Mountain Equipment Co-op raises ire of bicycle industry
November 5, 2009 - 2:42pm
Mountain Equipment Co-op, which has built its retailing reputation on a feel-good image of environmental and social responsibility, has ignited anger in an unlikely place – the bicycle industry.
Its foray this month into bike selling has been criticized by rival specialty retailers for everything from unfair competition because of its tax-exempt status, to a Wal-Mart-style money grab, to unethical sourcing.
Bike enthusiasts' ire toward MEC intensified when an executive at the non-profit chain slammed the bike industry in a blog on the company's website, calling it “grey, dusty and dirty.” The blog entry was later removed.
Some bike-parts suppliers have even refused to ship to MEC, while one Quebec distributor last month dropped a major Canadian parts manufacturer from its roster because the supplier is selling to MEC.
Read it here.
Thanks for this, Snuckles. I've been a MEC member for over a decade, and I've seen a good community-based model turn into a greenwashed Wal-Mart. Oh well.
It sounds like a turf war to me. One of the world's most sucessfull co-ops undercuts the capitalists. Surprised? You shouldn't be - IT's A NON PROFIT! It should be cheaper.
If you think MEC isn't capitalist you don't know what capitalism means.
I especially like their gymnastic routine to explain why their offshore sweatshops are actually green and socially responsible.
I'm puzzled by why it's any worse for them to sell bicycles than it is to sell canoes. Granted, every bicycle that MEC sells could have been sold by a specialty bicycle retailer, but every canoe that MEC sells could have been sold by a specialty canoe retailer. Hmmm.
Off road bicycles contribute to forest degradation and soil erosion.
I don't know why the bicycle industry is so upset. Places like WalMart, Canadian Tire, and any number of other entities already sell bikes. I doubt that MEC's entry into the business will seriously impact the market and I don't see it changing the habits of hardcore bicycle enthusiasts.
Uh, because MEC is a coop,; which means they get a HUGE tax break- leaving the playing field unfair for small independent bike shops. And Canadian Tire and Walmart don't sell bikes that any serious cyclists would use, so they aren't going after the same market.
Coops pay tax federal and provincial tax on their income (they do get a deduction for dividends they pay to their members however).
Yes, so all they have to do is give out a bunch on non-voting shares and they can reduce their net income without reducing their profits. Viz, as a not-for-profit, they pay lower taxes. Which would be fine if they were not behaving like a for-profit corporation. What started out as a co-op to provide equipment not readily available elsewhere has turned into a juggernaut that puts profits above community, and outsources its production to developing nations with lax labour and environmental laws.
Are they a non-profit or a co-op. If they are a non-profit what happens with the extra money in a good year?
Just out of curiousity then, what's the answer?
Are co-ops a bad idea, since they'll necessarily cut into the profits of for profit retailers?
Should they only sell things that for-profit retailers don't care to sell?
Should they hike their prices higher than needed so as not to be too competitive?
Other than, I guess, describing an industry as "grey", I'm just not seeing the evil here.
Are they a non-profit or a co-op. If they are a non-profit what happens with the extra money in a good year?
Coops ARE non profit in most cases. It means that they can accumulate profit, but the entity must be formed with a view other than accumulating profit.
The purposes of cooperative status are to create jobs, correct market imbalances, serve community needs, fill market gaps and empower the consumer. This is according the the Cooperative Secretariat of Canada.
How is MEC fulfilling this mandate expanding into markets that are already well served by small businesses? That's a Walmart tactic.
Double post
The point is that MEC is not a co-op. Google claims that it's company model is "Don't be Evil" even as they became a publicly traded company with a stranglehold on net advertisment and information orgainzation. MEC, because it has co-operative roots, feels like it can claim to be a green, ethical and community-based company, even though it has long abandoned such principles and become the Wal-Mart of outdoor activity merchandise. The experience of walking into a MEC today is not unlike walking into Cost-co or some other big-box store: smiling teeangers eager to help (with limited knowledge) while imported, consumerist products masquerade as locally produced and durable.
To answer torontoprof's question, there is little difference between them selling bikes or selling canoes, except for the fact that the capitalist trajectory MEC has been on for awhile now expands their market share and brings a quantitatively higher impact to bear on the affected industries. That is, it's not bike selling that is the problem--it's that MEC is simply a friendly face on the mercenary expansionism that defines all major retailers in North America.
While I agree with most what you are saying Catchfire, MEC is not publicly traded, and the value of member shares does not increase. That would be in contravention of law governing coop status and it would lose its loophole.
So if MEC is not, in fact, a co-op, then is it safe to assume that they do not, in fact, get some unfair tax break?
AFAIK MEC is still legally a co-op. It's a consumer co-op, not a producers so-op. The members are the customers.
Clearly there are issues with this model as it scales up (big credit unions, anyone?) but that doesn't change the legal form of the organization.
