Feasibility of a purchasing cooperative for rural grocery stores: the case of Rural Access Distribution Cooperative North Dakota & exploring purchasing cooperative model for rural grocers in Southeast Kansas

Abstract

This thesis examines the feasibility and potential of establishing a shared service cooperative among rural grocers in Southeast Kansas, inspired by the success of the Rural Access Distribution (RAD) Cooperative in Walsh County, North Dakota. The study meticulously investigates the economic viability, operational challenges, and benefits of adopting a cooperative model to address the pressing issues of food distribution and access in rural areas. Through a detailed analysis encompassing dairy, produce, and alcohol categories across three grocery stores in Southeast Kansas, the research provides critical insights into the pricing disparities, procurement inefficiencies, and the minimal purchasing volumes that significantly impact these stores' ability to achieve economies of scale and operational sustainability. Despite the theoretical appeal of purchasing cooperatives in reducing costs and enhancing product diversity, the study concludes that the current circumstances and purchasing dynamics in Southeast Kansas do not support the practical or economic viability of such a model. The projected cost savings are modest at best, and significant challenges, including supplier pricing and the need for increased purchasing volumes, hinder the feasibility of establishing a purchasing cooperative under present conditions. However, the thesis goes beyond its primary investigation to offer broader implications for rural grocery stores considering cooperative models. It underscores the importance of scale, volume, selective benefits, learning from successful initiatives, strategic considerations, and adaptation to evolving retail landscapes. By detailing the comprehensive process involved—from initial exploration to operational commencement—the study serves as a strategic framework for other stores contemplating similar cooperative endeavors. In synthesizing these findings, the research contributes a nuanced perspective on the potential and limitations of shared service cooperatives in rural grocery distribution. It underscores the need for detailed analysis, realistic assessment, and strategic planning in the decision-making process, offering valuable lessons for stakeholders in Southeast Kansas and beyond interested in exploring cooperative models as a strategy for ensuring sustainable food access and economic resilience in rural communities.