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A consumer cooperative is an enterprise owned by consumers and managed democratically and that aims at fulfilling the needs and aspirations of its members. Such cooperatives operate within the market economy independently of the state, as a form of
mutual aid Mutual aid is an organizational model where voluntary, collaborative exchanges of resources and services for common benefit take place amongst community members to overcome social, economic, and political barriers to meeting common needs. This ...
oriented toward service rather than pecuniary profit. Many cooperatives, however, do have a degree of profit orientation. Just like other corporations, some cooperatives issue dividends to owners based on a share of total net profit or earnings (all owners typically receive the same amount); or based on a percentage of the total amount of purchases made by the owner. Regardless of whether they issue a dividend or not, most consumers’ cooperatives will offer owners discounts and preferential access to goods and services. Consumer cooperatives often take the form of retail outlets owned and operated by their consumers, such as food cooperatives. However, there are many types of consumers' cooperatives, operating in areas such as health care, insurance,
housing Housing refers to a property containing one or more Shelter (building), shelter as a living space. Housing spaces are inhabited either by individuals or a collective group of people. Housing is also referred to as a human need and right to ...
,
utilities A public utility company (usually just utility) is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and r ...
and personal finance (including
credit union A credit union is a member-owned nonprofit organization, nonprofit cooperative financial institution. They may offer financial services equivalent to those of commercial banks, such as share accounts (savings accounts), share draft accounts (che ...
s). 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. Consumer cooperatives may, in turn, form a cooperative federation. These may come in the form of a cooperative wholesale society through which consumers' cooperatives collectively purchase goods at wholesale prices and, in some cases, own factories. Alternatively, they may be members of cooperative unions. Consumer cooperation has been a focus of study in the field of cooperative economics.


History

Consumer cooperatives rose to prominence during the
industrial revolution The Industrial Revolution, sometimes divided into the First Industrial Revolution and Second Industrial Revolution, was a transitional period of the global economy toward more widespread, efficient and stable manufacturing processes, succee ...
as part of the
labour movement The labour movement is the collective organisation of working people to further their shared political and economic interests. It consists of the trade union or labour union movement, as well as political parties of labour. It can be considere ...
. As employment moved to industrial areas and job sectors declined, workers began organizing and controlling businesses for themselves. Workers cooperatives were originally sparked by "critical reaction to industrial capitalism and the excesses of the industrial revolution." The formation of some workers cooperatives was meant to "cope with the evils of unbridled capitalism and the insecurities of wage labor." The first documented consumer cooperative was founded in 1769, in a barely-furnished cottage in Fenwick, East Ayrshire, when local weavers manhandled a sack of oatmeal into John Walker's whitewashed front room and began selling the contents at a discount, forming the Fenwick Weavers' Society. In the decades that followed, several cooperatives or cooperative societies formed including Lennoxtown Friendly Victualling Society, founded in 1812. The philosophy that underpinned the cooperative movement stemmed from such
socialist Socialism is an economic ideology, economic and political philosophy encompassing diverse Economic system, economic and social systems characterised by social ownership of the means of production, as opposed to private ownership. It describes ...
writers as Robert Owen and Charles Fourier. Robert Owen, as the father of the cooperative movement, made his fortune in the cotton trade, but believed in putting his workers in a good environment with access to education for themselves and their children. These ideas were put into effect successfully in the cotton mills of New Lanark,
Scotland Scotland is a Countries of the United Kingdom, country that is part of the United Kingdom. It contains nearly one-third of the United Kingdom's land area, consisting of the northern part of the island of Great Britain and more than 790 adjac ...
, where the first co-operative store was opened. Spurred on by this success, Owen had the idea of forming "villages of co-operation" where workers would drag themselves out of poverty by growing their own food, making their own clothes, and ultimately becoming self-governing. He tried to form such communities in Orbiston, Scotland and in New Harmony, Indiana in the
United States of America The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 states and a federal capital district, Washington, D.C. The 48 contiguo ...
, but both communities failed. Similar early experiments were made in the early 19th century and by 1830 there were several hundred co-operatives. William King made Owen's ideas more workable and practical. He believed in starting small, and realized that the working classes would need to set up co-operatives for themselves, so he saw his role as one of instruction. He founded a monthly periodical called ''The Co-operator'', the first edition of which appeared on 1 May 1828. It gave a mixture of co-operative philosophy and practical advice about running a shop using cooperative principles.


