Why are consumer co-operative stores considered to be less expensive? What are its relative advantages over other large scale retailers?



Q.3:- Why are consumer co-operative stores considered to be less expensive? What are its relative advantages over other large scale retailers?

 

Answer:-

A consumer co-operative store is an organization owned, managed and controlled by consumers themselves. The cooperative stores generally buy in large quantity, directly from manufacturers or wholesalers and sell them to the consumers at reasonable prices. Members get products of good quality at cheaper rates since the middlemen are eliminated or reduced. The major advantages of a consumer cooperative store are as follows

(i) Ease of Formation It is easy to form a consumer cooperative society. Any 10 people can come together to form a voluntary association and get themselves registered with the Registrar of Cooperative Societies by completing certain formalities.



(ii) Limited Liability The liability of the members in a cooperative store is limited to the extent of the capital contributed by them. They are not liable personally to pay for the debts of society, in case the liabilities are greater than its assets.

(iii) Democratic Management Cooperative societies are democratically managed through management committees which are elected by the members. Each member has one vote, irrespective of the number of shares held by him/her.

(iv) Lower Prices A cooperative store purchases goods directly from the manufacturers or wholesalers and sells them to members and others. Elimination of middlemen results in lower prices for the consumer goods to the members.

(v) Cash Sales The consumer cooperative stores normally sell goods on cash basis. As a result, the requirement for working capital is reduced.

(vi) Convenient Location The consumer cooperative stores are generally opened at convenient public places where the members and others can easily buy the products as per their requirements.