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PERFORMANCE APPRAISAL OF CONSUMER COOPERATIVE. A CASE STUDY OF AWKA

ABSTRACT

The research focuses on evaluating consumers Patronage of Consumer

Cooperative Stores. A cross- sectional survey of two hundred (200) members of

Consumer Cooperative was conducted to determine factors that influence

consumers Patronage and also examine the level of patronage of consumer

cooperative stores in Enugu State. A uniform set of structured questionnaire and

interview were employed to collect data for the study.

The results show that sex, income level, education and availability are factors that

influence patronage of consumer cooperative stores. More so, the result reveals

that members of the consumer cooperative often patronize the consumer store.

Consequently upon the findings, the researcher recommends that emphasis should

be laid on cooperative education to equip members with the knowledge and skill

about cooperative principles, management and business. More so, it will help to

instill in members cooperative values, scale up their understanding and

participation in cooperative business by organizing seminar, workshop, discussion

group and meeting. Also staff-owned consumer cooperative stores should be

established outside the working premises to attract none members to patronize the

consumer store. More so enable them to compete with other retail outlets.

Consumer cooperative should endeavour to employ staff for the consumer store

instead of rotating it among themselves to avoid distraction. There is need for

qualified manager and account officer for efficient management of the consumer

cooperative store and record keeping. The cooperative should adopt the principle

of patronage refund. Such policy promotes members loyalty thus increase the

patronage of the consumer store.

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Cooperative is a form of economic organization based on certain human

values. The International Cooperative Alliance has defined cooperative as ‘an

autonomous association of persons united voluntarily to meet their common

economic, social and cultural needs and aspirations through a jointly owned and

democratically controlled enterprise’.

According to Kattookaran (2002) cooperatives are service-oriented

institution based on the principles of each for all and all for each. It is an

organization of the people, by the people and for the people. The basic objective

of the cooperative movement is to achieve the welfare of the members

concerned and to protect them from exploitation. In developing countries,

cooperatives have been assigned some important role as instrument of

economic and social transformation. Cooperative aims to remedy the economic

inequality and the evils of concentration of the weaker section by the strong.

Cooperative came as an aftermath of industrial revolution which took

place in Britain as a reaction to the capitalist exploitation such as hike in price,

profiteering, adulteration of goods, offering to the market goods with incorrect

weight and measures. The first workable cooperative society was founded in

England by the Rochdale pioneers group of weavers. The policy and

organization they adopted later became the principle of cooperation. The

principles of cooperation formulated by Rochdale pioneer were: democratic

control, open membership, limited interest on capital, patronage divided, cash

trading, sale of pure and unadulterated goods, education of members and

political and religious neutrality. The London Congress (1934) and Vienna

Congress (1966) of the International Cooperative Alliances have revised the

principles of cooperative formulated by Rochdale pioneers. The ICA general

assembly met in the occasion of ICA’s centennial congress in Manchester in

September 1995 and approved the ICA 1995 principles which include;

voluntary and open membership, democratic management and control, member

economic participation, autonomy and independence, education, training and

information, cooperation among cooperatives, concern for community,

Uchendu (1998) noted.

The cooperatives have enlarged its activities in all spheres of human life

namely production, distribution, housing, education and so on.

1.1.1 CONSUMER COOPERATIVE SOCIETIES

Since time immemorial, middlemen have been exploiting the consumers.

It is the consumers who ultimately bear all the burden of the various middlemen

who engaged in the distributive channel of trade. These middlemen also indulge

in the variety malpractices such as underweight, adulteration, black marketing,

hoarding and profiteering. As long as these nefarious activities of the

middlemen are not checked, price line cannot be brought under control,

Himachalam (1991). Under this situation, consumer cooperative was the only

answer to protect the interest of the consumers as a whole.

Consumer cooperative is a business enterprise run by consumers who are

members as well as owners of the business. According to Guelp (1993),

Consumer cooperative is a cooperative business owned by its customers for

their mutual benefit. The consumers of the goods and services which the

business provides are often the individuals who provide the capital required for

establishing the enterprises.

In the words of Igwe (1999), consumer cooperative provides unlimited

opportunities for helping to solve consumers’ problems and improving the

quality of their lives. Consumer cooperative is organization, which intends to

support the economy of member household through the acquisition of

merchandise from wholesalers for sales to members at a fair price, Igwe (2006)

noted. In carrying out their commercial activities, they are consciously guided

ethically by values such as honesty in business, sales of high quality goods and

services, fair prices and advice to consumers so as to get the best possible

decision for the satisfaction of their needs.