One might even describe MEC as a consumerist co-op. But that would require seeing a difference between consumerism and capitalism.
Since when does being a co-op mean you are also a non-profit? I can think off the top of my head of any number of co-op businesses that turn regular profits which are distributed to owners (members) or used to fund internal growth. Perhaps there should be a tutorial on how a co-op works.
I have no special affection for MEC, though I have bought, oh, about $200 worth of stuff there in my lifetime. But I did check out their FAQ, and unless they lie on their webpage, they still are a co-op. This is all explained here. I know, I know: I am taking MEC's word for it on various things, and their own FAQ is obviously going to slant things to their advantage. Nonetheless, it's worth reading if you want to get a first look at their business model.
The mere fact that some organization is a co-op doesn't mean that everything it does is ethical, of course. The New Day Co-op comes to mind...
I'm still waiting for my dividend cheque.
In its basic sense, a company is a co-op if its members have one equal vote each when electing its board of directors. One can have many shares (if allowed) but one vote only. Most non-co-ops have one vote per common share. If someone controls 51 percent of the shares, he/she controls 51% of the votes (and usually choses 100% of the directors).
Here's a link to a well known western Canadian Co-op group in Saskatoon. It's well known west of Ontario. Not MEC.
When I think of the people who visit the MEC store in Toronto, I see people who want to think that they are outdoor adventure travellers. They may think that they are green; it doesn't mean that they are. MEC serves a middle to upper income group that seems to be mostly white people who think they are green. The store itself is not just a place to buy things, but an experience to enjoy. Kids get to try the climbing wall. There are lots of adventure clothes that contain lots of pockets to hold your multipurpose Swiss-army knife. There are books about canoe routes, hiking trails, and the Himalayas.
MEC already sells high-end bicycle parts and bike clothes. High-end bikes are the next trend. One does need a $5,000 nountain bike when tearing trails through the Himalayas. The store will probably not compete against Wal-mart and Canadian Tire. It will go against Sporting Life and Europe Travel that do sell high end bikes.
I'm still waiting for my dividend cheque.
Unfortunately, that's not the way it works. If there's a profit at the end of the year (after paying suppliers, employees, other operating costs), then members (i.e., shareholders) are given "patronage shares", worth $5 each. The number of patronage shares a members receives in a given year is based on the amount of money s/he spent that year. If there is sufficient capital, MEC will buy back shares from members. See here. So, if you have spent a lot of money at MEC over the years, it's probably a good idea to find out how many patronage shares you have, and to find out how you might go about redeeming those shares.
Catchfire: "The experience of walking into a MEC today is not unlike walking into Cost-co or some other big-box store: smiling teeangers eager to help (with limited knowledge) while imported, consumerist products masquerade as locally produced and durable."
Skinny Dipper: "The store itself is not just a place to buy things, but an experience to enjoy. Kids get to try the climbing wall. There are lots of adventure clothes that contain lots of pockets to hold your multipurpose Swiss-army knife. There are books about canoe routes, hiking trails, and the Himalayas."
Well, there's an interesting difference between how people see the MEC experience.
Returning to the critical issue, where the money goes has been kind of answered. Profits get rebated back to members in proportion to their expenditures. Very standard co-op stuff. Basically a discount on purchases that is calculated later after the business costs have been calculated. If they sell a bunch of high end bikes and make more money and give it back (or use it to expand the co-op) to the people who are buying their stuff is that wrong? By the way where is the money going with the other bike sellers, what is their ownership structure?
A a good friend of mine is a fanatical bike enthusiast. His bike cost him $25.
Look, it's easy to isolate MEC's foray into the elite cycle market and ask what is intrinsically wrong with it. For me, it's a question of the trajectory from a community-based, locally sourced alternative to overpriced and alienating elite sporting good stores, to an expansionistic, nationwide big-box chain that has fully embraced the capitalist corporate model, while maintaining just the façade of its former self. When I said MEC is not a co-op, I was referring to the slippage in meaning 'co-op' has endured over the past couple of decades--clearly, MEC is a co-op, literally, in name. But capitalism has co-opted "co-op" the same way it has co-opted "Green," "Organic," and "Fair-trade."
I am a MEC member and have spent thousands of dollars in their stores across the country and online. I would still prefer to buy equipment at MEC than, say, Sports Experts or whatever--but I no longer pretend that I am ethically superior because of the things I buy at a MEC--that is what the "experience" to which Skinny Dipper referred is really based in. It's a friendlier, happier capitalism, but no less devastating to local economies, communities and environments.
Catchfire, I still think you are conflating consumerism with capitalism. If we keep these kinds of categories straight in our own heads we will find it easier to understand and explain what is wrong in the world.
