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Why Do Co-Op Stores Only Work in Small Towns? (lemmy.dbzer0.com)
submitted 1 year ago by to c/australia@aussie.zone
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Most small rural towns in Western Australia have a Co-op store.

I'm a bit sketchy on the details but my understanding is that they're not-for-profit's, they charge a mark up on the things they sell, but really just enough to pay wages for employees. Any left over money is distributed to the people who buy things.

Why do these only exist in small towns and why aren't they a thing in larger towns and cities?

It would be amazing to only pay cost plus wages for your groceries.

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[–] 22 points 1 year ago (5 children)

If I had to guess, part of it would be that many staple groceries are actually sold below cost by the majors as loss leaders to get people in the doors. They can also force suppliers, with their larger buying power, to sell them things for cheaper. A good example of all this is milk.

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  • [–] 13 points 1 year ago (4 children)

    Not necessarily selling below cost. They can save money in all sorts of ways:

    • charging brands to put their products in the best shelves
    • fridges and shelves with ads and product names (often provided for free by the brands)
    • bigger sales volume reduce cost of storage, reduce amount of expired products and as you said, also guarantee a better price when acquiring the goods.
    • they have much more data on what sells at what price
    • they know very well what kind of products people will check the price for and which ones they'll just buy in whatever store they are already at (so they put a lower price on product X to get people in the store and then a higher price on product Y to cover for it)
    • they own multiple store brands, with different price ranges, so they can make one store generate profit for both of them similarly to the previous point.
    • they do all sorts of sketchy stuff to get tax breaks, insurance claims and other stuff that may have give them some money back
    • they may sometimes move products between stores to sell everything that might be expiring soon
    • they have their own product brands that they can save money on
    • in some places they may re-package stuff to artificially extend their shelf life.
    • probably a lot more stuff I never even considered.
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  • [–] [S] 2 points 1 year ago (2 children)

    These are all really good examples of what large grocers can do to maximise profits, but it doesn't really answer my question.

    A large not-for-profit could leverage most of these advantages. Multiple stores in multiple cities certainly could.

    IGA stores are all independently owned but have a combined distribution network.

    They wouldn't have to achieve the same volume that colesworth does because... they don't need any profit.

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  • [–] 4 points 1 year ago (1 child)

    I know they both (Coles + ww) did some sketchy stuff to kill off all stores around them, they set up contracts with premises not to let competitors in the buildings, those contracts have been made illegal, but they still existhow are you going to know they exist to eradicate them. Plus high rents that are killing for profit businesses, that combined with Coles + ww buying power, (bulk buying in truckloads) mean they can acquire a product at a ridiculously lowered price and can therefore lower the price to much lower than a side seller can, until those go out of business and then they start the aggressive price rises, once they've killed off competition. They also sign contracts with producers that don't allow them to sell to anyone else. They do heaps of other, really aggressive anti competition stuff, that should be illegal, but they probably lobby to skate by unregulated. I would suggest there's reasons politicians aren't doing anything about the monopoly or the practices they've utilised to become a monopoly, in tandem. So those practices would keep anything like what you're talking about out.

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  • [–] [S] 1 point 1 year ago

    they set up contracts with premises not to let competitors in the buildings, those contracts have been made illegal, but they still existhow are you going to know they exist to eradicate them.

    Sure but a co-op wouldn't need to be in a shopping centre next door to colesworth.

    Plus high rents that are killing for profit businesses

    This effects everyone, and isn't a reason why co-ops aren't common.

    that combined with Coles + ww buying power

    This is the most credible reason that most people are proposing. IGA stores share a purchasing and distribution network to mitigate this disadvantage as much as possible. I don't know much about that.

    They also sign contracts with producers that don't allow them to sell to anyone else.

    True. The flip side of this is that smaller local producers could work with a co-op.

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