Retail co-ops advised to
foster member identification,
not force conformity
By Janet Ciccone,
Director of Communications,
College of Human Ecology,
The Ohio State University
e-mail: Ciccone.2@osu.edu
etail cooperatives wanting
to retain members
and encourage their participation
in programs
would do best to foster
feelings of identification within the
group to increase interactions, rather
than force conformity to group goals.
This is according to a study by
Leslie M. Stoel, assistant professor of
merchandising management at The
Ohio State University, College of
Human Ecology. The results of her
study, which appeared in the Journal of
Small Business Management, apply to
retail cooperatives in other industries
and to many types of franchises, even
though data were collected from the
hardware industry.
U.S. retail hardware cooperative
groups have increased their membership
in the last decade, some as much
as doubling. This is in part due to coop
mergers, and in part due to independent
retailers joining cooperatives
to work toward results that they cannot
achieve individually.
Cooperatives offer a variety of programs
that, in the past, were all voluntary.
Today, however, co-ops increasingly
rely on prescribed programs.
“From our study, we found that
strength of identification by the co-op
member with the coop
influences the likelihood
that members
will participate in the
voluntary co-op programs,”
Stoel says.
“Specifically, if they
identified strongly
with the co-op, if they
considered their role
as co-op members
more important than
their role as a store
owner, they were
more likely to adhere to the norms of
the group, such as adopting a new sign
program or a new computer program.”
At the same time, however, Stoel
notes that identification with the co-op
should not be confused with conformity.
“High levels of forced conformity
to group goals can be divisive,” Stoel
says. “Care should be taken in ordering
conformity, because it may lead to
within-group conflict, ultimately splitting
the group.”
Hardware stores surveyed
Stoel surveyed 147 retail hardware
store owners that had five or fewer
employees and less than 10,000 square
feet of retail space. Half of the stores
had a sales volume of under $1 million.
The stores answered a series of
questions about being a member of the
co-op group and about their competitive
situation. Each store was located
in a geographic area where it competed
with a hardware store that belonged
to another hardware cooperative.
Stoel also looked at how belonging
to the co-op affected members’ perceptions
of rivalry toward stores in
their geographic area belonging to a
different co-op. She asked: If Ed’s Tru-
Value Hardware is competing for customers
against Fred’s Ace Hardware,
to what extent will belonging to the
TruValue cooperative influence Ed’s
perceptions about Fred as a rival for
local customers?
Stoel found that the importance a
co-op member attaches to being a
member of the group influences
his/her perception of conflict with a
rival party and beliefs about what
behavior was appropriate in response.
“The majority of respondents considered
their primary competitive rival
as being the Big Box stores (e.g., Home
Depot, Lowe’s), despite the proximity
of the store belonging to the rival coop,”
Stoel said. “Another small fraction
didn’t seem to perceive a rivalry at all,
instead focusing on their customers.”
However, 28 percent of the respondents
perceived that their No. 1 competitor
was the other hardware store
that belonged to a rival cooperative.
With 20,000 hardware stores belonging
to cooperatives in 1996, this number
is noteworthy. For these members,
feelings of identification with the
cooperative group resulted in increased
perceptions of conflict with the member
of the competing cooperative. These feelings influenced their beliefs
about the importance of competitive
behaviors relative to that rival.
“It is critical that we understand
how belonging to the group can influence
perceptions and behavior,” Stoel
said. “Hardware retailers must compete
on two fronts — against “category
killers” and group-affiliated retailers.
They will want to make careful choices,
especially since research shows that
intense rivalry is associated with poor
performance.”
Strategies for retail co-ops
To help cooperatives operate to
maximum advantage, Stoel recommends
that they focus on helping
members develop a sense of belonging
and appreciation for their membership.
She suggests that co-ops could consider
the following:
- Offer programs that accommodate
members in diverse competitive situations,
i.e., allow variations in programs
to keep them relevant to different
situations. Examples of variations
for different competitive situations
are as follows:
a. An advertising/promotion program
(or store interior and signage
program) for stores that compete
heavily with Big Box stores,
another program for stores that
compete mostly with another coop
store, and perhaps another for
those that compete mostly with
Wal-Mart or other general merchandise
discounter.
b. Merchandise/inventory assortment
programs for rural stores,
urban stores and suburban stores,
or programs targeted by region
(e.g., southern vs. midwestern or
northern, due to climate differences,
housing differences, etc.).
c. Human resource development/
training programs based on education
level/workforce readiness of
potential workers (e.g., program
needs for rural and urban stores
may differ in some cases from suburban
needs).
- Educate members about benefits of
conforming to co-op programs, especially
in terms of customer appeal
(e.g., answer the question: how will
this program improve customer perceptions
and responses?). One method
of education would be to obtain and
publicize customer response to pilot
tests of new programs.
- Provide opportunities for co-op
members in similar competitive situations
to network with other members
and with co-op management
(e.g., using online bulletin boards or
discussion boards).
Stoel’s recommendations about
rivalry are to be aware of it in order to
stay sharp but focus on your customers.
What can you do, with the
help of your co-op, that your rival
can’t do? Or what you can do better
than your rival, with the assistance of
your co-op?
