WHAT do department store John Lewis, food firm Loch Fyne and the Edinburgh Bicycle Co-operative have in common?
The answer is simple: the firms are all co-operatives, owned by their members as an independent enterprise, with mutual goals and aims.
But while the structure is hailed as a huge success by employees and owners of some of its biggest players, others see the co-operative as a dying tradition, associated with savings stamps and old-fashioned club membership in rural towns.
Co-operative Development Scotland (CDS), which was created nine months ago to support and encourage Scotland's hundreds of co-operative businesses, is tasked with the aim of opening the eyes of the business community to the possibility of the co-operative movement.
The body, which is an offshoot of Scottish Enterprise, has helped set up 21 co-operatives north of the Border since its launch – taking the Scottish total to 427.
But chief executive Ian Hughes is not wedded to the idea that all businesses should be co-ops: "It is not for everyone, but we want businesses to know that it is an option. Our job is to develop the business model in the Scottish economy. At the moment, the traditional model is all that entrepreneurs see."
Many of Scotland's co-operatives are in rural communities. Hughes cites small retailers in the Scottish Islands that have banded together to share suppliers. "Individually, it was difficult for the businesses, but together they work very well," he says.
CDS says the type of business structure is becoming more popular, but points out that consolidation is also popular in the industry, meaning that the number of co-operatives is not growing quickly.
The vast majority of co-operatives are retailers, with the sector accounting for around 90 per cent of co-operative turnover, while the rest are made up of SMEs. Hughes is now set to undertake research into the scale of the co-operative movement in Scotland and pinpoint ways that it can be promoted among small businesses.
He explains: "Co-operatives tend to merge rather than go bust, so they are very good for the economy. The Americans are very good at co-operatives and there is a lot we could learn from them.
"In the case of John Lewis, which is a massive business, staff participate in decision making, which is obviously beneficial for the company.
When CDS was set up, co-operatives were a bit of an unknown quantity. Just 4 per cent of Scotland's GDP (about £4bn) is generated from co-ops, while in Scandinavia, the figure is well into double digits.
Hughes believes the main difference between co-ops in Scotland and Scandinavia is knowledge of the sector. "Intermediaries, the people who speak to entrepreneurs when they set up, are not really aware of the sector," he says. "Lawyers, accountants and so on need to know what the benefits can be so people starting their own businesses are given the option.
"The research is to find out if the way the companies trade in Scandinavia is something different to the way it is done in the UK."
Co-operatives can be found in almost any sector, including manufacturing, agriculture, housing, retail, consumer and financial services, credit unions, green energy, recycling, as well as tourism, food and drink.
Loch Fyne Oysters, which launched with a single shop on the banks of the loch, is now an international business with a turnover of more than £10 million and its first overseas restaurant is set to open in Dubai, after going co-operative five years ago.
Virginia Sumsion, trustee of the Employee Benefit Trust for Loch Fyne says: "We all work to make the company successful; are able to influence the way the business is run and we all share the rewards. We know we are working for ourselves, our colleagues and future employees in our own company."
She added: "Since becoming employee-owned, recruitment and retention levels have risen, staff are far more involved in the plans of the company and people are starting to see financial benefits through dividend payments and share value received when retiring."
A LONG TRADITION MODERN co-operatives date back to the 18th and 19th centuries. It is believed the first co-operative was set up in Scotland – when the Fenwick Weavers' Society was formed in Fenwick, Ayrshire, to sell discounted oatmeal to local workers.
In 1844, the Rochdale Society of Equitable Pioneers established the "Rochdale Principles" establishing the basis of the modern co-operative movement. The Co-operative Group formed gradually over 140 years from the merger of many independent retail societies.
CDS statistics claim that one in five adults is a member of a co-operative, one in four of a mutual, such as the Dunfermline Building Society.
The full article contains 823 words and appears in The Scotsman newspaper.
