Grocery Cooperatives


Over the past decade, estimates of retail consumer cooperatives have averaged between 300 and 350 stores. During those years, no one has attempted to identify the number of cooperative buying clubs in the country, although a major natural foods wholesaler reports that they serve these less formal organizations in 32 states. A loosely connected group of large buying club networks is estimated to serve nearly 150,000 households throughout the U.S.


Consumer-owned food stores have emerged, grown, and declined in waves since the 1850s. The most recent growth period occurred during the mid-l960 and early 1970 when there was a nationwide resurgence of cooperative food stores. By 1979, an estimated 3,000 food stores and buying clubs operated in the United States and Canada (Food Co-op Project, 1979). By the 1990s, however, the changing social and political climate resulted in a substantial decline in the number of cooperatives, accompanied by a period of consolidation and growth for the strong cooperatives. By the mid-2000s, food cooperatives once again experienced growth-driven, intense consumer interest in alternatives to a market system that might not serve their needs.

Consumers’ interest and participation in retail food cooperatives tends to increase in periods of social, political, and economic turmoil. Although their secondary needs may vary considerably, cooperative members consistently want their cooperatives to provide price, quality, and selection advantages. Growth periods also occur when large numbers of consumers experience economic difficulties and develop an interest in ownership and control of their retail food sources when they become concerned for food safety and when they experience a strong desire for an ethical society (Hoyt, 1982). Failure of cooperatives is consistently traced to decline in member participation, lack of management skills, inadequate capitalization, strong competition, increasing concentration in food retailing, and "loss of the cooperative spirit" (The Co-op Handbook Collective, 1975).

Industry Niche

The retail grocery industry is highly competitive. Recently, the large market share gained by non-traditional outlets, which includes warehouse clubs and super centers, has increased competitive pressure on the traditional grocery retailer, already squeezed by the loss of the food consumers’ dollar to the food-away-from-home-market, which captured 48.5% of total food expenditures in 2005. The industry has also seen a high level of merger and consolidation, both horizontal and vertical, with large wholesalers acquiring retail outlets (Plunkett Research, 2008).

Retail food cooperatives have introduced numerous consumer-oriented innovations, and have fought to retain retailing practices that provide the consumer competitive value and service. Since the 1930's, cooperatives have pioneered nutritional labeling, open dating, unit pricing, bulk sales, informative advertising, consumer education, and innovative institutional structures. They have also consistently been in the forefront of consumer protection through selective merchandising and boycotts, political lobbying, and ongoing consumer education.

The most extensive impact food cooperatives have recently had on the grocery industry has been their pioneering introduction of natural and organic foods, which began with the “new wave” of food cooperatives in the early 1970s. Cooperatives dominated this market until the 1990s, when several independently owned natural foods markets began large-scale expansion. In 1990, the total organic food and beverage market amounted to $1B in sales, served primarily through cooperatives and other independent retailers. In 2008, that market was expected to reach $23B, with the traditional mass market grocery stores and non-traditional food stores having gained projected shares of 38% and 16%, respectively (Organic Trade Association, 2008).

Organizational Structure

Retail food cooperatives either operate retail stores or pre-order buying clubs. Cooperatives that operate retail stores are predominantly single-store operations, but some successful stores have expanded to operate two or more stores. The largest of these is the Puget Natural Markets which operates out of nine locations. Several retail food cooperatives have expanded into non-grocery businesses. Most are restaurants and delis, but a few others include natural home products and vertical integration into ownership of farms and orchards. The store-based food cooperatives are characterized by their strong support for natural and organic foods, community activities, local food systems and environmental sustainability. Although many current store-based food cooperatives originally encouraged members to work voluntarily in the store in return for a “member discount,” most stores now hire professional management and operate the store with paid staff.

Buying clubs operate on a pre-order basis in which members either order a standard “market basket” of foods at a pre-determined price or combine individual family orders into full case lots. The second option is commonly facilitated through a computerized ordering system. In both methods, case lots of food are delivered to a central distribution point where the larger, single order is re-sorted into individual orders. Members pick up their orders at the distribution point. Food is ordered and delivered periodically, most often monthly or bi-weekly. Large buying clubs may hire an outside manager/coordinator, but most of the labor is provided by member volunteers. Savings in buying clubs can be significant, because most of the cost of retail distribution is eliminated by the labor contribution of cooperative members.

All food cooperatives that operate stores are incorporated under state statutes. Over the last decade, some food cooperatives that were originally incorporated as nonprofits have re-incorporated in those states that have cooperative statutes that accommodate the needs of consumer cooperatives. Few buying clubs are incorporated.

Most cooperatives require a relatively small investment in an initial membership share, and an additional financial contribution, which may be in the form of additional membership shares or in an annual membership fee. Investment in membership shares is considered a contribution to equity, while membership fees, if not refundable, are treated as income. Consumer cooperatives are not required to pay income taxes on member-based income if they return that income to members either as cash or as allocated patronage. However, they are required to pay income taxes on non-member income and unallocated member income.

Food cooperative members vote on a one-member/one-vote basis and elect a board of directors from among the membership.

Population Discovery and Data Sources

We obtained the list for consumer goods cooperatives from the Consumer Cooperative Management Association (CCMA) grocery cooperatives lists maintained by Ann Hoyt. All economic data was obtained from survey work undertaken by the UWCC. The survey response rate for grocery cooperatives was 41% and all reporting cooperatives provided us with 2007 fiscal year-end data. We supplemented revenue and employment data for purchasing cooperatives from Onesource. The data collection and survey methodology is discussed in detail in the Data Collection section in the Appendix.

Economic Impacts

Table 4-2 shows that we obtained data from 101 consumer grocery cooperatives, and these firms collectively account for >$323M in assets, $865M in sales revenue, and pay $171M in wages and benefits. There are approximately 14,000 employees and 487,000 memberships. From Table 4-2.3, by extrapolating to the entire population (290 firms) and adding indirect and induced impacts to this activity, consumer grocery cooperatives account for close to $2.1B in sales revenue, >15,000 jobs, $252M in wages and benefits paid, and $316M in valued-added income.

Table 4-2.3: Economic Impacts for Groceries Cooperatives
Economic Impact Multiplier   Unit Direct Indirect Induced Total
Revenues 1.013   million $ 2,098 12 14 2,124
Income 1.781     178 59 80 316
Wages 1.474     171 36 45 252
Employment 1.130   jobs 13,640 711 1,066 15,417
Figure 4-2.6: Distribution of Grocery Cooperatives (does not include Retail or Purchasing cooperatives)