Rural Grocery Cooperatives
Phil Kenkel
Bill Fitzwater Cooperative Chair
Independent grocery stores operating in rural communities often struggle to maintain economic viability. A number of solutions to the disappearing rural grocery store have been attempted. Some towns have established community owned stores while others have created a grocery operation involving the school. One of the intriguing models is the rural grocery cooperative. Agricultural cooperatives are a center piece of rural communities while food cooperatives serve an important food niche in urban centers. The rural grocery cooperative attempts to build on these successful models to create grocery stores in isolated rural communities.
A case study or rural grocery cooperatives was conducted by the University of Wisconsin. The study identified some of the critical success factors and potential pitfalls. Not surprisingly, a strong experienced manager was a key to success. Successful rural grocery cooperatives also had substantial investment from their members and benefited from a culture of cooperatives in the community. The study found that members of existing rural cooperatives were more likely to become members and patrons of rural grocery cooperatives than were other rural residents. Being located in an area without significant competition from super stores, the support of rural political leaders and the support of local volunteers were also important success factors.
The Wisconsin study also identified several common pitfalls for rural cooperative groceries. One pitfall was having too many social goals such as creating jobs, creating economic development and even saving the local community. It appears that the board or rural grocery cooperatives, like board members of other cooperatives, must decide whether they are running a business or a social organization. Other common pitfalls included poor planning, a lack of financial oversight, poor location and turnover in staff and management. The study also described a pitfall in failing to capitalize on their cooperative advantage. A business formed and owned by an engaged set of patrons has financial, leadership and marketing strengths that can give it an advantage over other business models. Rural cooperative groceries that did not cultivate this support from the point of startup were more prone to failure.
Rural cooperative groceries are just another example of how cooperatives develop to address unmet needs. It is interesting to note that both the keys to success and the common pitfalls are similar to those facing agricultural cooperatives.
11-10-2010