In 2013, Coop Israel and the Communitarian Cooperatives (Moshavim – Residential Collectives that organize the life of their resident-members according to the cooperative ethos) signed a ground-breaking framework agreement on retail services in the Periphery.
By providing quality consumer goods at affordable prices, this agreement empowers small businesses outside urban areas with the buying force and logistics of Coop Israel, the third largest supermarket chain in neighborhood areas in the country.
Due to their relative isolation, these communities face a high supply cost, which has in many cases caused the local-run convenience stores to close or fail. At a time when the entire Israeli retail industry is convulsing, this has made it even tougher on the local shops and has repercussions on the industry as a whole.
By integrating these ‘mom-and-pop’ shops as franchisees under the “Coop Shop in the Village” Brand, the participating outlets benefit from the logistics and bargaining power of a major chain, which translates into lower costs and therefore lower prices for the end consumer. This has empowered the communities as consumers, reviving a moribund sector of activity, all the while broadening the customer base of Coop Israel.
The setup embraces the core principle of giving back to the community (providing consumer goods at affordable prices, revitalizing local business and employment) while creating business opportunities for a primary cooperative. Coop Israel takes no margin and therefore makes no direct profit on sales. The addition of these extra outlets to the chain increases orders, which in turn brings down cost-per-unit and indirectly benefits the Coop’s activity.
After the first year of implementation, the effects were already substantial:
- Prices have gone down between 15-30% for the consumer
- Many franchisees are investing, expanding their commercial space to face rising demand
- Many are also investing in more labor to face rising demand
- More potential franchisees are asking to join the network daily, leading to new outlets every week, and an ever-growing presence of the Coop throughout the country.
And the trend is continuing.
This is an example of Cooperatives from different sectors working together and creating opportunities at a time when the market is contracting. Where competing brands are shrinking, Coop Israel has successfully drawn on its Cooperative identity to create growth, aid the community and expand its own activity.
Coop Shop “in the Village”: a classic case of successful Cross-Sector Cooperation between Cooperatives.