Word: coops
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Dates: during 1960-1969
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Keeping the Coop a profitable business, while at the same time offering both low prices and a rebate is becoming harder and harder each year. Although he won't know for sure until the close of the Coop's fiscal year at the end of June, Brown is afraid that the membership rebates will have to be cut again this year. "Nobody wants to cut them," says Brown. "But we can't pay what we don't earn. As they say, you can't get blood out of a turnip...
...COOPS rebate policy is one of the most misunderstood aspects of its whole operation. As a cooperative society, the Coop must pay back to its members all the profits left over from members' purchases after taxes and operating expenses. Unless the Coop pays this patronage refund, that profit is liable to be taxed up to fifty per cent as it is in any large corporation...
Members account for about 82 per cent of the Coop's sales. Thus, 82 per cent of the Coop's profits go back to the membership at the end of the year. The other 18 per cent gets cut in half by taxes, and the remainder is all the Coop has left for reinvestment and growth. Although the Coop appears to have a lot of money, it really doesn't. There are not large sums hidden away in the vaults of the Harvard Trust. In fact, whenever the Coop has needed to expand in recent years...
Brown points to a number of factors which may force the Coop to lower its dividend rate as it did two years ago. Although sales have continued to grow (they will be over $16 million this year, compared to $15,282,000 last year), expenses have risen at a faster rate. Marginality has finally caught up with the Coop. For years he Coop had endeavored to give, in a sense, a double discount. Besides the patronage refund, the Coop has always made a point of pricing as low as or lower than its competition. In fact, the Coop was founded...
...arrival of the discount house in the last ten years has really put us in a squeeze," Brown admits. "We have always tried to price as low as anyone, but now that low is relatively much lower than before. In order to get a dividend, the Coop must cut corners wherever it can. The rebate has to come from somewhere if it doesn't come from higher prices. You can't have a superlative store and fixturing, $5-an-hour sales people, maintain discount prices, provide a lot of service in the form of special orders and still expect...