Modern movement

The first successful co-operative was the Rochdale Society of Equitable Pioneers, established in England in 1844. This became the basis for the development and growth of the modern cooperative movement. As the mechanization of the Industrial Revolution forced more skilled workers into poverty, these tradesmen decided to band together to open their own store selling food items they could not otherwise afford. With lessons from prior failed attempts at co-operation in mind, they designed the now-famous Rochdale Principles, and over a period of four months they struggled to pool one
pound sterling Sterling (symbol: £; currency code: GBP) is the currency of the United Kingdom and nine of its associated territories. The pound is the main unit of sterling, and the word '' pound'' is also used to refer to the British currency general ...
per person for a total of 28 pounds of capital. On December 21, 1844, they opened their store with a very meagre selection of butter, sugar, flour, oatmeal and a few candles. Within three months, they expanded their selection to include tea and tobacco, and they were soon known for providing high quality, unadulterated goods. The Co-operative Group formed gradually over 140 years from the merger of many independent retail societies, and their wholesale societies and federations. In 1863, twenty years after the Rochdale Pioneers opened their co-operative, the North of England Co-operative Society was launched by 300 individual co-ops across
Yorkshire Yorkshire ( ) is an area of Northern England which was History of Yorkshire, historically a county. Despite no longer being used for administration, Yorkshire retains a strong regional identity. The county was named after its county town, the ...
and
Lancashire Lancashire ( , ; abbreviated ''Lancs'') is a ceremonial county in North West England. It is bordered by Cumbria to the north, North Yorkshire and West Yorkshire to the east, Greater Manchester and Merseyside to the south, and the Irish Sea to ...
. By 1872, it had become known as the Co-operative Wholesale Society (CWS). Through the 20th century, smaller societies merged with CWS, such as the Scottish Co-operative Wholesale Society (1973) and the South Suburban Co-operative Society (1984).


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 A board of directors is a governing body that supervises the activities of a business, a nonprofit organization, or a government agency. The powers, duties, and responsibilities of a board of directors are determined by government regulatio ...
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.


Finance and approach to capital accumulation

The customers or consumers of the goods and services provided by a cooperative are often also the individuals who supply the capital necessary to establish or acquire the enterprise. The primary distinction between consumer cooperatives and other forms of business is that a consumer cooperative aims to offer quality goods and services at the lowest possible cost to its consumer‑owners, rather than maximizing profits by charging the highest price the market will bear. In practice, consumer cooperatives typically set prices at competitive market rates. Unlike for-profit enterprises, which treat the margin between cost and selling price as profit for shareholders, consumer cooperatives may use this surplus to build collectively owned capital, support member-defined social objectives, or return the excess to consumer‑owners as a patronage refund or dividend. Accumulated capital may be retained as reserves, reinvested in the cooperative’s growth, or used to acquire assets such as facilities or equipment. While some claim that surplus payment returns to consumer/owner patrons should be taxed the same as dividends paid to corporate stock holders, others argue that consumer cooperatives do not return a profit by traditional definition, and similar tax standards do not apply.


Problems

Since consumer cooperatives are run democratically, they are subject to the same problems typical of democratic government. Such difficulties can be mitigated by frequently providing member/owners with reliable educational materials regarding current business conditions. In addition, because a consumer cooperative is owned by the users of a good or service as opposed to the producers of that good or service, the same sorts of labor issues may arise between the workers and the cooperative as would appear in any other company. This is one critique of consumer cooperatives in favor of worker cooperatives.


