Lake Cowichan Consumers' Co-operative Society

Date of Incorporation: 1950

Membership: 1400

Area Served: Lake Cowichan

Activity: This consumer co-op operates a grocery and hardware store in the town of Lake Cowichan, and has recently become the petroleum dealer for two local gas stations, which provide a discount on fuel for co-op members. It is a member of Federated Co-operatives Limited.

Background

The Lake Cowichan Consumers' Co-operative Society (LCCCS) formed just over fifty years ago to bring purchasing power to the people living in the Cowichan Lake region. Most of these people earned their livings through the forestry industry, and many were members of the Industrial Woodworkers of America (IWA) union. This played a significant role in the formation of the co-op, which became known as the "union store," due to the fact that all the original store's staff were also union members.

The co-op began with a small building, and would bring in truckloads of goods for its members to purchase there at lower costs. Back in its initial years members of the co-op would purchase goods on payday and stock up for the two-week period. The store eventually purchased a building along Lake Cowichan's main street, which it continues to operate out of to this day.

The audit report and financial statements from 1957 show that the co-op had 565 members at that time. The board meetings were held once a month on average, with approximately five board members present. That year the co-operative had $255 445.40 in sales (an increase of 5.5% from the previous year), and a net income of $10 284.56. The co-op also completed an addition to their building in 1957. Because of the co-op's increased operations, the BC Co-operative Wholesale Society (which the co-op was a member of) offered to assist in the development of a more comprehensive accounting plan.

Stable Commitments, New Imperatives

Many things have changed since the early years of the LCCCS, but its operating principles and commitment to the community remain the same. The co-op staff are part of the union and make a good union wage with a full benefits package. This is unusual in the grocery business; most stores would pay only slightly above minimum wage, with no benefits or employment security.  Some of the co-op customers express their satisfaction at seeing employees who are satisfied with their working conditions, and who enjoy secure employment in their own town. Most of the current staff members have been at the store for fifteen years or more. The store has also hired some local youth, who also receive union wage and a benefits package.

Paying staff higher wages increases the cost of business up for the co-op, which is one reason why store cannot offer prices as low as those at the discount stores.  Consumers in the community used to cite the fact that co-op employees worked for union wages as a reason for loyalty to the co-op store. Nowadays, according to the co-op's general manager, people in the community do not consider this a significant reason to shop at the store.

The LCCCS and the Overwaitea grocery store, which opened in the 1960s, provided most of the grocery shopping for the area until quite recently.  Due to economic downturn and lower employment levels in Lake Cowichan itself, more people are working and doing business in Duncan but continuing to live in Lake Cowichan, because of the area's lower housing costs. Lake Cowichan residents are increasingly shopping at the large discount stores, such as Superstore and Wal-Mart, which have recently opened in Duncan.

There are demands from the consumer market that go beyond a simple desire for cheaper goods. Consumers are looking for more than just storage goods purchased on payday, which was the pattern when the co-op first opened. They now demand a wide selection of fresh and prepared foods. This has required the co-op to purchase more freezer and fridge storage units in order supply more goods of this kind.

The co-operative changed management in the last few years and Tom Denninger, the new manager, has developed a number of original practices for the co-op. Firstly, Denninger lowered the membership fee from $25 to $5 annually, which resulted in an approximate jump of 400 members to the current 1400. This has provided the membership base the co-op needs to survive. Unfortunately, the increase in membership has not significantly increased the co-op's sales. According to Denninger, if each co-op member spent an additional $5 per week in the store, this would provide the sales volume the store needs in order to survive. The current challenge for the co-op is to determine how to get the members to increase their purchases.

Denninger's second strategy for economic survival was the reintroduction of petroleum services. The co-op now supplies the petroleum for two local gas stations. This venture does not require much effort on the co-op's part, as it only holds the accounts receivable and does not actually operate the gas stations. This strategy secured the co-op's finances over the last few years; Denninger argues that the co-op would have shut down in December 1999 if they had not been dealing in petroleum, which counts for slightly over half of the co-op's sales at this point.

Structure of the Co-op

The co-operative is a member of Federated Co-operators Limited, and Vancouver Island Central Services Co-operative, which has offered support to the LCCCS.  These organisations hold meetings to discuss business strategies for the co-op, to pool the resources of the various co-op stores throughout the area, and to provide training to the managerial staff. Federated Co-operators Limited also provides a significant portion of goods to the co-op, as well as services such as auditing the financial reports, and printing promotional documentation. As Denninger expressed, "It's like being in a co-op within a co-op within a co-op." This helps to create a sense of security and camaraderie within the consumer co-operative movement.

The Lake Cowichan Consumers Co-operative Society has a board of directors with approximately seven members, although its board membership has been as low as five at certain points in the co-op's history.  Recruiting members can be difficult.

The board meets approximately every four to six weeks, and is responsible for hiring the general manager, who in turn is responsible for hiring the co-op's staff.  Currently the store employs thirteen staff members, "a pretty tight ship" according to Denninger.  The management initiates most of the co-op's decisions, and the board members act as a sounding board for these initiatives by offering their opinions and ideas.

Commitment to Community

The co-operative hosts membership appreciation picnics, and provides goods at cost for events held by local service groups and kids' groups, such as minor hockey and baseball teams.  Non-profit organisations get a ten percent discount on all products, and the co-op donates gifts for prize draws. The store also donates facilities such as coolers for community events, and provides food for concession stands during the Lake Days celebrations.

Looking to the Future

The Lake Cowichan area has suffered from economic downturns, and most businesses in the area have felt the effects of this situation. The primary industry in the area has always been forestry and wood processing, but several mills have shut down recently.  The town of Lake Cowichan is now attempting to bring secondary industries such as a chicken processing plant into the area. One obstacle to this type of development is that the Lake Cowichan district does not own any industrial land. Most of the land in the area is owned by logging companies. Unless the issue of land tenure is addressed, the community will have a hard time reviving its economy.  Despite these challenges, Tom Denninger is hopeful the co-op can encourage its members to increase their spending and loyalty to the store, which would allow the co­op to continue to thrive in the Lake Cowichan community for years to come.

Case Study Information

This case study was developed for a report entitled Situating Co-operatives in British Columbia - 2000-2001, which was prepared for the Province of B.C. (Ministry of Community Development, Co-operatives and Volunteers) by the British Columbia Institute for Co-operative Studies, University of Victoria. To obtain the information for the case study BCICS and the co-operative entered into a partnership agreement. BCICS is grateful to the co-op members for their contributions and time. The case study is published with the approval of the co-operative. Further information regarding this study includes the following:

Researcher: Lloy Wylie
Date of research: 2001
Author:  Lloy Wylie
Date of writing: 2001
Editing: BCICS editorial group
Supervision: Kathleen Gabelmann, BCICS Research Co-ordinator

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