Consumer Co-operatives in the Nordic countries, 1950-2010

Espen EkbergCentre for Business history

BI Norwegian Business School

Plan of presentation

• Main trends in the development of Western European consumer co-ops after 1950 – the rise and decline narrative

• The Nordic experience

• Causes for success

• A Nordic model of consumer co-operation?

The rise and decline narrative

• Dominates much (most) existing research on consumer co-operatives• After having risen to prominence from the mid

nineteenth century onwards consumer co-ops went into decline in the period after 1950

• The 1989 ICA study: “In general we can resume that the lot of consumer co-operatives in Europe has been not to easy in recent years. At present only the Norwegian movement seems on a path of strong expansion – but it is still very fragmented and may benefit more from its strength in the savings area than from a comparative advantage in retailing. In Italy co-operatives seem to be faring slightly better too, but the state of Italian retailing [...] is one of the most backward in Europe.” Brazda and Schediwy 1989, p. 33

The rise and decline narrative

• Also reflected in popular notions of co-ops• the co-op is a remnant of the past/ an outmoded

organisational form unable to compete in post-war, capitalist and individualised consumer societies

• But: What does the data tell us?

• What characterises the development of post-war consumer co-ops

Market shares (food retail) Western European consumer co-

ops, 1950-2010

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 20100

5

10

15

20

25

30

35

UKGermanyAustriaHollandFranceSwitzerlandItalyNordic

Divergence not decline

• Indeed, many co-ops stagnated massively after 1950, and some collapased totally.

• But in a number of countries consumer co-ops retained their position and some even expanded substantially.

• In many countries, consumer co-ops are the dominant providers of food retail services today.

Combined market shares (food retail) Nordic consumer co-ops,

1950-2010

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 20100

5

10

15

20

25

30

35

The three revolutions in post-1950 food retailing

• ”The supermarket revolution” - the replacement of the small, numerous counter serviced stores that still dominated the food retail industry by 1950, with large self-serviced supermarkets and hypermarkets

• “The chain store revolution” - the replacement of the small independent retailer with the large standardised, integrated and centralised retail chains

• “The consumer revolution” – the development of the affluent, individualised consumer society

What explains Nordic success?

• Nordic co-ops managed to develop their structure of stores to meet with the growth of supermarket, hypermarket and multi-format retailing

• Nordic co-ops managed to develop their organisational structure to meet with the superior organisational efficiency of the large, standardised, integrated and centralised retail chains

• Nordic co-ops managed to adapt their ideological profile to meet with the demands and aspirations of the modern, affluent individualised consumer

Store formats operated by Nordic consumer co-ops

2009/2010

Store type Norway Denmark Sweden Finland

Local stores Coop Marked

(14%)

DagliBrugsen/

LokalBrugsen

(15,9%)

Coop Nära Sale, Alepa

(11,6%)

Soft discount Coop Prix/ Extra

(32,8)

Fakta (21 %) - -

Supermarket

s

Coop Mega

(26,9)

SuperBrugsen/

Irma (39%)

Coop

Konsum/Coop Extra

S-Market (45,8%)

Hypermarket

s

Coop Obs/

Smart Club (26,3)

Kvickly/Kvickly

Xtra (24,1%)

Coop Forum Prisma (42,6%)

Major retail groups in Nordic food retailing, 2010

Norway Denmark Sweden Finland0

10

20

30

40

50

60

70

80

90

100

Norges-gruppen

36,9

0

Dansk Super-marked

31

0

ICA51,7

0

Kesko33,9

Coop 23,7

0

Coop37,2

0

Coop18,8

0

Coop41

Rema 100020,9

Dagrofa19,1

0

Axfood16,1

0

SL11,9

ICA 14,8

Other12,7

Other13,4

0

Other 13,1

3.7

Membership in Nordic consumer co-ops, 1950-2010

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 20100.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Nordic

Norway

Sweden

Denmark

Finland

A Nordic model of consumer co-operation?

• Not really• The ”Nordic” success criteria have been

equally applied in countries such as Italy and Switzerland

• Despite overall similarities, also much variation between the different Nordic consumer co-ops

Market shares (food retail) Nordic consumer co-ops, 1950-2010

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 20100

10

20

30

40

50

60

Nordic weightedNorwaySwedenDenmarkFinland

Organisational structure in 2010

Norway Denmark Sweden FinlandNational associations Coop Norge

SAFDB KF SOK

Separate commercial organisations/subsidiaries

Production, wholesaling, buying, chain management, marketing

Retailing, wholesaling, franchise management, advertising

Retailing, buying, wholesaling, membership/loyalty program, marketing, banking, publishing and book stores

Buying, wholesaling, chain management, hotels and restaurants, agricultural trade, automotive trade services, foreign retailing, banking

Number of independent retail societies

127 354 44 30

Independent retail societies’ share of food retail sales

97% 35% 50% 100% (in Finland)

Organisational model Federal Hybrid Hybrid Federal

Four growth strategies

Organic growth

Growth through acquisitions

Federal structure

Norway Finland

Hybrid structure

Sweden Denmark

Consumer Co-operatives in the Nordic countries, 1950-2010

• Overall market growth, but substantial variation between countries

• Handled the three revolutions in the food retail sector well

• But not similar strategies

• Pragmatic attitude towards the goals and principles of co-operation.

• Able to re-aligning modern retailing practices with the more traditional virtues of the co-operative model.