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10% Non-Owner Surcharge: Keep It or Remove It?

For decades Willy Street Co-op Owners paid listed prices and other shoppers paid an additional 10% surcharge. Changes in the natural food industry and a national trend among retail cooperatives to eliminate surcharges has prompted the Co-op to review this practice.

In researching other cooperatives within the National Cooperative Grocery Association (NCGA), Willy Street Co-op was found to be one of only three co-ops in the organization still surcharging non-Owners. Central to the reasons cited by other co-ops for removing their surcharge was the need to remain competitive in the burgeoning organic and natural foods retail sector.

As part of this review process, we’ve held two small-group Owner forums, where Owners were invited to give us their input around removing the surcharge. Now, to gather even more feedback from Owners, we’ve compiled a list of reasons for keeping and for removing the surcharge and we’re requesting as much feedback from Owners as possible. Your feedback will be used by the Board’s ad hoc committee, which is assigned to review the matter in order to better inform their recommendation to either eliminate the surcharge or maintain it.

Once you’ve had a chance to consider this issue, we invite you to email us at , or call (608) 251-0884 and ask for the Co-op Services department to give us your feedback.

Reasons for keeping the surcharge:

  • Some current Owners may equate removal of the surcharge as a decrease in their benefits.
  • Removal of the surcharge will likely result in fewer people opting to become Owners of the Co-op, decreasing the amount of equity, which is helpful in managing the Co-op’s financial position.
  • Loss of income generated through the 10% surcharge (FY09: $42K).
  • WSGC’s current, large Owner base and Owner purchases aid in keeping the Co-op’s taxes lower when patronage is distributed. Any profits from purchases by non-Owners are taxed at a higher rate.

Reasons for removing the surcharge:

  • Create greater access to the Cooperative to those who may not be able to afford to join or shop with the additional 10% surcharge.
  • Eliminate the perception that the Co-op is exclusive or not welcoming to non-Owners.
  • New shoppers would be encouraged to join for all of the benefits of becoming an Owner instead of just doing so to avoid the 10% surcharge.
  • Eliminate uncomfortable or inconvenient delays at the registers while cashiers explain the surcharge.
  • There is the potential for an increase in sales when shoppers discover there is no longer a 10% surcharge.
  • Enable us to put non-Owner prices in line with competitors. The surcharge negatively reflects on our price image to those who are not Owners.
  • The surcharge in a new store, in a new community, may not translate well and jeopardize the success of that store.

Also check out the other discussion that are going on about this topic here and here.