Co-ops offer independents chance to compete
Increased buying power is just one advantage for members
by Jill FitzSimmons


Businesses throughout the country have banded together to form cooperatives to be able to compete with larger corporations on a more level playing field.
Co-ops today operate in nearly every industry, including agriculture, child care, energy, financial services, food retailing and distribution, health care, insurance, housing, purchasing and shared services, and telecommunications. They range in various sizes, from Fortune 500 companies to small businesses. There are 48,000 co-ops in the United States, 29 of which bring in more than $1 billion annually, according to the National Cooperative Business Association (NCBA). Some co-ops are big names in business, including Land O’Lakes and Ace Hardware.
Co-ops come in different forms. Purchasing co-ops offer group buying and shared services. They are often times independent businesses that have banded together to enhance their buying powers, lowering their costs and improving their competitiveness. There are some 250 purchasing co-ops in the United States serving about 50,000 independent businesses, according to the NCBA.
Darrell Skiles, president of D. Skiles Corporation, is a member of the Associated Grocers cooperative. That co-op consists of about 365 stores in Oregon, Washington, Alaska and parts of Guam. Skiles owns three grocery stores: Pioneer Market in La Conner, Market Place in Point Roberts and Red Apple in Mount Vernon.
The co-op provides several services to Skiles’ three independent grocery stores. Perhaps most importantly, the co-op has buyers who buy produce, meat, deli and grocery items for co-op members. If the independent grocers weren’t banded together as a group, they couldn’t buy products at a competitive rate, Skiles says. And this would make it hard to compete in an industry with such giants as Safeway, Albertsons, Winco and other such stores.
However, the co-op does more than serve as a buying group. It will check competitor’s prices and report to member businesses. It has an advertising group, which Skiles sometimes uses. Members can buy paper bags and other supplies through the co-op to get a competitive price. It will even print the tags that go on grocery shelves for members who wish to use them. “They allow us to be competitive in many ways,” Skiles says. “It’s the only way we can be competitive.”
Ace Hardware in Anacortes belongs to the Ace Corporation co-op. The co-op offers its members many types of business plans and advertising opportunities. Members share ideas and attend business seminars held throughout the year, says Pat Strand, president of the Anacortes operation. As a business owner, it’s nice not having to reinvent the wheel every time you make a decision; often times, the co-op is able to answer questions or members share their own expertise and experiences, Strand says. And, of course, there’s the buying power that co-op offers.
“I don’t think you can make it in the hardware business without some sort of buyer’s group,” Strand says.
To become a member, business owners must purchase stock into the co-op. The co-op, a business itself, is then governed by its members. Members collect dividends at the end of the year. The co-op has a number of different committees and boards, so members get together often and can become involved in various aspects of the business.
A large difference between a franchise and a co-op is the independence a business owner in a co-op maintains. Membership is open and businesses retain their autonomy. For example, Skiles could move his stores or change their names without consulting anyone. It’s his decision, not the co-op’s.
At Ace Hardware, each store decides what it wants to carry on its shelves, which is especially important region to region, Strand says. The Anacortes store has a large garden area as well as a marine department, something other stores don’t have, she says. In a franchise, often times, these decisions about what you will carry in your store are made from corporation headquarters back east, which don’t take into account individual regions, she says.
There are many successful co-ops in the nation today, Skiles says. They’ve become a common way to do business. “I would say they are just a part of the landscape,” he says.
Skiles advises business owners who may be looking at a co-op to make sure it’s a healthy business. After all, you will be investing in the operation. “The primary thing to look at is the help and what the co-op can offer relative to pricing and other services,” he says.