Friday, 18 February 2022 23:21

Why Supporting Co-ops is Important!

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In the modern era, where people (especially in urban areas) have a choice of product/service providers, the rationale to be a member and keep an existing co-op going can sometimes be murky for members and potential members. Co-operatives need to be able to articulate why people should be a member of their co-op when they have a choice of businesses that can meet their needs.

This blog post will look at some of the reasons why members (and future members!) might choose to be part of a co-operative, some of the challenges that having competition creates for co-ops, and why it’s a great idea to be a member of and support a co-op, even if you can get your product/service elsewhere.

This may help you, dear co-operative-loving reader, to answer that question that sometimes comes up: “Why should I support a co-op, when Company X provides the same service/product – sometimes at a cheaper price?”

When co-ops are first formed, founding members are acutely aware of why the co-op formed and what need the co-op is meeting for its members. Over time, as new members come on board, the co-op flourishes, time marches on, and that need may not be as clear to people that get involved later.

While this is happening, competition may emerge. This shift could look like several grocery stores selling products in one city or town, multiple childcare providers, or banks and credit unions serving the same area, or any other setting where a co-operative is not the only provider of the goods/services, and/or people aren’t as aware that the business they are shopping at is a co-op.

Back in the day in Saskatchewan, it was (and still often is) common that the credit union was the only financial institution in town, or even the region, and the local retail co-op might have also been the only place in town to meet your needs for groceries, fuel, hardware, ag. supplies, etc.

Today, whether it’s housing, insurance, childcare, internet, or a multitude of other types of products or services, many co-ops face all sorts of competition – especially in urban areas, but also as consumers are shifting their habits (e.g. shopping and banking online, buying bulk in the city and taking a mountain of toilet paper home, etc.).

How can a co-operative compete against a national or multinational corporation?

Successful co-operatives typically consciously decide what kind of business strategy will help them achieve competitive advantage.

The main types of these generic business strategies focus on either cost leadership/being the lowest cost alternative (think Superstore, for example), or differentiation/offering something perceived to be valuable enough that customers (or members) will pay a premium for it (Apple products, for example). This strategy focus can be business wide, or focused on a product line or other factors. There has been a lot written on this topic, so if you want to know more, just search for competitive strategy and/or look up Michael Porter’s Four Generic Strategies and you’ll find a lot more detail.

For co-operatives, trying to achieve an overall cost leadership strategy (i.e. be the cheapest option) is often impossible, in the face of national and international competition, and their ability to get better deals than a smaller co-operative can, because they can order a much higher volume of stuff, or save money and be more efficient delivering services. Most co-operatives do not have the buying power to compete with big multinational companies that focus on being low cost to consumers. That said, it’s not impossible for co-operatives to be competitive, but it can be challenging to match those big companies.

This is why many co-operatives choose to focus on being of great value to their members. Co-ops will always work to be competitive with other businesses, but the difference you will often see is in the very high quality of service. In part, it is their very purpose – to meet member needs, not to maximize wealth for their stakeholders.

Because co-ops can’t always match the lowest possible price, this is why co-operatives, (and I would say especially mature co-operatives that don’t have a monopoly in the marketplace), also need to educate their members about what their co-op is all about, how it works, what makes it different, why that is important, and how to get involved as an engaged member.

Why should I shop at or use the services of a co-op today?

In today’s world, it seems to like there is also often a sense of… assumption… that businesses will exist to meet peoples’ needs and that some unknown group of people will make it happen, make decisions, and ensure that the business carries on.

The reality is that co-ops NEED their members to survive, and they exist to serve their members. Co-ops need at least some of their members to be actively involved in the governance of the co-op as well.

So, if you value what a co-operative has to offer and how much it supports your community and you don’t want to see your access to those products or services disappear, the quick answer is – get involved and support your co-op!

Benefits to the community are also a big reason to support co-operatives. Local jobs and profits staying in the community, local ownership and control of the business, the values-based approach of co-ops’ community investment, caring, and embeddedness that co-ops provide are all of real benefit to the community, and by extension, us, collectively, and sometimes, individually.

There has been a lot of research done about the economic benefits of shopping locally. As noted in the image below, from Civic Economics, when you shop local, more money stays in your community and province. This means there is more money in the community to support other businesses, community initiatives, and more.

 

Civic Economics Shop Local Economics

Image created by: Civic Economics

What’s in it for me as a member? Why should I care today?

So, sure, you might be able to get a cheaper cucumber, widget, bank fee, or whatever from a national or multinational corporation. And sometimes everyone needs to go for that cheapest option…

But, sometimes, you, as a consumer have a choice of how to spend your money and what type of businesses to support.

Look around your community – who is sponsoring your local sports field, arena, concert venue, playground, literacy program, Indigenous initiatives, community celebrations, food bank, or offering scholarships for kids in your community, etc., etc.? I bet most or all of those initiatives are sponsored by or supported by co-ops and credit unions.

Co-operatives and credit unions invest millions of dollars every year into communities in Saskatchewan. There are huge benefits to hundreds of communities across the province from these investments.

Here is my top 6 list of why you should CHOOSE to support a co-operative:

  1. Excellent and knowledgeable service. Co-operatives and credit unions are well known for knowledgeable and exceptional service.
  2. Good paying jobs in the community, management jobs in the community/province. There are a lot of management and senior executive jobs, as well as good paying technical jobs of all sorts in co-ops and credit unions across the province. The corporate and management executives of multinational companies are not based here. There are great economic benefits to having these types of jobs here, as these folks spend their money in the local community too.
  3. Profits stay local. In co-operatives, profits are returned to the members, invested into the community, and reinvested back into the co-op to help it grow. This is in contrast to where the profits go in multinational corporations.
  4. Local ownership and decision making. Being able to have an influence on what your local co-operative does can be really important – whether it’s ensuring the local grocery store or credit union stays open when a corporation would close it, or ensuring your childcare co-op is providing the kind of care for your child you, local decision making and ownership can have a big impact.
  5. Investment in making the community better. I mentioned this one above, but it is so significant, I’m listing it here too. The investments that co-ops and credit unions make into our communities is HUGE and we all benefit from that.
  6. More local economic benefits, and spin-off jobs created. There are all sorts of auditing firms, marketing jobs, legal, human resources, insurance, and other complementary services and experts that get more business from locally owned co-operatives vs. national or multinational corporations.

Co-operatives are locally owned, caring community members. And not only do they provide the same products/services as their competitors, on top of their pretty comparable rates, they invest their profits in the local community and create huge impacts that way.

So, if you can access the same services through a co-operative, why WOULDN’T you support the locally owned, community benefitting, values based option (which are presumably aligned with your own values) ?

I hope this blog post has helped articulate some reasons why supporting co-ops and credit unions in your community is important and benefits you! Let us know what you think.

Last modified on Friday, 04 March 2022 15:04
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