Business review; Retail cooperatives
- Transcript
From the national educational radio network here is a Business Review ASSOCIATE PROFESSOR ROSS Wilhelm of the University of Michigan Graduate School of Business Administration presents is abuse and commons of business and economic activity. One of the interesting minor points of debate and retailing is why have consumer retail co-operative stores been highly successful in some parts of the world where they've generally not been successful in the United States cooperatives at the retail level have been highly successful in Great Britain and Sweden for instance where the cooperatives are giant organizations comparable to our chain grocery stores. Yet in the United States cooperatives have not managed to make much of a dent in the retail trade. I've been fairly successful here in wholesaling functions particular in agriculture. In addition we've seen some success in the banking field with the organization of credit unions but we've not seen them successful in retailing. The hypothesis which seems to best explain this variation of experience is the cooperatives are only successful where they are fulfilling a function which is not being adequately carried on by a profit making organization or where there is an effect of Monopoly and retail trade exercised by the privately owned stores. A monopoly by privately owned stores is
achieved when ever there is an effect of enforced resale price maintenance agreement among the stores. When United States have had laws legalizing resale price maintenance agreements are fair trade laws as they are known in most of our states as well as a federal law since the 1930s. However the American fair trade laws of largely been ineffective. In contrast up until 1964 Great Britain had one of the most effective set of arrangements for ensuring resale price maintenance in the world. Manufacturers refused to sell to wholesalers who cut prices wholesalers refused to sell to retailers who cut prices in other parts of the world where cooperatives have been effective. There have been similar monopoly arrangements among the retailers. The main reason why cooperatives are not able to compete effectively where there is no monopoly among retailers arises from the principles on which most of the cooperatives are based. The principles guiding co-operative operations are called the Rockdale play and they derive their name from Rockdale England where in the early 1900s a group of weavers formed a cooperative and evolved the principles. The principles include the
holding of the cost of doing business down by such devices as cell service location of the store and low rent areas the sale of privately branded merchandise instead of nationally advertised brands sales for cash and the use of an expect so inexpensive displays a second principle is that the store sells its products is this at the same prices as do other stores. And lastly any profits or overcharge is earned would be returned to the customers in proportion to the customer's purchases from the store. After the stockholders have been paid the going rate of interest on their capital contributions. There are other minor principles such as one man one vote and so on but they are important to us here. The main reason the cooperatives are not been successful here particularly in grocery retailing is because our grocery chains are probably the most efficient business organizations in retailing and they operate on a very low margin of profit around 2 percent of sales. If the cooperatives tried to compete with such chains and sold at the same prices as the chains they would assuming they were equally efficient. None have been have very little money to
return to their customers in the form of profit over charges. The simple fact is that American grocery chains follow most of the selling principles of cooperatives and yet they pass their savings on to the customers immediately in the form of low prices rather than a check for over charges at some future date. Cooperatives have not been able to survive against such competition. In recent years we've had an opportunity in Great Britain to observe a test of this hypothesis for since 1964 Great Britain has been eliminating much of the monopoly in its retail trade by means of anti-monopoly laws. The process has been a slow one because of the way the law is written but the end is being accomplished. Interestingly enough the cooperative movement in Great Britain has been having a hard time in recent years also the total sales of the retail associations have been a loss of the retail societies have been off since 1966 and their growth in sales in 1968 was only 2 percent over one thousand sixty seven. Well total retail sales in Great Britain rose by 6 percent. The cooperatives are having great difficulties as the British Retail trade has become more
competitive. The cooperatives did manage to compete effectively with unfair trade on cigarettes was removed. However this was due more to the way Englishman buy their cigarettes than anything else. The fundamental problems of the British cooperatives are that they have many inefficient stores and are not able to get rid of them. It will be interesting to continue to observe the British cooperatives over time to see if they can survive in a competitive market. That was Associate Professor Ross Wilhelm of the University of Michigan Graduate School of Business Administration. With his views and comments on business and economic activity Business Review is recorded by the University of Michigan Broadcasting Service. This is the national educational radio network.
- Series
- Business review
- Episode
- Retail cooperatives
- Producing Organization
- University of Michigan
- National Association of Educational Broadcasters
- Contributing Organization
- University of Maryland (College Park, Maryland)
- AAPB ID
- cpb-aacip/500-1v5bh21w
If you have more information about this item than what is given here, or if you have concerns about this record, we want to know! Contact us, indicating the AAPB ID (cpb-aacip/500-1v5bh21w).
- Description
- Episode Description
- In program number 413, Ross Wilhelm discusses retail cooperatives and why they haven't succeeded in the United States as they have elsewhere in the world.
- Series Description
- This series, hosted by Ross Wilhelm, focuses on current news stories that relate to business and economic activity.
- Broadcast Date
- 1969-05-13
- Topics
- Business
- Media type
- Sound
- Duration
- 00:05:16
- Credits
-
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Producing Organization: University of Michigan
Producing Organization: National Association of Educational Broadcasters
Speaker: Wilhelm, Ross, 1920-1983
- AAPB Contributor Holdings
-
University of Maryland
Identifier: 61-35c-413 (National Association of Educational Broadcasters)
Format: 1/4 inch audio tape
Duration: 00:05:02
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- Citations
- Chicago: “Business review; Retail cooperatives,” 1969-05-13, University of Maryland, American Archive of Public Broadcasting (GBH and the Library of Congress), Boston, MA and Washington, DC, accessed October 9, 2024, http://americanarchive.org/catalog/cpb-aacip-500-1v5bh21w.
- MLA: “Business review; Retail cooperatives.” 1969-05-13. University of Maryland, American Archive of Public Broadcasting (GBH and the Library of Congress), Boston, MA and Washington, DC. Web. October 9, 2024. <http://americanarchive.org/catalog/cpb-aacip-500-1v5bh21w>.
- APA: Business review; Retail cooperatives. Boston, MA: University of Maryland, American Archive of Public Broadcasting (GBH and the Library of Congress), Boston, MA and Washington, DC. Retrieved from http://americanarchive.org/catalog/cpb-aacip-500-1v5bh21w