Eric Simard – Recipient of the Quebec Cooperative and Mutualist Merit Award 2023.
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•May 17, 2024
•1 minute read
Consumer Cooperatives: Definition, Operation and Advantages
Coopérative
Kickoff
Do you have a project with an economic and social vocation? The cooperative
model marries democracy and efficiency, equity and competitiveness. As such, the consumer
cooperative can be a beneficial legal framework for a network of customers who want a say in
the services or products they buy.
What is a consumer cooperative?
A consumer cooperative can be defined as a business whose main purpose is to provide goods
and services to its members for their personal use. This type of cooperative is also a
solution for revitalizing communities that want to make services available locally. These
co-ops can be found in a variety of sectors, including food, housing, school goods and
services, cable TV and funeral services.
Today, there are more than 1,500 consumer cooperatives in operation in Quebec. They act as a
shield against inflation, since their commitment not to pursue profit at any cost means they
guarantee competitive prices. Found across the province, these cooperatives are especially
successful outside major cities to maintain essential local services. Let’s take the example
of a village grocery or hardware store. Have you heard of Ici Coop? This network is a
federation of over 75 consumer cooperatives that operate grocery stores under various
banners or as independent businesses.
COOPSCO: Snapshot of a consumer cooperative network
A well-known consumer cooperative is the COOPSCO network of
school-based cooperatives. They mainly sell school supplies, books, IT equipment and other
products for students. COOPSCO members are generally the students enrolled in participating
educational institutions, such as CEGEPs and universities. Not only do these cooperatives
offer school products and services at competitive prices, they also play an active role in
student life by organizing events and activities. In short, COOPSCO is an example of a
consumer cooperative that meets the needs of a specific demographic group while implementing
the cooperative principles of democratic participation and collective benefits.
Housing cooperatives: A pillar of consumer cooperatives
In Quebec, housing cooperatives are an interesting example of consumer cooperatives. These
co-ops are crucial to protecting significant real estate assets from speculation, which is
particularly important in the current housing shortage. Since the 1970s, over 1,000 housing
cooperatives have been launched in Quebec, mainly in the form of continuing, non-ownership
cooperatives. This structure fosters access to quality housing while also allowing members
to be decision-makers in regard to their living environment.
How the consumer cooperative works
The members of this type of co-op are users who come together to acquire products or
services at a lower cost or better quality. They share needs and interests. Since they are
collective owners of the organization, they must have access to the services the cooperative
offers. It should be noted that the legislation on cooperatives stipulates that a minimum of
five people is required to form this type of collective enterprise.
The consumer cooperative is also characterized by threefold member participation:
- Participating economically: Members contribute
equitably to the cooperative’s capital. Membership fees vary according to individual needs
and financial capacities. - Sharing power: The “one member, one vote” rule
specific to the cooperative model applies regardless of the number of shares held by a
member or the volume of business they do with the cooperative. In addition, positions on the
board of directors are open to all members, offering a meaningful and equal opportunity to
take part in co-op governance. - Benefiting from surpluses: Surpluses are allocated to
the cooperative’s reserve, either to consolidate its financial situation or to be used for
development. Members can also decide to redistribute some surplus earnings in the form of
patronage dividends.
So, what really distinguishes consumer cooperatives from private companies in the same
business sector? Most important is the value received by the owners. A private business
owner generally seeks to maximize the return on their capital investment. Members of a
consumer co-op, however, contribute capital to benefit from goods and services that meet
their needs at a better price-quality ratio.
The advantages of the consumer cooperative
Consumer cooperatives offer their members many advantages:
- Economies of scale
By pooling purchases, consumer cooperatives allow their members to benefit from economies of
scale. Through these bulk buys, they can obtain reduced prices on products and services, and
that translates into savings for members.
- Quality and choice
Consumer cooperatives offer their members a choice and a quality of products or services
that is centred on members’ needs and preferences.
- Democratic participation
Each member of a consumer cooperative has an equal voice in decision-making. Members also
take part in general meetings and have the right to vote on important cooperative matters.
- Fair distribution of surplus earnings
Consumer cooperatives redistribute surpluses to their members in the form of discounts,
dividends or other economic benefits. This fair redistribution of profits strengthens the
member–cooperative bond.
- Limited liability
The liability of members is limited to the amount of their investment in the co-op. In other
words, members are not personally liable for the cooperative’s debts or obligations beyond
this amount.
- Social impact
Consumer cooperatives often have a strong social impact in their communities by promoting
the local economy, creating sustainable jobs and supporting ethical business practices.
In short, consumer cooperatives offer an economic and social alternative focused on meeting
members’ needs, democratic participation, financial responsibility and positive impact on
the community.
In conclusion, this post is part of a series exploring the five types
of cooperatives. Our aim is to explain the specific features and advantages of
each cooperative model, be it consumer cooperatives or
- Worker cooperatives
- Solidarity
cooperatives - Worker shareholder cooperatives
- Producers
cooperatives
In exploring this series, you’ll discover the many facets of these organizations as well as
their positive impact on communities and the economy as a whole. If you’d like to learn more
about the other types of cooperatives, check out the corresponding posts!
