Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Wednesday, December 03, 2014

Economic development for small towns needs to include the development of cooperative stores

While the US has a strong co-operative business movement within agriculture, with groups serving farmers as businesses as well as marketing and distributing agriculture products to consumers.  For example, Land-O-Lakes, which produces dairy products, Ocean Spray, the distributor of cranberry-based products, and Sunkist Growers are all cooperatives.

But unlike countries like the UK, the US doesn't have as strong a record of retail and banking cooperatives operating on large scale.

Image from KAKE-TV.  

As US rural communities depopulate, and as retail firms focusing on rural markets run into financial problems--for example, Alco, a company serving small communities, has declared bankruptcy and all there stores, almost 200, will close and community residents will be left with big gaps in their retail options.


From "Former Kansas retailer Alco Stores seeks bankruptcy" (Associated Press):
Alco Stores Inc. has 198 stores in 23 states. The Coppell, Texas, company says most of its stores are in towns of fewer than 5,000 people and regions of fewer than 16,000 where there is no direct competition from national or regional broad-line retailers. Alco has 3,000 employees.

Alco had $474 million in net sales from continuing operations in its latest fiscal year. That represented a 2 percent decline from the year before. The company closed 14 stores early in the current fiscal year.
While the UK's Cooperative Group has had financial problems over the past few years because of the banking crisis' impact on their bank division, cooperatives can be a way for communities to step in and own and operate businesses that would otherwise fail.  The group has 4,900 stores and business locations, although they've sold off some divisions, like pharmacies, to raise capital.

I wrote about some of the independent "community serving retail" initiatives in the UK earlier in the year, "Community Owned Retail -- Resources from the UK." While the University of Nebraska Extension Service has an initiative on community retail, it pales compared to the efforts of the UK's Plunkett Foundation.

The Plunkett Foundation is focused on quality of life in rural communities and because of the shrinking population in many rural areas, they have developed programs promoting co-operatives, community shops, community pubs, and other enterprises.

-- Publications, Plunkett Foundation.

Similarly, I have been impressed with the European retail business network Spar, which functions similarly to how Ace Hardware or True Value Hardware organizations function in the US, as a wholesaler and business support group owned by and serving local retailers.  (Similar organizations and relationships exist in the US supermarket industry.)

This simplifies the ability to support stores at the local level when they would normally lack the resources of a national company or organization.

A similar model is the company Eurocash, which is a wholesaler supporting small independently owned shops in Poland ("The man who bet on tradition," Financial Times).

We need similar operations in the US to support store development in underserved communities.

Also see "Yoga, dance and microbrewery beer at UK's first community pub," (Financial Times).

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5 Comments:

At 8:52 AM, Anonymous ndw_dc said...

Richard,

Wouldn't credit unions be considered a cooperative structure? They are technically supposed to be non-profits, or at least that is how they originated, and I believe that credit union members have an ownership interest in the credit union itself. That is why a the equivalent of a savings account at a credit union is called a "share account" instead, and members can vote on important issues facing the credit union (changing the charter, etc.).

And the US has thousands of credit unions. We are actually an outlier in terms of how de-concentrated our banking industry is. That may sound odd considering the history of the last 10 years - with companies like BofA, JP Morgan, Citi, Wells Fargo, etc. accumulating such huge assets - but compared to many other countries we actually have far, far more small and community banks/credit unions. The UK, for instance, is dominated I believe by only 6 or 7 banks in the entire country. In the US, there are literally thousands of credit unions (which are cooperatives), and thousands of smaller community banks (not cooperatives). I totally agree with your point when it comes to cooperative retail, but I think the US is probably way out in front when it comes to cooperative finance. (And then we can get into the CDFI movement, which has picked up steam in recent years.)

 
At 12:09 PM, Blogger Richard Layman said...

1. you're absolutely right.

2. However, the places that don't have retail typically don't have credit unions.

3. and US credit unions don't appear to be a factor in the support of locally controlled retail, at least not in the same way that the Cooperative Society functions in the UK.

(e.g., H Street NE is a rare street with a functioning independent credit union and has been on the corridor for 40 years or more.)

4. note that I didn't mention Nationwide Insurance, or discuss business cooperatives more specifically.

The National Cooperative Bank is a financial entity that can be tapped for financing. (Although mostly for cooperative grocery stores.)

--
I think it's fair to say that we don't have the right mix of institutions and business organizations in the right place to be able to support the maintenance of community owned businesses in small towns. E.g., note that Alco stores are typically in towns of 5,000 or less population.

... I've been interested in this for a long time as a way to also provide for and expand local retail options in underserved urban communities.

cf. http://nextcity.org/daily/entry/nations-first-non-profit-supermarket-opens-in-chester-pa

 
At 2:19 PM, Anonymous Anonymous said...

Tons of hardware stores, (Ace, Do-It-Best, True Value), Southern States, IGA, not to mention electric and telephone coops still dot many rural landscapes I can think of.

 
At 4:29 PM, Blogger Richard Layman said...

yep. supermarkets and hardware stores are well established being delivered through business cooperatives.

we need similar forms in other retail categories... or maybe Ace, True Value, and IGA could create variety store formats too.

 
At 1:01 PM, Anonymous Anonymous said...

I have seen many of the hardware stores where the product mix was localized and diversified enough that they could be deemed "general stores".

 

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