SASKATOON – Western Canadians are buying more from their retail co-ops than ever before.
Sales were a record $1.98 billion in the year ended Oct. 31, 1994, according to the annual report of Federated Co-operatives Ltd. That’s up 3.2 percent from the previous year and 34 percent ahead of five years ago ($1.49 billion in 1989).
Net savings were up 10 percent to a record $123 million, which is 45 percent ahead of the 1989 result of $85 million.
Over the past 10 years, sales have increased by 38 percent while net savings have more than quadrupled.
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FCL provides centralized wholesaling, manufacturing and administrative services to more than 300 locally owned co-ops across Western Canada.
Chief executive officer Wayne Thompson said in an interview during FCL’s annual meeting last week that there’s no reason this level of growth can’t continue in the “foreseeable future” of three to five years.
“There’s definitely growth within that period and what we’re doing in our planning is trying to put in place the kind of things that will contribute to long-term growth as well.”
The budget for 1994-95 projects sales of $2.1 billion and net savings of $121 million, although Thompson said that’s a cautious projection. Last year’s savings exceeded budget by about $20 million.
Market share up
He said the retail co-ops have gained market share in locations where they’re already established and have expanded to serve new areas as well.
The more than 350 delegates attending FCL’s annual meeting were apparently pleased with last year’s results. A question period following the presentation of the board of directors report elicited just a handful of questions, dealing with matters like the cost of the FCL float for local parades, the number of seniors on the board and FCL’s policy on air-miles accumulated by employees.
“People are pretty satisfied,” said delegate Cam Weppler from the Morse, Sask., co-op.
FCL president Vern Leland said the organization plans to emphasize the benefits of being a co-op member in its advertising and public relations in the coming year.
He said those benefits can be divided into four categories: services, quality products, community building and equity and cash payments to members. Total equity held by 750,000 co-op members exceeds $720 million, while annual cash equity payments have averaged $35.5 million over the past 10 years.
Flexibility the key
In his speech to delegates, Thompson said a key to the co-op retailing system’s future success will be flexibility.
“We must avoid developing rigid strategies, structures and formulas that will inhibit our ability to respond quickly and well to new challenges and opportunities.”
Delegates showed they agree by easily defeating a resolution calling on FCL to devise a long-term plan to limit the amount of equity it holds and distribute more money in a timely and equitable way to member co-operatives throughout the year.
Last year FCL allocated $118 million to member retailers as patronage refunds on their purchases from FCL, while $102 million was put in reserves.
“If the equity accumulation in FCL is left unchecked, member retail co-ops may become increasingly vulnerable should FCL experience financial difficulties,” said the resolution.
But the vast majority of delegates supported the view expressed by Saskatchewan delegate Bill Marshall, who said “every year is different and I don’t think we should tie the hands of the FCL board” by setting out a formula to deal with the equity issue.
Thompson’s idea of flexibility doesn’t include following the example of Saskatchewan Wheat Pool and converting member equity into publicly-traded shares. He said members would be bound to lose some degree of control over their business.
“You definitely lose something when you go to the market no matter how you try to explain it away,” he said. “As far as I’m concerned, if that happens at Federated, that would be a sad day for me.”
