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.