CONSUMER COOPERATIVE STORE —MEANING, CHARACTERISTICS, ADVANTAGES, DISADVANTAGES

A consumer cooperative store is a retail outlet owned and managed by consumers.

A consumer cooperative usually arises as a result of consumers of a given area being unable to purchase daily necessities at a cheaper price.

A consumer cooperative store typically buys goods in bulk from the manufacturer and then offers them to customers at a discount.

At the end of the year, a portion of the profit earned by the store is distributed to its members as a bonus to members.

The remaining profit after distribution to members is set aside for general reserves and the general welfare of the members.

The main objective of the consumer cooperative store is to obtain goods at the lower possible price by reducing eliminating middlemen.

Please note that a consumer cooperative store is commonly called a consumer cooperative society.

Characteristics of a consumer Cooperative store

1. It is a voluntary association: A consumer cooperative society is a voluntary society registered under the corporate societies Act.

A consumer cooperative store is typically founded by consumers with similar values and interests.

2. Capital: Consumer cooperatives raise the necessary capital for their operations by issuing shares.

A consumer can become a member of the cooperative society simply by purchasing units or units of shares.

3. Democratic management: This is one of the most distinctive characteristics of a consumer cooperative society.

In a consumer cooperative store, one member gets one vote, and the operation and management of the business are democratically decided.

4. Elimination of middlemen: The whole idea of a consumer cooperative store is to get goods at minimum prices by doing away with middlemen.

This is accomplished in a consumer cooperative society by purchasing goods directly from the producer.

5. Limited liability: The liability of members of a consumer cooperative is limited to the amount of capital invested in the business.

Advantages of Consumer Cooperative store

1. It is easy to form: Because there are fewer formalities, it is very easy to establish a consumer cooperative society

To form a consumer cooperative store, a minimum of ten people just have to come together and register with the registrar of cooperative Societies.

2. Lower prices: By cutting out middlemen, a consumer cooperative store can buy products in bulk directly from manufacturers.

Because there are no middlemen, it can sell goods to the consumer for less money.

3. There is a decrease in bad debt: Consumer cooperative shops typically only accept cash as payment for their goods.

As a result, there are hardly any instances of bad debts.

4. Limited liability: The members of a consumer cooperative store are only liable to the extent of the capital they have invested in the company.

This means that the members' personal belongings would not be used to settle the store's debt in the case of liquidation if the store's assets were larger facilities.

As a result, the members of a consumer cooperative store can feel secure about their personal property

5. Economies of scale: By purchasing goods in bulk from the manufacturer, a consumer cooperative society benefits from economies of scale.

Purchasing goods in bulk saves money on transportation costs that would have been spent if items were purchased individually or in break-bulk.

Disadvantages or Limitations of Consumer Cooperative Stores

1. It faces a shortage of funds: This is an important disadvantage of consumer Cooperative stores that you should note.

Consumer cooperative stores receive most of their funding from members through the issuance of shares.

However, because most consumer cooperative stores are formed by people with low incomes consumer cooperative stores usually struggle with a lack of funding.

2. Challenges in growing and expanding the business: Lack of funding prevents the store from expanding and growing

3. Poor calibre of management: A consumer cooperative society is unable to appoint competent managers due to a lack of funds and resources.

Instead, members of the cooperative society typically choose members to manage and run the company on their behalf.

These members might misuse the stores' resources since they lack the necessary experience and knowledge.

4. Lack of privacy: Because it must submit its annual reports to the Registrar of Cooperative societies, a consumer cooperative store lacks privacy.

5. Corruption and nepotism: Individuals chosen to run the company may engage in favouritism and nepotism while doing so.

Additionally, the individuals chosen to run the company may be dishonest and take bribes from other members before they can accept their proposal.

All of these have the potential to negatively impact how smoothly a cooperative society runs.

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