Economy

"Our human destiny is inextricably linked to the actions of all other living things. Respecting this principle is the fundamental challenge in changing the nature of business."
- Paul Hawken, The Ecology of Commerce

 

A SUSTAINABLE ECONOMY
- = Sustainable Economy Initiatives = -

The Mid-Island Cooperative, Nanaimo, Vancouver Island

The Mid-Island Consumer Co-operative, on Vancouver Island, is a 22,000-strong consumer cooperative, with its main activities in the retail food and gasoline sectors.

Origins

Vancouver Island lies off Canada’s west coast, and Nanaimo (population 77,000) is its second city, after Victoria. The Mid-Island Consumer Services Co-operative was founded by active members of the Nanaimo Credit Union in 1960. The founders took their inspiration from Canada’s cooperative movement, which grew strong during the 1930s as a response to the Great Depression. Before that, their inspiration dates back to the Rochdale Pioneers, who founded the first consumers’ cooperative in the 1840s, and to British Columbia’s first cooperatives in the 1860s. From an initial membership of 330 people, the Co-op now has 22,000 members, and yearly sales of $46 million (£19 million).

Aims and Objectives

The Co-op’s fundamental aims are to enable people to be active participants in creating their future; to encourage social democracy; and to work together for the members’ mutual benefit. Its members take pride in taking on "the big boys" of retail consumerism, and winning at their own game.

Activities

The Co-op’s activities fall into two spheres: food and gasoline (petrol). Inspired by the success of a group of Saskatchewan prairie farmers in the 1930s who raised $30,000 and built their own co-operative oil refinery, the Mid-Island Co-op bought 3 acres of land, built their own gas station, and started selling gas (petrol) and furnace oil in 1962. As this succeeded, the members asked for a cooperative retail food outlet, which opened in 1971, with a second store opening in 1974, both selling at cost. Membership was now up to 5,000. The gas station side has grown steadily, and the Co-op now operates 6 full-service stations/convenience stores, including ‘cardlock’ sales to commercial customers, and sells its gas to a further 12 stations. The food side went through a period of expansion, and then retraction, when one of the stores had to be sold. The current store offers a full range of supermarket goods and services, including groceries, fruits vegetables, meats, bakery, a deli, organic foods, a garden centre, dry cleaning, shoe repair, film developing, stamps, bus passes, recycling, a book exchange, Credit Union financial services, a coffee shop, and a delivery service.

Structure

The Co-op is a registered cooperative, governed by an elected board of 9 directors (including one youth director). As one of 298 Co-ops in Western Canada, it is a member of the Co-op Retailing System (CRS), which also owns Federated Co-operative, the wholesaling arm of the co-operatives. Federated Co-operative in turn owns the original petroleum refinery in Saskatchewan, a forest products plant, and seven feed production plants for pigs, poultry, beef, bison, elk and pets.

Finance

The Co-op has $19 million in assets, $11 million in liabilities and $8 million in Member Equity. In 2001 it had annual sales of $46 million (£19m). The food side, with revenues of $13 million, made a loss of $1.1 million in 2001, while the gas side, with revenues of $33 million, broke even. The Co-op also received $3.3 million in patronage allocation from the Federated Co-operative, representing its share of the profits on the distribution of wholesale supplies ($2.3 billion in sales), resulting in an overall profit of $2.2 million for the year. Since it started in 1960, total sales increased every year except for a period during the 1980s. To become a Member you are required to buy 10 $1 shares.

Performance

Over the Co-op’s 42 years of activity, there have periods when the food side has carried the Co-op (in the 80s), periods when the gas side has carried it (at present), and periods when the Federated Co-op’s lumber business has carried it (the early 80s, during the big recession). In the early days, produce in the food store was displayed on industrial shelving and sold at near-cost. This upset some suppliers, but when they realized how successful the Co-op was being, they soon came back. As the Co-op got going, the members began to realize the benefits they were receiving, and gave it their full-hearted support. As new members joined, a second food store was opened in 1974, which doubled in size in 1977, and the first store was enlarged. There was a monthly newsletter that spelt out the co-operative philosophy, and the early to mid-1980s were a heady period when it was hard to put a foot wrong. Membership kept rising, and purchases per member (at wholesale prices) were the highest for any retail co-op store in North America.

In the mid 1980s, however, the city of Nanaimo went on an out-of-town mall-building blitz, creating intense competition for the Co-op’s food sales, and effectively killing off Nanaimo’s downtown. In response, the weekly fee was increased, proper shelving was installed, and price scanners were introduced, instead of the members pricing their own purchases at the shelves; the workforce also became unionized.

In 1989, the food side faced declining sales and a major cash crisis. The weekly fee was abolished in favour of the $60 annual fee, and the Co-op opened its doors to non-members, who currently make up 15% of the food purchases. The prices were adjusted to normal retail level, and the Co-op started advertising for the first time. The 1990s have continued to be a difficult time for the food side, with Board directors, members and managers coming and going, perhaps indicating a general weakening of commitment. In 2002, the decision was made to close one of the two large food stores, causing 50 staff to lose their jobs.

The gas side of the Co-op, meanwhile, has expanded steadily during the 1990s, with new outlets-plus-convenience stores being run as franchises by independent operators. In the 1970s and 80s, the gas was sold to members at the regular pump price through coupon books (colour-coded to show the grade of gas required), with the members obtaining an immediate 7% discount. Today, 45% of the gas sales are to non-members, and three new convenience stores/gas bars have been opened in the past two years.

Future

The Co-op’s gas side is doing just fine, and will continue to expand. The food side still faces difficulties, however. For a period, the food stores tried to mimic the big stores, but this has not worked; the challenge now is for the remaining store to establish a new identity, at a time when most of the Co-op’s members are growing older, and younger people are not being attracted to the co-operative approach, and its benefits. How the Co-op will meet this new challenge has yet to be determined – though the faith that it will meet the challenge is strong.

For further information contact :

Dave Hoy,
General Manager,
Mid-Island Cooperative,
2517 Bowen Rd,
Nanaimo, B.C. V9T 3L2, Canada

Tel: 250-729-8401
www.midislandcoop.com


Written by Guy Dauncey, Sustainable Communities Consultancy, Victoria, B.C., Canada

guydauncey@earthfuture.com