Pursuit of social goals

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. For example, 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: Cooperative Federalists, a term coined in the writings of Beatrice Webb, advocated forming federations of consumer cooperatives as a means to achieve social reform. They believed such a development would bring benefits such as economic democracy and
justice In its broadest sense, justice is the idea that individuals should be treated fairly. According to the ''Stanford Encyclopedia of Philosophy'', the most plausible candidate for a core definition comes from the ''Institutes (Justinian), Inst ...
, transparency, greater product purity, and financial benefits for consumers.


Examples


Europe

One of the world's largest consumer co-operative federations operates in the UK as The Co-op, which operates over 5,500 branches of 'Co-op' branded business including
Co-op Food Co-op is a UK supermarket chain and the brand used for the food retail business of The Co-operative Group, one of the world's largest consumer co-operatives. As the UK's fifth largest food retailer, Co-op operates nearly 2,400 food stores. It ...
(the UK's sixth largest supermarket chain), Co-op Funeralcare, Co-op Travel, Co-op Legal Services, and Co-op Electrical.
The Co-operative Group The Co-operative Group Limited, trading as Co-op and formerly known as the Co-operative Wholesale Society, is a British consumer cooperative, consumer co-operative with a group of retail businesses, including grocery retail and wholesale, leg ...
is by far the largest of these businesses, itself having over 4,500 outlets and operating the collective buying group. In
Switzerland Switzerland, officially the Swiss Confederation, is a landlocked country located in west-central Europe. It is bordered by Italy to the south, France to the west, Germany to the north, and Austria and Liechtenstein to the east. Switzerland ...
, the two largest supermarket chains Coop and Migros are both co-operatives and are among the country’s largest employers. In
Ireland Ireland (, ; ; Ulster Scots dialect, Ulster-Scots: ) is an island in the North Atlantic Ocean, in Northwestern Europe. Geopolitically, the island is divided between the Republic of Ireland (officially Names of the Irish state, named Irelan ...
, the Dublin Food Coop has been in operation since 1983. In
Scandinavia Scandinavia is a subregion#Europe, subregion of northern Europe, with strong historical, cultural, and linguistic ties between its constituent peoples. ''Scandinavia'' most commonly refers to Denmark, Norway, and Sweden. It can sometimes also ...
, the national cooperatives
Norway Norway, officially the Kingdom of Norway, is a Nordic countries, Nordic country located on the Scandinavian Peninsula in Northern Europe. The remote Arctic island of Jan Mayen and the archipelago of Svalbard also form part of the Kingdom of ...
,
Sweden Sweden, formally the Kingdom of Sweden, is a Nordic countries, Nordic country located on the Scandinavian Peninsula in Northern Europe. It borders Norway to the west and north, and Finland to the east. At , Sweden is the largest Nordic count ...
, and
Denmark Denmark is a Nordic countries, Nordic country in Northern Europe. It is the metropole and most populous constituent of the Kingdom of Denmark,, . also known as the Danish Realm, a constitutionally unitary state that includes the Autonomous a ...
joined as Coop Norden in January 2002, but separated again in 2008. In
Italy Italy, officially the Italian Republic, is a country in Southern Europe, Southern and Western Europe, Western Europe. It consists of Italian Peninsula, a peninsula that extends into the Mediterranean Sea, with the Alps on its northern land b ...
, the Coop Italia chain formed by many sub-cooperatives controlled 17.7% of the grocery market in 2005. In
Finland Finland, officially the Republic of Finland, is a Nordic country in Northern Europe. It borders Sweden to the northwest, Norway to the north, and Russia to the east, with the Gulf of Bothnia to the west and the Gulf of Finland to the south, ...
, 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 Kesko's 28%. In
France France, officially the French Republic, is a country located primarily in Western Europe. Overseas France, Its overseas regions and territories include French Guiana in South America, Saint Pierre and Miquelon in the Atlantic Ocean#North Atlan ...
, Coop Atlantique owns 7 hypermarkets, 39 supermarkets, and about 200 convenience stores. In
Germany Germany, officially the Federal Republic of Germany, is a country in Central Europe. It lies between the Baltic Sea and the North Sea to the north and the Alps to the south. Its sixteen States of Germany, constituent states have a total popu ...
, the ReWe Group is a diversified holding company of consumer cooperatives that includes thousands of retail stores, discount stores, and tourism agencies. It ranks as the second largest supermarket chain in Germany and in the top ten cooperative groups in the world. In Spain, Eroski is a supermarket chain within Mondragón Corporación Cooperativa. As a worker-consumer hybrid, some of the personnel are hired workers and some are owner-workers. The owners include workers and mere consumers, but buying is open to everybody. It has franchises under the brand ''Aliprox'' not owned by Eroski but sharing its product range. Its origin is in the Basque Country. In its process of expansion, it merged with the Valencia-based cooperative Consum, but the merger dissolved in 2005. It has expanded across Spain and entered France and Gibraltar. After the Spanish crisis of 2008, Eroski sold several of its supermarkets and hypermarkets.


