Retail co-operative society is a form of co-operative in which many small independent retailers pool their resources together to enable them make bulk purchases and then sell the goods at lower prices to their members.
The major purpose of co-operative society is to make profit. The profits made are shared in proportion to the amount of purchase made by each member.
The co-operative societies are formed basically to:
- arrest high cost of commodities.
- arrest the activities of middlemen.
- protect inexperience buyers from skillful salesmen.
For a retail cooperative society, capital is provided by members who pay a membership fee and also buy at least, one share.
Features of Retail Co-operative Society
- Stock variety of goods: Retail cooperative society is known to stock wide variety of goods for their members.
- Owned by members: The retail co-operative society is owned by the entire members who register and buy their shares.
- Patronage by members: The retail cooperative society is basically patronized by members.
- Management by elected members: The retail co-operative society is usually managed by elected officers who form the management committee.
- Democratic control: Most cooperative societies do achieve their objectives by democratic control because all their decisions are taken through election and the view of the majority is obeyed.
- Lower prices: Retailer cooperative society do enjoy low prices of goods because they purchase their goods in bulk.
Advantages of Retail Co-operative society
- High turnover: Since members are paid dividends based on their purchases, the turn over is high because members always purchase from the co-operative society.
- Sales on cash and carry basis: Sales are strictly on cash and therefore, there is nothing like bad debts.
- Low prices: Members pay low prices for goods purchased from the cooperative society.
- Economics of large scale operation: Retail co-operative societies do enjoy economics of large scale operation as a result of the availability of huge capital which enables bulk purchases and resulting in low prices of goods to customers.
- Democratic management and control: Retail cooperative society is usually managed and controlled by elected management committee and members have equal rights i.e. One man, One vote.
- No need for advertisement: There is no need to spend money on advertisement since most members are customers of the society.
- Payment of dividends: Retail co-operative society do pay dividends to their members on the basis of patronage at the end of the year.
- Membership is open to anybody: Membership of the retail co-operative society is open to anybody who can pay a membership fee and buy, at least, one share.
- No exploitation: There is no exploitation because any surplus reverts to members according to their purchases from the cooperative.
Disadvantages of retail Co-operative society
- Too much democracy: There is too much democracy in retail cooperative society to the extent that management depends on votes of members in order to hold a position.
- Incompetent management: Most of the elected members that manage the cooperative society may be illiterate and incompetent to run the business.
- Illiteracy of members: Most members in retail cooperative lack the knowledge of modern trends in business.
- Narrow range of goods: Retail cooperative society deals on very few range of goods. They may have only two to five range of products available to members.
- No room for credit facilities: There is no room for credit facilities as goods are purchased on cash and carry basis.
- Lack of capital: Most co-operative societies lack capital to finance their projects.
Advantages of large scale retail trade
- Economics of scale: Large scale retail trades enjoy economics of scale because of their large size.
- Bulk purchase: They can buy goods in bulk and sell in bits or units.
- Extensive advertising: Large scale retail trade can afford to carry out more extensive advertising to increase sales.
- Operates on cash and carry basis: Their size ensures that they sell only on cash and carry basis which ensures no bad debt.
- Risk is widely spread: The risk of the business is widely spread, loss in one branch is covered by other branches.
- Employment of expert: Large scale retail trade usually employ competent or specialist staff to run their operations.
- Access to larger capital: They have access to larger capital, to improve operations which may increase profit.
- Stock variety of goods: Their size makes one stop-shopping possible in other words they have the ability to stock variety of goods.
- Provision of after sales services: Large scale retail trade provides after sales services, which are beneficial to consumers.
- Facilitates e-commerce: Large scale retail trade facilitates electronic buying and selling (i.e. e-commerce).
- Requires few sales attendants: Only few sales attendants are needed because of self-service.
Disadvantages of large scale retail trade
- High cost of operation: Extra running cost will be incurred in the operation of the business eg. extra cost of baskets, trolleys, etc.
- No credit facilities: Customers are not allowed to have credit facilities in this type of retail business.
- Less personal attention: The nature of the large scale retail trade which allow self-service and price tags leads to less personal attention given to customers.
- High rate of pilfery: As a result of self-service, goods in this type of business are prone to high level of pilfery by customers.
- Restricted only to urban centres: Large scale retail trade is restricted only to urban centres thereby denying the rural dwellers goods at cheaper prices.
- Inability to bargain: Most goods in large scale retail trade carry price tags and this makes it impossible to bargain or price the cost of these goods.