Will Coop Rebates Increase?

Your Coop rebate could be bigger this year.

Official sales figures won't be available until the end of the month, but this may be the year the Harvard Cooperative Society reverses its sagging financial fortunes.

It's not as if the rebate could go any lower. Last year, the Coop hit rock bottom. Coop President Jeremiah P. Murphy '73, just six months into his tenure in the Coop after a successful career at Nieman Marcus in Dallas, announced an annual rebate to members of 1.1 percent of their total purposes--the lowest since records have been kept.

The precipitous drop in the rebate, which was 5 percent the previous year and in the not-so-distant past has been as high as 13 percent, angered students and cut short Murphy's honeymoon as the new president. The rebate, paid annually to members, comes out of company profits, which declined more than 80 percent between 1991 and 1992, from $2.6 million to $460,000.

Lost in the popular outrage over the low payback rate was much of the work Murphy did during the past year to change the way the Coop does business. Murphy's reforms could have their first important impact when the 1993 rebate is announced later this month.

If the rebate is higher, it will be largely because of two factors: a slight rebound by the New England economy and the activist approach of Murphy as a manager.

Outside of the economy, the biggest reason for declining profits--and, thus, the lower rebate--was a loss in sales in the music department. The loss was triggered in part by competition from Tower Records and HMV, which opened new stores in Harvard Square.

Murphy responded in two ways. First, he cut prices on music goods in an attempt to get sales volume up. Then, he began looking for other sources of revenue for the Coop.

Murphy found what he was looking for with the Champions Shop, which sells items with the Harvard insignia to eager tourists, parents and students. Insignia merchandise sold well even before Murphy created the Champions Shop. The shop's sales figures for the past year promise to be even better and should take some of the sting out of losses sustained by the notoriously unprofitable textbook department.

The new president has also introduced a home works shop and widened aisles in the stationery department to make the area more customer-friendly. And he revamped the advertising strategy, relying more on radio ads and less on print.

Murphy's reforms appear to have the support of the Coop's board of directors, which includes Faculty members and students from Harvard and MIT.

"This combination of analysis of business, adjacencies and renovations will continue to make the Coop a noteworthy retailer in the '90s," wrote William Dickson, chair of the Coop's board of directors, in his report to members last year.

That's what Dickson believes, but the unspoken fear of the chair of the board, Murphy and everyone at the Coop is his strategy won't work.

The diversification of Harvard Square, the store's high fixed costs and the still-sluggish retail market could conspire to deal another severe blow to the Coop's finances and the student rebate.

The students will find out soon enough. The Coop rebate should be announced in the next few weeks.