CHAPTER ONE

1.0       INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Cooperative is a form of economic organization based on certain human values. The International Cooperative Alliance has defined cooperative as ‘an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise’.

According to Kattookaran (2002) cooperatives are service-oriented institution based on the principles of each for all and all for each. It is an organization of the people, by the people and for the people. The basic objective of the cooperative movement is to achieve the welfare of the members concerned and to protect them from exploitation. In developing countries, cooperatives have been assigned some important role as instrument of economic and social transformation. Cooperative aims to remedy the economic inequality and the evils of concentration of the weaker section by the strong.

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Cooperative came as an aftermath of industrial revolution which took place in Britain as a reaction to the capitalist exploitation such as hike in price, profiteering, adulteration of goods, offering to the market goods with incorrect weight and measures. The first workable cooperative society was founded in England by the Rochdale pioneers group of weavers. The policy and organization they adopted later became the principle of cooperation. The principles of cooperation formulated by Rochdale pioneer were: democratic control, open membership, limited interest on capital, patronage divided, cash trading, sale of pure and unadulterated goods, education of members and political and religious neutrality. The London Congress (1934) and Vienna Congress (1966) of the International Cooperative Alliances have revised the principles of cooperative formulated by Rochdale pioneers. The ICA general assembly met in the occasion of ICA’s centennial congress in Manchester in September 1995 and approved the ICA 1995 principles which include; voluntary and open membership, democratic management and control, member economic participation, autonomy and independence, education, training and information, cooperation among cooperatives, concern for community, Uchendu (1998) noted.

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The cooperatives have enlarged its activities in all spheres of human life namely production, distribution, housing, education and so on.

1.1.1 CONSUMER COOPERATIVE SOCIETIES

Since time immemorial, middlemen have been exploiting the consumers. It is the consumers who ultimately bear all the burden of the various middlemen who engaged in the distributive channel of trade. These middlemen also indulge in the variety malpractices such as underweight, adulteration, black marketing, hoarding and profiteering. As long as these nefarious activities of the middlemen are not checked, price line cannot be brought under control, Himachalam (1991). Under this situation, consumer cooperative was the only answer to protect the interest of the consumers as a whole.

Consumer cooperative is a business enterprise run by consumers who are members as well as owners of the business. According to Guelp (1993), Consumer cooperative is a cooperative business owned by its customers for their mutual benefit. The consumers of the goods and services which the business provides are often the individuals who provide the capital required for establishing the enterprises.

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In the words of Igwe (1999), consumer cooperative provides unlimited opportunities for helping to solve consumers’ problems and improving the quality of their lives. Consumer cooperative is organization, which intends to support the economy of member household through the acquisition of merchandise from wholesalers for sales to members at a fair price, Igwe (2006) noted. In carrying out their commercial activities, they are consciously guided ethically by values such as honesty in business, sales of high quality goods and services, fair prices and advice to consumers so as to get the best possible decision for the satisfaction of their needs.

A consumer cooperative store is a voluntary organization of consumers, organized to obtain their requirements of consumer goods and services on the terms of greatest advantages to them Mathur (1991). Consumer cooperative stores also sell to non-members and the cost savings that result from their large-scale operation are onto members. According to Kattookaran (2002), consumer cooperatives are supposed to serve as the best custodian of the consumers by supplying quality products and services at reasonable price and in correct weight.

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Consumer  cooperative  society  is  one  of  the  types  of  retail  outlets. According to Agbonifoh et al (1998), consumer cooperative societies are economic associations of consumers for the purposes of purchasing goods from manufacturers or wholesalers to a retailer to members of the cooperative who, by definition, are final consumers. Retailing is the process of selling goods directly to the ultimate consumers. A retailer is a specialized marketing functionary linking the wholesaler or the producer with the final consumer. As a specialist in selling to the final consumers, he buys the assortment of goods demanded by the consumers and makes them available to the consumers at convenient points from numerous sources. He convinces the consumer to buy,

employs all the marketing variables at his disposal, Agbonifoh et al (1998).

According to , Agbonifoh et al (1998), retailing has evolved over the years as is evident in the different types of retailers and the different functions performed by them over time. Three theories have been advanced to explain the evolution of retail institutions. The theory of natural selection maintains that retail institution that adapts best to its environment will survive and grow. Another theory asserts that retailing institutions that pass through a life cycle begins with low margin, low price and minimum services. The next stage in the

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life cycle sees the retailer upgrading his facilities and offerings and adding more services in a bid to increase the volume of sales and hopefully profit.

According to Uchendu (1998), consumer cooperative store is a retail store that is put up by group of people who come together as a sociological group to pursue common objectives of:

1.                 Buying in large quantities to reduce unit cost.

2.                 Buying directly from producers to reduce the incidence of buying adulterated goods.

3.                 Enjoy other economies of scale associated with bulk purchases.