So Why Were the 10% Member Appreciation Days Discontinued?
Great question. As owners of this cooperative, it’s important for all of us to understand how a changing economy and marketplace impacts our business.
Our Co-op’s Member Appreciation Program was established nearly 10 years ago. It evolved from a random, once-per-quarter event to a long-standing option offered on the 15th and 16th of each month.
In response to the pandemic and to promote social distancing, we changed Member Appreciation Days from the 15th and 16th to a single floating date chosen by the member. As intended, the modification helped balance customer traffic while improving safety for our employees during the many months of uncertain and changing pandemic guidelines.
The unexpected result was a rapid and unsustainable erosion of our thin operating margins. Pre-pandemic, the Member Appreciation Days cost your business an average $500,000 annually. But, within the first 12 months of the change made in response to the pandemic, the loss to your cooperative topped $1.8 million. In 2022, the total loss increased to $2.3 million.
The financial environment we operate in now is very different from the one when we first launched a discount program. Today, in addition to an unsustainably high overall cost, it may surprise you to read that this 10% discount model actually hurts our ability to price competitively every day.
"How Can That Be?" You Might Ask.
First, consider that the chain stores and online retailers we compete against earn 2-3 percent profit on sales…some make more. These competitors are enormous, multinational corporations. And though they may hire local people (which we applaud), their big profits don’t stay in the Upper Valley.
Our Co-op’s average profit on each dollar of goods sold is micro-thin compared to those players. For us, making 1/10 of 1 percent profit can feel like a victory. Your co-op employees work tirelessly to keep your business vibrant while paying bills and running an environmentally and socially responsible business.
With that in mind, here’s how our Member Appreciation Discount hurts our ability to price competitively each day: The Member Appreciation discount is applied to all purchases (except alcohol), even if the product was already on sale. Our cooperative team places thousands of products on sale, then the discount can cut into our thin profits even more. Because they know the impact that scenario has had on your business, they pulled back on some sale prices to save every penny they could.
So, after nearly a year of designing ways to keep members saving, put better sale prices in place, and keep our business model sound, our new Member Rewards program launched.
Beyond tackling enormous factors such as food inflation over 10-percent and supply chain challenges, our food buyers are excited to do the work of delivering the products you seek at prices that help you and your cooperative. Giving you Member Rewards to use when you want and how you want is a nice bonus, too.
Thanks for helping us build a strong business for our communities and for future cooperative generations.