The Coop Loses Its Mission (and Rebate)

I was in the Coop the other day, searching for a textbook. Going up stairs and down hallways, with soft, sappy elevator music soothing my ears, I passed by all kinds of merchandise. Women's clothing. Electronics. Tapes and CDs. Picture frames. The Coop truly has everything, I thought.

Everything except student shoppers.

You see, the Harvard Cooperative Society has ceased to serve student needs. Instead of providing bargains, the Coop has become a pricey department store. And the yearly rebate is so miniscule (one percent last year) that the store should be embarrassed to send out checks that small.

The Coop of today has all but abandoned its original purpose. It was founded in 1882 by a group of Harvard students who felt that the prices offered by Harvard Square merchants were excessively high. Thus, these ambitious students decided to open a store to provide members--students, faculty or employees of the College--with cheaper books, notebooks, pens, furniture, wood and coal.

The Coop offered lower prices; the store's profits were mandated to be only five percent above wholesale value. Any profits that were earned were given back to the members in the form of a yearly rebate.

The Coop flourished, and soon it was serving MIT students and faculty, as well as doing more business with "non-members"--the residents of Cambridge. Although not eligible for the rebates enjoyed by members, many non-members found the Coop's prices and merchandise to be quite reasonable.

Despite this expansion, the directors never lost sight of the Coop's original purpose: to provide savings to students and faculty. Prices continued to be very competitive, and the rebate stayed around 10 percent for many years.

In the mid-1980's, however, the rebate began to drop steadily. It fell to five percent by 1991, then dropped precipitously to 1.1 percent in 1992. Last year, the rebate reached an all-time low of one percent.

Somewhere along the line, as the Coop grew into the sprawling department store that it is today, the once-attractive prices grew higher and higher. Now, almost anything on sale in the Coop can be found elsewhere for a substantially lower price.

Why has this happened? The recent recession has certainly not helped matters. New England merchants have been hit hard, and the Coop is no exception.

Still, the failing economy is only part of the reason. Most of the losses are concentrated in certain departments, particularly women's wear, computers and music. These losses perennially suck up the profits that are earned in more successful departments.

The Coop has tried to become a department store for the city of Cambridge and has failed to focus on the needs of students. In doing so, the Coop has sustained heavy financial losses, which have hurt students further by virtually eliminating the rebate.

It is high time for the Coop to return to its original mission--to provide members with the goods they need, at low cost. Based on recent experience, focusing on student needs will lead to higher profits--and larger rebates.

It is no coincidence that the most successful departments are those which provide for the needs of students. Demand for textbooks and stationary, for example, is high, and there are few other suppliers. High demand means high sales and healthy profits.

And it is precisely those departments that students do not frequent that are consistently losing money. You can be sure that almost no Harvard students buy clothing from "Women's World." Most students choose to buy their computers at the Technology Product Center, and during the year need only purchase printer ribbons and floppy disks, which can be found quite cheaply at Radio Shack or other such stores.

Perhaps the Coop's managers feel that increased business with non-members would boost profits, thus also boosting members' rebates. While this is theoretically a good strategy, it does not seem to be working. It is time for the Coop to trim some of its dead weight, and eliminate chronically unprofitable departments.

Despite the steady decline in profits, the managers still have not caught on. For example, while they readily acknowledge that the Cambridge music market is one of the most competitive in the country, they insist on devoting an entire floor of the store to music, and then wondering why exactly that department loses money.

Fortunately, there is some hope that reason will prevail. The Coop was founded by students, and in keeping with that tradition, 11 of the 23-person Board of Directors are Harvard and MIT students. Many of them joined the Board not only to gain experience in running a business, but in order to make sure that the Coop serves the needs of students.

Today, the names of the newly-elected student members of the 1994-95 Board were released. Hopefully, these members will work to restore the Coop's original purpose. Otherwise, students may find that their year-end rebate barely covers the $1 Coop membership fee.