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Retailer cooperation: Costs & benefits \'l"hat will be the ultimate value of the trend toward horizontal co- operation bevveen retailers ~ Will the social costs eventually exceed the benefits ? This is the question explored by C. alerle Crawford, prufessor of marketing, t-. of :11ich, Ann Arbor, in a recent is:ue of Journal of Re- lvilbz~i. I'rof. Crawford points out that, as our l>opulations. incomes, markets. store:, financing problems, mana- gerial coml lexit}•, and risks of op- eration grow in size, retailers in- creasingly lookk to formal methods r.,f integratinr their operations with those of the competition. Objectives of this cooperation, he says, are to exchange information or tn increase power. "The information-exchanging groups are the least significant, so- cialk- and economically, since they have little immediate effect on the general character of retail opera- Thfir5 ,. The second objective, however, that of increasing power, often in- volves the pooling of dollars. This pooling generally requires a firm anrl extensive loss of independence for the cooperators and therefore changes the entire character of in- dependent retailing. Examples of horizontal coopera- tion between retailers cited by Prof. Crsr~%°fi)rul incbAtt3e the followiaag:  The opening of branch units, u•ithin other stores,  The financing of campaigns designed to educate consumers gen- erall-,• about classes of merchandise, or to direct the interests of young workers towards careers in retail- ing or public service.  The reaching of agreement on conditions under which merchants in an area will accept returned mer- chanrii se. • The financing and operating of a night-hours pharmacy in a city's central police station.  The banding together to fi- nance a family counseling center giv- ing instructions in operating home appliances, such as pmver mowers.  The joint financing of a com- parishn s4i~op~ping~ s~ st~en,n,; ~tlhere~the J AMERICAN DRUGGiST • September 7, 1970 information gathered is made avail- able ttt all members. Future: Besides these tasks which have already been "cooperated" on an experimental basis, Prof. Craw- ford foresees a day when advertising agencies will finance centers for training copy writers . . . noncom- lxiitive stores will share executives ... and nonmall merchants will give up the front 10 ft of their stores fOr a passageway between stores. He feels that cooperative ventures such as these will continue ... and that new ones will be developed. Dangers: "Obvioushl," he sa.•s, "cooperative ventures can bring substantial profits to the retailers involved. What has not been dis- cussed, and what should increas- ingl}• give concern. is the other side of the coin. "The customer obviously bene- fits from a situation where 2 or more retailers aggressively compete for her business. She n.ar s,uffer from the loss of this competition." Also. "it would seenT a reasonable conclusion that as retailers use co- operation to strengthen their posi- tion, there is an automatic reduction in the ease with which new competi- tors can enter the market." Besides reducing customer ben- fits and the ease of entry into a ntarket, Prof. Crawford feels that horizontal cooperation between smaller independent retailers will threaten the fxrsiticMtt of the maker "As mantlfacturers gradually be- come simple factories," he warns, "product innovation would seem to become a responsibility of the re- tailer. Can the retailer also assume the product innovation function ~- " A final conce»t, stemming from the rapid increase in horizontal co- operation at retail, is that retailing nlay lose its capacity to adapt to changing conditions in the market- place. "It is the ven• essence of coopera- tion to reduce freedom and flexibil- ity in return for lower costs or greater sales. To the extent that cooperators bind themselves to given policies of operation, we have the same effect as vested interest at the ntanttfacturer level. i "Obviously, cooperation ha~, not progressed to the point where con- cern along these lines nee<l be erni- nent. But the threat x•otllrl seen) to be there, and might deserve corlsicl- eration when public pr)lic~- di.~cn•- sions take place on thi~~ frt,n..- ROT~~HOTO ~ Revolutionary New PHOTO FILE I MODEL PF6-P 3V2X5" PHOTOS MODEL P06-P 3tiaX41.s" PHOTOS MODEL IN6-P 31/sX3?%2" PHOTOS Retail $6.00 PLETE TO•DEPTUR NEW C PHO HOLDS 48 or 96 3)/2"x4',." PHOTOS MODEL 48•P Retail $2.95 MODEL 96-P " $4.95 40% PROFIT For Instant Load Films Order #48-1 Retail $2.95 #96-1 Retail $4.95 SEND FOR CATALOG ORDER - FROM - YOUR WHOLESALER or ROTO-PHOTO 7064 N. CLARK ST. CHICAGO, ILL. 6D626 MorAotrno 1rtrd< • 73