A consumer cooperative store is a voluntary organization of consumers,

organized to obtain their requirements of consumer goods and services on the

terms of greatest advantages to them Mathur (1991). Consumer cooperative

stores also sell to non-members and the cost savings that result from their largescale

operation are onto members. According to Kattookaran (2002),

consumer cooperatives are supposed to serve as the best custodian of the

consumers by supplying quality products and services at reasonable price and in

correct weight.

Consumer cooperative society is one of the types of retail outlets.

According to Agbonifoh et al (1998), consumer cooperative societies are

economic associations of consumers for the purposes of purchasing goods from

manufacturers or wholesalers to a retailer to members of the cooperative who,

by definition, are final consumers. Retailing is the process of selling goods

directly to the ultimate consumers. A retailer is a specialized marketing

functionary linking the wholesaler or the producer with the final consumer. As a

specialist in selling to the final consumers, he buys the assortment of goods

demanded by the consumers and makes them available to the consumers at

convenient points from numerous sources. He convinces the consumer to buy,

employs all the marketing variables at his disposal, Agbonifoh et al (1998).

According to , Agbonifoh et al (1998), retailing has evolved over the

years as is evident in the different types of retailers and the different functions

performed by them over time. Three theories have been advanced to explain the

evolution of retail institutions. The theory of natural selection maintains that

retail institution that adapts best to its environment will survive and grow.

Another theory asserts that retailing institutions that pass through a life cycle

begins with low margin, low price and minimum services. The next stage in the

life cycle sees the retailer upgrading his facilities and offerings and adding more

services in a bid to increase the volume of sales and hopefully profit.

According to Uchendu (1998), consumer cooperative store is a retail

store that is put up by group of people who come together as a sociological

group to pursue common objectives of:

1. Buying in large quantities to reduce unit cost.

2. Buying directly from producers to reduce the incidence of buying

adulterated goods.

3. Enjoy other economies of scale associated with bulk purchases.

Consumer cooperative came as an aftermath of industrial revolution

which took place in Britain as a reaction to the capitalist exploitation such as

hike in price, profiteering, adulteration of goods, offering to the market goods

with incorrect weight and measures. The first successful consumer cooperative

was the Rochdale Equitable Pioneers.

In Nigeria, the establishment of consumer cooperative was prompted by

the scarcity of consumer goods after the Second World War. It started as a

village store with meager resources. People pull their resources and stocked

consumer shop so that they can buy from the manufactures or importers at same

price as their counterparts, the competitors.

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Members derive a lot of benefits by joining a consumer cooperative

society which urges them to patronize the consumer cooperative store. Some of

the benefits according to Igwe (2006) are that the membership affords one the

opportunity of buying goods at a very cheaper price. The cheapness of the

goods helps the members to save money thereby contributing to improvement

of the socio-economic status of members. The goods bought are free from

adulteration, shortage of weights and measure and other bad practices in

inherent in capitalist trade. The consumers are sure of getting what they

bargained for at consumer store without fear. There is also regular payment of

dividend to members in form of patronage to the consumer store, Chukwu

(1990). Consumer cooperative protects members from being exploited by

middlemen. The idea of cooperative is in the forefront of upholding this stand

in the interest of the consumers.

More so, consumer cooperative makes goods available to consumers at

all times which implies that consumers are sure of getting what they want at all

times. The interests of consumers are highly protected.

1.2 STATEMENT OF THE PROBLEM

The need for consumer cooperative in Nigeria cannot be overemphasized.

Consumer cooperative stores are much needed in a country where majority of

the citizens are workers, civil servants, and so do not produce what they

consume.

It has been observed that little attention has been given to this aspect of

cooperative unlike agricultural cooperative. Over the times, there have been a

lot of attentions on agricultural produce with little or no emphasis on

consumers. There is need to study how these finished goods reach the final

consumers and consumers’ satisfaction of the consumer goods which is the

finished products of the agricultural goods.

According to Uchendu (1998), in a situation of rural areas, there might be

less need for consumers’ cooperative stores. Most of the people produce

substantial fraction of what they consume. They depend less on the open market

for their basic food items. Consumer cooperatives are best needed in the urban

areas where majority of the people make purchases for their basic needs and

that of their families.

According to Adebayo (2005), when an economic situation is termed to

be normal and goods are available at the open market, prices are very moderate

without much interference from the middlemen in the chain of distribution. But

in a situation where the conditions are the other way round then all hands must

be on deck to evolve a system by which the consumers will get these goods at

reasonable price, with the required quantity and possible reduction in the

activities of the market intermediaries.

