Japanese Food Co-ops See Store-less Trends
One Hundred Years of Japanese Co-ops
|Editor's note: Home to the largest consumer cooperative sector of any nation, Japan is also increasingly experiencing globalization and rapid economic and social change. The Japanese Consumers' Co-operative Union recently held its 50th anniversary annual general assembly and published summary reports. The JCCU newsletter (see logo above) and the Consumer Co-operative Institute of Japan are my regular sources. --DG|
Consumer spending continues to stagnate, while retail competition intensifies. Japanese co-ops, which have traditionally conducted their activities according to food safety and environmental protection, are now looking toward stabilizing existing business activities and exploring possibilities for new growth." So the Japanese Consumers' Co-operative Union (JCCU) summarized its recent year-end outlook.
With 469 stores, retail co-ops are the dominant type of co-op society in the JCCU (there are parallel national co-op associations for forest owners, fisheries, agricultural and workers' cooperatives). Other JCCU members include 119 medical co-ops with 2.2 million members, insurance, housing, and university co-ops.
While the food co-ops' market share and number of members has been growing, the stores are seeing continuing decline in sales (down by 4% in 1998-99) and in sales per member. Last year, seven of the top ten retail co-ops had sales declines ranging down to -6.3%. These ten co-ops, each having between 390,000 and 1,390,000 members, had sales ranging from 57,000 million yen to 342,000 million yen. (Divide by 100 for a rough equivalent in dollars.) Total co-op store sales are about 1,450 billion yen.
From Industrial Union Act to Livelihood Co-operatives
|This year is the one hundredth anniversary of the Industrial Co-operative Act that was promulgated in 1900 and abolished in 1948, replaced by the new Individual Co-operative Act.|
|It is interesting to note that the first introduction to the Rochdale Equitable Pioneer Society in Japan was an article in a newspaper in 1878, called "The Co-operative as a Cooperation Company." It wasn't until much later, however, that consumer type co-ops were first formed. Having colonized Taiwan and Korea (after the Japan-China War 1894-95), Japan promoted an Industrial Implantation Policy and enacted the Industrial Co-operative Act based on German credit unions and agricultural co-operative systems. At this time, with the support of the labor union movement, a few consumer co-operatives sprung up in urban districts based on Rochdale ideas.|
|After World War II, new "livelihood co-operatives" sprung up nationwide with strong concerns for the quality of life. The definition of "consumer livelihood co-operative" was adapted by the Consumers Co-operatives Act of 1948. Japan's unique character of consumers' co-operatives includes the promotion of activities to enhance the quality of material and cultural life.|
|Source: Consumer Co-operative Institute of Japan, 9/00 CCIJ News.|
Operating parallel to the stores are a huge number of joint purchasing groups, the HAN, which have total sales equal to those of the stores. HAN groups are 3-5 neighborhood members who purchase together weekly -- they're like U.S. buying clubs only smaller, more prolific, and more systematically organized. Some 1,620,000 HAN groups with 7,550,000 members mainly provide deliveries of frozen and processed foods and non-food items. Some fresh vegetables and fruit are also received directly from farming regions. Payments are made monthly via automatic bank transfers from co-op members' accounts.
HAN groups and co-op activities are driven almost entirely by women, and changes in women's practices are driving further changes in co-ops. Most joint purchase system participants have been housewives with no occupation outside the home. Now more married women want to take up other activities and are taking jobs outside the home.
A major consequence for both the stores and the HAN groups is increasing member demand for home delivery services. During the 1990s, home delivery of co-op products has risen dramatically, and about 50 local co-ops currently offer the service. Individual delivery and catalog sales already constitute 10 percent of total retail sales (see chart). From 1994 to 1999, one growing store saw its total sales increase four-fold while home delivery sales grew by a factor of 25. This new service is bringing new members to co-ops. And a well organized retail distribution system appears to keep charges for home delivery to a nominal level.
Besides new member demands, Japanese co-ops face other challenbves: tighten operations to meet market conditions and reverse a trend of declining profits; improve management in some co-ops which have suffered from neglect or worse; and continue the co-op movement's historic leadership in food safety education and environmental protections.