Buying Clubs: Competition or Opportunity?
Recently, the issue of buying clubs or preorder cooperatives buying their food wholesale has been raised in trade publications and elsewhere in the natural foods industry. We at Northeast Cooperatives would like to broaden the scope of this argument and look at the true issues at the heart of this discussion.
First, who are these buying clubs? Obviously, they are the natural foods consumer, pure and simple. The manufacturers and distributors that have been in the business since its inception know that the natural foods industry, in large part, owes its very existence to groups of consumers gathering together to puchase food not available through existing (or ‘proper') channels. These consumers formed the basis for the market that would eventually broaden to include retails, manufacturers of prepared natural foods, distributor networks, and all facets of the natural products industry that we know today.
Today, the buying club market continues to broaden the audience for natural foods. The markets that are being expanded include lower income areas, rural areas (many of which are not served by retails), and consumers that are frustrated by lack of control over their food supply. Many buying clubs eventually lead, either directly or indirectly, to the creation of natural foods retails that will serve some segments of their comunities. Many individuals are introduced to the concept of natural foods by friends and neighbors who are involved in buying clubs. Many of these consumers would never have set foot in a natural foods retail prior to personalized experiences with the products.
The consumers in these buying clubs are valuable resources, not only to the wholesalers that serve them but also to the manufacturers and even retailers. The direct contact with the consumer sharpens industry awareness of the market and its trends and allows very specific information to be gathered and reviewed. Indeed, buying club consumers are an asset to the retailers that are currently uncomfortable with their existence. They are among the best informed and strongest advocates for the natural foods industry in their communities. These consumers may create in the local retails a demand for products that has not existed before.
The ultimate question, as we see it, is this: is the aim of the natural foods industry to grow and prosper? If so, should we not take advantage of every conceivable means of distribution encouraged by our free market, democratically based economy, in the interest of the broadest possible impact? Is the threat to our retailers not more real from full service supermarkets or even club stores, much like the mass market? Should we propose that the natural foods industry rally against the mass market sector with claims of unfair competiton? We think not.
We are truly chagrined that so much energy is being spent debating an issue that, to us, is anathema to both the roots and the future growth of our industry. We hope that you will think carefully about your position in this debate and return to the business of becoming the best in your particular part of our fine industry.
- Northeast Cooperatives Management