned. The end result is that the producers build a clientele among the consumers in the cooperative, and can use that as the basis for beginning to also market their products with other merchants. Doing so means more money stays in the local economy and provides jobs for local citizens, which was in fact one of the goals of the cooperative.

Typically, a consumer cooperative is not about making huge profits, although some funds above cost are necessary in order to grow the operation. The main focus is to supply members with products they can use at prices they can afford, even while pursuing whatever objectives in terms of community service, environmental issues, or other goals that the members of the cooperative have defined as part of the reasons for the cooperative’s existence. Organizations of this type may choose to remain small and based in a specific geographical area, based on the aims of the cooperative. Along with locally generated products, some cooperatives may be the means of offering nationwide health insurance plans, financial services and even utility services such as mobile phone and long-distance plans.

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