The Board of Directors for Co-op Atlantic recently recommended to its member-owners that the organization negotiate wholesale supply agreements with Sobeys to ensure their long-term success moving forward, said a recent release. This recommendation follows several months of operational and financial review which determined that this is the best course of action for long-term viability of member-owners.
“It’s a positive move,” said Darren MacKinnon, manager of the O’Leary Co-op.
According to Mr MacKinnon, speaking on behalf of the O’Leary Co-op, “Each individual co-operatives are shareholders in Co-op Atlantic, who have the responsibility of providing us with wholesale food and gas. What we are looking at today is selling those assets and acquiring a future relationship with a new wholesaler that will enable the longterm viability of our local co-ops.”
“It would give us a competitive opportunity to buy on an international market because that is what we are really dealing with here. The smaller you are and the less volume you have, you pay more for things,” said Mr MacKinnon.
Mr MacKinnon explained, the recommendation has been povided to each individual shareholder units, which are the independent co-op’s, by the board of directors that have been appointed by each co-op’s in these regions to provide a recommendation that is in the best interest of the local co-op.
“This is actually very positive thing for our local co-op’s...for our local identities because really nothing will change other than our supply of goods for resale to our members and we will be able to hopefully by the end of this transition will be in a position to better enable our co-op’s to reinvest in themselves; to support our communities even more than we do today...it opens up a lot more opportunity for our local co-ops.”
The proposed purchase and sales arrangement would see Sobeys purchase the majority of the corporate food and gas retail sites and wholesale assets.
“There are two things: a divesture of the assets and wholesale business of food and gas, but there is also then when that is completed, then we have to go, if it’s approved, we have to seek a new relationship with another wholesaler.”
“The board has provided a recommendation that they see fit, for a vote where delegates from the co-op’s, individually will support or not support if they so choose to move forward with this. Our membership has voted for our board of directors to be their voice in business such as this. In each individual co-op has handled this in different ways...some have, this time of year, their annual meeting that act as their opportunity where members can voice their concerns and opionions about this transition.”
“We are providing an opportunity for our membership to provide the directors who in turn of those directors, four of them will have a delegate vote in this decision,” said Mr MacKinnon. “Not only for education back to the membership but also for feedback back to them to make their decision.”
Mr MacKinnon ensured as members of the O’Leary Co-op, there will be very little in the way of change. “The product offering will change slightly, only in terms of private label. Unfortunately with this transition, the Co-op label and the Centsible’s label will no longer be available should this transition go through.”
“This is just a simple exercise of economics...the economics of today. When you are forced to compete on a local level with such major national and international chains with huge buying power you have to be as efficient and buy sensibly as you can,” said Mr MacKinnon.
“People need to understand that the local memberships in our co-op’s do not lose any control, the identity or heritage of the co-op do not change with this transition,” said Mr MacKinnon, who is proud to say the O’Leary Co-op will be celebrating their 75th anniversary next month.
“Our membership need to also understand that these changes and decisions affecting the future are to enable our members to be able to enjoy the benefits of a co-op in their community, in saying that, the benefits will be there for them to enjoy, but you must also make sure you enjoy them and exercise the ability to support a co-op you are an owner in. That’s important - these businesses aren’t a public trade of business. They exist totally on support and the long term support support is the key to long term sustainability.”
Currently there are 3,200 memberships; with 2,300 active members at the O’Leary Co-op.
“The staff at Co-op Atlantic have worked hard to ensure there is opportunity in the future for our co-op’s,” said Mr MacKinnon. “They have worked hard to make sure this decision is in the best interest of our future. That needs to be respected. These decisions never come easily...this is a very difficult thing because you are dealing with something that involves us at a local level but you are looking at a decision that will affect people in a different province that were apart of our network we worked with every day that if this transition does go through may not have employment anymore, so there is toughness to this too.”
On May 12, a teleconference meeting and a vote on the recommendation will occur.
Following the completion of the vote, Co-op Atlantic will be in a better position to assess what this will mean for Co-op Atlantic and its remaining divisions moving forward including home energy and agriculture.
“This decision will open a lot of doorways,” said Paul King, manager of Tignish Co-op. “This will strengthen Sobey’s, if indeed it is Sobey’s, with approximately $70 million dollars of food purchase through our organization. That gives Sobey’s more power to buy better, stronger and be more competitive in our world against other coporate structures.
“We maintain our independence...we are just buying from Sobey’s possibly,” said Mr King, who explained this decision would keep the co-op’s more competitive in pricing. Pricing is always a sensitive topic. Everyone thinks you should be the lowest price in town...you can’t in today’s society. You have to be competitive and offer quality service.”
“Some of our competitors will offer us better price but not the service or quality. And then the other side we may be ten cents more but the quality is better and we have the service,” said Mr King. “It comes down to what the consumer wants. I think we will get a better pricing structure than what we have been on.”
Although Mr King has not seen the product availability list, he thinks there will be more products offered. “I am only assuming that.”
“The main thing we have to remind our members...we are owned by the local community and owned by our membership who buy shares through us, that will never change until they decide to change it. They hold the power...the board doesn’t hold the power to that - the members do,” said Mr King. “The rumour is that we are going to change our co-op to Sobey’s...that’s not going to happen.”
Currently there are 4,000 members at Tignish Co-op.