Direct charge grocery co-ops

As long as we're on the subject of consumer grocery co-ops this week, I have a burning question.

A zillion years ago, when I was really geeking out on the cooperative movement (which later caused me to move to where I live now, in the heartland of worker-owned cooperative country), I heard about the direct-charge system of consumer coops. I instantly loved it for its logic and what it made happen. Back in the day, legend says one of the great examples was the Nanaimo Co-op on Vancouver Island in BC. Safeway was very keen to get them out of the market and be the kings of the town. So they put things on sale for years at heavy losses to try to get them to close. The co-op had a big board at the entrance advertising who had the best prices on a lot of items in town, including all those loss-leaders at Safeway. After all, people had been direct charged for a service, getting good, cheap groceries, so the co-op staff dutifully helped the members out. It was not about selling more, it was about giving good service to the people who paid you.

Anyway, it's a strange model for people to get used to, but I think the principles behind it are great. I'm wondering if anyone knows if there are co-ops around these days using and/or (hopefully) making a success out of this model?

Could you describe the Direct charge grocery co-op model? What does it purport to do? How does it operate, etc...

Joseph Lofthouse wrote:
Could you describe the Direct charge grocery co-op model? What does it purport to do? How does it operate, etc...

Sure, sorry... I don't know if they always work exactly like this, but the legendary Nanaimo one apparently charged its members wholesale cost for everything, i.e. they sold everything for exactly what the supplier had charged them. So prices were very low. The overhead costs (rent, utilities, labo(u)r...) were charged directly to the members.

The economic logic is great. So, you're already paying $30/mo. let's say as your share of the overhead. And the place has rock-bottom prices. Why would you shop anywhere else? You want to recoup those $30, and everywhere else is more expensive to buy anything, because everyone else charges a markup on things and your co-op doesn't. So loyalty is built in.

The monthly charge is a marketing problem though, I guess. As cool as this plan seems to me, most people don't want to pay a monthly fee for anything. "Safeway doesn't charge me a monthly fee!" All the time being blind to the higher prices, 20 cents more on this, 55 cents more on that, etc, etc, ... it doesn't seem like money, even though it usually adds up to a lot more than your monthly fee at the co-op. It's the same reason people buy 10 pairs of cheap boots over time for $40 each, rather than one good pair for $150... "$150 is expensive, I can't afford that" ignoring the fact that they're actually spending $400 on the "cheap" ones. I think we're wired to think this way, and we have to train ourselves pretty hard to see things more rationally.

Anyway, the model has this PR problem, or maybe it's a human perception problem, and as a result is not very popular, but I keep hoping that some day people will come around and it will take off. Or maybe it has, and there are some people doing it successfully. That's why I asked. I'd love to hear about any cases people know of.

I moved to the Nanaimo area in 1993. My new landlord soon told me about a wonderful place called the Nanaimo co-op. We went there and I found that the prices of most things that I wanted where higher than that of competing stores. Fresh produce was not up to par with other places. His wife was the mathematician of the family and she did not give positive reviews.

It seemed like an ok place to shop if you wanted to live on over packaged goods. Lots of canned food, premade frozen meals and other processed stuff. The fresh produce department was sparse.

They preached about member ownership , but I saw Ted's annual return and it couldn't begin to compensate for the higher prices he had paid.

Employees could do much better working for Overwaitea , which became Save-on-Foods. Higher wages in a chain that was expanding so there was a chance for them to move up.

We did much of our shopping at the 49th parallel in Ladysmith. Privately owned by the nicest guy in town, Wayne Richmond. He made sure that none of his expired goods went to waste, long before that was popular. He would approach needy families in the aisles, show them some things that needed to go, and then he accompanied them to the cash register where instant markdowns were arranged and sometimes things were free.
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I have no idea of the business model that they purported to use in Nanaimo. The store  and the food in it, were subpar.