In the words of Okonkwo (2001), today in our country, a lot of people

cannot afford three square meals a day. This is because of the sky-rocketing

inflation which bedeviled this country. Consumer goods are so scare and

starvation widespread. This problem is made worse by the traders and

middlemen who buy up the available foodstuffs and stock them to be sold at

very high prices during the period of scarcity. Also in anticipation of hike in

price of food items, they hoard the foodstuff apparently; make huge gain in time

of scarcity. They create artificial scarcity as a result of their personal interest.

People spend all their incomes in purchase of foodstuff and less or none for

other basic needs.

Furthermore, the need for consumer cooperative also arose among the

salary earners. The need arose out of the fact that salaries are not paid when

due. For this reason, salary earners sometimes run out of cash and therefore

cannot purchase from the open market or from the producers or the major

distributors. These irregularities of salaries brought forth the need for

establishing cooperative stores where members can purchase not only on credit

but also at a fair price, unadulterated goods, goods of high quality and correct

measure. Cooperative stores operate in such a way that members pool their

resources together to purchase goods in bulk and directly from producers or

importers. This way, the goods are offered to members at a moderate price than

is obtainable at open market and pay patronage dividend to members.

Although the aim of cooperative stores is to make goods available to

members at a cheaper rate, there is also the need to make surplus from the

venture; therefore, it becomes pertinent that a study to evaluate consumers’

patronage is carried out. The study proposed here, intends to evaluate these

salient reasons that may influence consumers to purchase from cooperative

stores or on contrary dissuade them from doing so.

The life of any business depends on its ability to make surplus and

plough it back into the business. This also applies to consumer cooperative

stores. For this reasons, level of patronage becomes a very important aspect of

their existence. This study will also examine level of patronage in order to

evaluate consumer patronage and how it affects the life of cooperative stores.

1.3 OBJECTIVE OF THE STUDY

The overall purpose of this study is to evaluate consumers’ patronage of

consumers’ cooperative stores in Enugu State.

The specific objectives are to:

1. examine the socio-economic profiles of the members of consumers

cooperative;

2. determine the socio-economic functions/activities of consumer

cooperative stores;

3. determine the nature and varieties of goods sold in consumer

cooperative stores;

4. examine the level of patronage of consumer cooperative stores

and the perception of the members regarding patronage of

consumer stores;

5. determine socio-economic and market factors affecting patronage of

the consumer cooperative stores;

12

6. examine the problems that the consumer cooperative stores face;

7. and make appropriate recommendations based on the findings.

1.4 RESEARCH QUESTIONS

1. What are the socio-economic profiles of the members of consumer

stores?

2. What type of socio-economic activities do cooperative stores engage

in?

3. What types of goods are sold in cooperatives stores?

4. What are the factors that affect the patronage of the consumers?

5. What are the perceptions of the members of consumer stores toward

patronage of consumer stores?

6. Are there any problems encountered by the consumer stores?

7. What can be done to improve the patronage of the consumers?

1.5 STATEMENT OF RESEARCH HYPOTHESES

The following hypotheses have been formulated to guide the study.

Ho – Socio-economic profile of consumers including age, sex, marital

status, income levels and education have no influence on the

patronage of consumer cooperative stores.

H1 – Socio-economic profiles of consumers including age, sex, marital

status, income levels and education have influence on the

patronage of consumer cooperative stores.

13

Ho – Market variables such as price, quality, accessibility, availability of

goods, services rendered and level of awareness has no influence on

the patronage of consumer cooperative stores.

H1 – Market variables such as price, quality, accessibility, availability of

goods, services rendered and level of awareness has influence on

patronage of consumer cooperative stores.

1.6 SIGNIFICANCE OF THE STUDY

The Ministry of Commerce and Cooperative, consumer cooperative

societies, owners/members of consumer cooperative societies and scholars of

cooperative department or college will find the study relevant. Information on

consumers’ patronage of consumer cooperative stores can guide in the

management and operations of consumers cooperative.

The study will help to assess how consumer cooperative societies have

helped in promoting the socio-economic well being of the members as well as

the owners. As a cooperative society and also as a retail outlet, there is need to

evaluate and assess the level of patronage of consumer cooperative stores to

know the level of patronage which is the live wire of the cooperative

sustainability and continuity.

The findings of the study will also help to promote the economic

activities of the consumer stores and enable them to survive the competitive

market environment.

Such findings will also benefit the owners of consumer cooperatives in

terms of enhancing the operations and management of the consumer

cooperative stores. More so, the result will enable them to promote consumer

cooperatives more than other retail outlets.

The study will help in laying a groundwork/foundation for more models

which seek to describe and explain consumer patronage (buying behavior) as a

major perspective in market analysis.

As a step forward, all those interested in the study will have a stand to

identify other relevant issues not covered and add to existing knowledge on this

topic.

Finally, this study will add to the literature on this topic and related topics

for further studies.

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