Australia

The Co-op Bookshop sold textbooks both online and on university campuses. It also owned
Australian Geographic Australian Geographic is a media business that produces the ''Australian Geographic'' and Australian Geographic Adventure magazine, australiangeographic.com.au and operates, either itself or business partners, Australian Geographic stores, Aus ...
. In 2020 its retail stores closed and its online store was sold to Booktopia. The Wine Society (Australian Wine Consumers’ Co-operative Society Limited), established in 1946, now has more than 58,000 members. It sources and sells premium wines under the Society label, runs comprehensive wine education courses, and recognises excellence from young winemakers. Bank Australia was formed in 2011 as the Members and Education Credit Union. It changed its name to Bank Australia in 2015. The bank is wholly owned by its customers, reported at 125,000 in 2012.


Japan

Japan has a large and well-developed consumer cooperative movement with more than 14 million members. Retail co-ops alone had a combined turnover of 2.5 trillion Yen (21 billion U.S. Dollars) in April, 2003.Japanese Consumers' Co-operative Union., 2003 Co-op Kobe (コープこうべ) in
Hyōgo Prefecture is a Prefectures of Japan, prefecture of Japan located in the Kansai region of Honshu. Hyōgo Prefecture has a population of 5,469,762 () and a geographic area of . Hyōgo Prefecture borders Kyoto Prefecture to the east, Osaka Prefecture to th ...
is the largest retail cooperative in Japan and, with more than 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 one in five of all Japanese households belongs to a local retail co-op and 90% of all co-op members are women. Nearly six million households belong to one of the 1,788,000 Han groups. 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 strength of Japanese consumer co-ops in recent years has been the growth of community supported agriculture in which fresh produce is sent direct to consumers from producers without going through the market. Some of co-op organisations, for example, in
Tokyo Tokyo, officially the Tokyo Metropolis, is the capital of Japan, capital and List of cities in Japan, most populous city in Japan. With a population of over 14 million in the city proper in 2023, it is List of largest cities, one of the most ...
metropolis and
Kanagawa prefecture is a Prefectures of Japan, prefecture of Japan located in the Kantō region of Honshu. Kanagawa Prefecture is the List of Japanese prefectures by population, second-most populous prefecture of Japan at 9,221,129 (1 April 2022) and third-dens ...
, manage their local political parties from 1970's; generally names itself as the "Network Movement" ("Tokyo Seikatsusha (it means "Living Persons") Network", "Kanagawa Network Movement", and so on). They depend on consumers movement, feminism, regionalism, and prefer to anti-nuclear. These parties keep small but steady sections in prefecture and municipal assemblies.


