The Uncooperative Coop

DID YOU ever stop to think why that department store over in the square bears the name of an enclosure for chickens? You might be surprised if you were to investigate the significance of the name, "Coop" derives from "cooperative society," and a quick look in webster's tells us that the phrase "Cooperative society" designates "any association for buying and selling to the better advantage of its members or participants by elimination of middlemen's profits." Cooperative societies buy in large quantities at wholesale prices like retail outlets, but while retail outlets price goods to make a profit, cooperatives sell at cost to save their members' money. Food co-ops, for example, often save members 40 percent off retail.

Ostensibly, the Coop is like any other cooperative. A collective of the Harvard and MIT communities, it is responsible to those communities and constituted to serve them. The Board of Directors is comprised of 11 faculty members and alumni and a general manager, all elected annually. The Coop furnishes books, school supplies, and other goods that the university community demands. There is just one hitch--the Coop is not saving its members money.

What about those great rebate checks that help you balance your bank account every October? A little sign by the cashier's counter at the Coop's Harvard Square store points out that your membership rebate has been rising steadily for the past 10 years--about .1 percent a year to a whopping 9.9 percent last year. What the sign fails to point out is that a little comparison shopping around the square will get you that same discount or better, and you don't have to lend your money to the Coop for a year at no interest for the priveleage.

You do not have to be a grizzled vetern of the local shopping wars to realize that Coop prices are at the high end of the retail spectrum. You can find cosmetics and toiletries for less at CVS, records for less at Strawberries, and books for less at Wordsworth. Sometimes the Coop rebate makes up the difference, but even when it does it comes a year too late in inflated currency that could well have financed a few nights on the town last year or at least have been earning some interest.

Of course, the Coop does provide some special services like selling obscure textbooks for classes ranging from semiotics to sanskrit and custom Lesley College notebooks, but why aren't these services provided at a real discount? That is the point of a cooperative society, anyway, and other stores seem to be able to sell at lower prices than the Coop and still make a profit.

Book sales are a good example. On the one hand, the Coop has a great selection and has to cope with the tremendous and varied demands for course books from MIT, Harvard, Lesley, and the various Harvard professional schools. But the typical retail markup for book sales is on the order of 100 percent. The Coop sells books at retail--or 10 percent off, counting the rebate. Many bookstores make a considerable profit selling at 10 or 20 percent off. If the Coop is not making a profit, what exactly is it doing with our money?

IT IS DIFFICULT to discover why the Coop can't offer its members a better discount. Unlike most co-ops, it does not regularly send its members financial statements. In fact, in order to find out anything about the Coop's financial status you have to set up an appointment with the General Manager's secretary--not a surefire way to keep thousand of Coop members abreast of their society's doings.

Is the Coop being poorly managed? If you're a member, you just have no way of knowing: your co-op is being managed incognito. But it doesn't have to be this way. The directors of the Coop are elected by its members. And while political activism may no longer be chic, even the most pragmatic aspirant to Harvard Business School should be able to get excited about a little economic activism. In theory at least, if enough people are interested in a cooperative society that will actually save them money, we could actually make the Coop cooperative.