North America

In the United States, the PCC (Puget Consumers Cooperative) Natural Markets in
Seattle Seattle ( ) is the most populous city in the U.S. state of Washington and in the Pacific Northwest region of North America. With a population of 780,995 in 2024, it is the 18th-most populous city in the United States. The city is the cou ...
is the largest consumer-owned food cooperative. The National Cooperative Grocers Association maintains a food cooperative directory. Seattle-based R.E.I., which specializes in outdoor sporting equipment, is the largest consumer cooperative in the United States. Outdoor retailer Mountain Equipment Co-op (MEC) in Canada was one of that country's major consumer cooperatives. In the Canadian Prairie provinces as well as
British Columbia British Columbia is the westernmost Provinces and territories of Canada, province of Canada. Situated in the Pacific Northwest between the Pacific Ocean and the Rocky Mountains, the province has a diverse geography, with rugged landscapes that ...
, gas stations, lumberyards, and grocery stores can be found under the Co-Op brand. All
credit union A credit union is a member-owned nonprofit organization, nonprofit cooperative financial institution. They may offer financial services equivalent to those of commercial banks, such as share accounts (savings accounts), share draft accounts (che ...
s in the United States and Canada are financial cooperatives. Tim Worstall has called the Vanguard Group a customer owned cooperative, since the owners of Vanguard funds are the funds' investors.


Caribbean

In
Puerto Rico ; abbreviated PR), officially the Commonwealth of Puerto Rico, is a Government of Puerto Rico, self-governing Caribbean Geography of Puerto Rico, archipelago and island organized as an Territories of the United States, unincorporated territo ...
, several Supermercados Fam Coop operate.


See also

* Food cooperative, a supermarket owned and operated by its consumers. *
Copyleft Copyleft is the legal technique of granting certain freedoms over copies of copyrighted works with the requirement that the same rights be preserved in derivative works. In this sense, ''freedoms'' refers to the use of the work for any purpose, ...
*
GNU General Public License The GNU General Public Licenses (GNU GPL or simply GPL) are a series of widely used free software licenses, or ''copyleft'' licenses, that guarantee end users the freedom to run, study, share, or modify the software. The GPL was the first ...
* Health food store * Healthcare Co-operatives movement in India *
National Cooperative Business Association The National Cooperative Business Association (NCBA) is a United States cooperative federation, membership organization for cooperatives, which are businesses that are jointly owned and democratically controlled. The association was founded in 1 ...
*
Open source Open source is source code that is made freely available for possible modification and redistribution. Products include permission to use and view the source code, design documents, or content of the product. The open source model is a decentrali ...
*
Open-source hardware Open-source hardware (OSH, OSHW) consists of physical artifact (software development), artifacts of technology designed and offered by the open-design movement. Both free and open-source software (FOSS) and open-source hardware are created by th ...
* US Federation of Worker Cooperatives


Notes


Further reading


''Co-operation 1921-1947''
published monthly by The Co-operative League of America.
''fully searchable original link''

''The History of Co-operation''
by George Jacob Holyoake, 1908.
''fully searchable original link''
A pamphlet from the G.I. Roundtable series by Joseph G. Knapp, 1944
''Law of Cooperatives''
by Legal Firm Stoel Rives, Seattle


External links


Cooperatives Europe
– The common platform of ICA Europe and the Coordinating Committee of European Cooperative Associations (CCACE)
International Co-operative Alliance


(sector of ICA)
Co-operatives UK, the central organisation for all UK co-operative enterprises

The online database of UK Co-operatives

ICOS, the Irish Co-operative Organisation Society

German technical consulting for optimization

The ICA Group, technical advice for cooperative start-ups in the USA.

English website from the Japanese Consumer Co-operative Union.

A new approach to cooperative understanding

University of Wisconsin Center for Cooperatives

Coopnet Update paper and event database



Background Paper on Co-operatives

Brazda&Schediwy (ed.) Comparative International Study, 1989
{{DEFAULTSORT:Consumers' Cooperative Business models