I've been riding the same El Cheapo Canadian Tire 21-speed road bike since 1995 - I think next year I will upgrade to a superlight road bike (not a racing bike, just ordinary transportation, with fenders and a carrier). If finances permit I would also like an electric bike, but I'm doing renovations to the house, so that's very iffy.
Capitalism is a socioeconomic system in which wealth (or capital) is accrued by purchasing commodities (or labour) in order to produce commodities with a higher exchange value, irrespective of use value, than the orignal purchase. Consumerism is a social impulse, a development which has found its most radical expression in our current (some call "late") capitalist climate. It is a symptom of an economy that demands both surplus and waste in order to perpetuate itself. Consumerism, in its latest articulation, disguises, even effaces use value, in objects that have become mere images, even spectacles, of themselves. I'm not sure what distinction you are trying to draw between the two, or how MEC can be consumerist but not capitalist, but I would argue that MEC has fully embraced our social tendency towards consumerism in its march toward a monopoly-seeking corporate entity, while sporting a hemp Che Guevera T-shirt and Green Birkenstocks.
Not quite. The defining characteristic of capitalism is that the owners of capital control things.
That's not true in the case of MEC. So if you blame all the economic problems of the world on capitalism you have a problem when it comes to explaining MECs behaviour.
If, OTOH you claim that the internal dynamic of organizations is to expand, no matter what the control mechanism is, and MEC is following that logic, I will agree with you.
If MEC acts in the interest of capital, irrespective of its alleged co-operative status, can you still say that MEC is "owned" by its members? My argument is that the nature of MEC's co-operative renders it a "co-op" only in name--it is an expansionistic enterprise that returns a large profit each year, to the gross benefit if board members and with an imperceptible return to its members. I don't know of a single MEC member (and I know loads) who considers themselves an owner of MEC, or possessive of any agency in the way MEC is run. With this being the case, how can you possibly argue that MEC is, de facto, not a capitalist organization?
I'm not saying it's a GOOD organization. That's a different debate. Capitalist and bad are not synonyms.
In what respect is MEC acting in the interests of capital? Other capitalists don't think so. It might (actually almost certainly) be acting in the interests of its board, but, AFAIK they are not major investors.
What's the evidence on the gross benefit of board members anyway?
ETA
Let me take another run at it.
What I think I hear your saying is that MEC is operating in a manner indistiguishable from a capitalist company in the same market. Therefor it is capitalist.
I don't think that is a correct analysis.
I think if we see an organization which is not constructed on a capitalist model acting in ways we don't like we have to see why that is, rather than just say "it's bad, therefor it is capitalist".
MEC demonstrates the limits to scale of consumer co-ops. Alterna is demostrating exactly the same limits in the credit union space.
Scale is the issue.
Here is the crux of my argument: there is nothing that capitalism cannot enlist in its service. This includes the co-operative business model meant to circumvent the violence corporate bodies enact. MEC is an example of capitalism co-opting the co-operative model meant to dismantle it, and is therefore exemplary of its chameleon and insidious character.
Why is that a useful way of looking at the world?
It's the demon theory of capitalism. Capitalism is the demon, therefor all bad is to be attributed to capitalism. Even if the form of the organization is not capitalist.
What you got there is religion, not political economy.
I don't argue about religions.
I'm sorry jrootham, but that's not what I said. I am talking about a specific example. How you get religion from that is peculiar to me, unless it means you'd rather not look at the example rigorously. It seems to me that you believe as long as a business appears as if it is owned by its members, whether or not it works that way in practice (and, even, in theory), then that is enough for you. I am saying that such a dynamic is a smokescreen, typical of the way capitalism enlists its opponents and welcomes them under its purview. We have seen it, not religiously, but scientifically, historically, accomplish this feat again and again--it's hardwired in capitalism's DNA (like the scorpion who, after swearing to the fox who carries it accross the river that he would not kill him because they shared a common interest, stings the fox anyway, its only apology that 'it's in my nature').
If you'd prefer to reduce this argument to some "demon theory," well, that's your perogative.
Now I'm puzzled. The owners of MEC -- i.e., the shareholders -- do control things, don't they? After all, they elect the board that runs the company. Or maybe I'm missing something here.
Where is the basis for the assumption that because an organization is a co-op that being part of some greater social struggle is intrinsic to the nature of the co-op? To be successful as a business is not a goal?
1st Principle: Voluntary and Open Membership
Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
2nd Principle: Democratic Member Control
Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organised in a democratic manner.
3rd Principle: Member Economic Participation
Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.
4th Principle: Autonomy and Independence
Co-operatives are autonomous, self-help organisations controlled by their members. If they enter to agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.
5th Principle: Education, Training and Information
Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public - particularly young people and opinion leaders - about the nature and benefits of co-operation.
6th Principle: Co-operation among Co-operatives
Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.
7th Principle: Concern for Community
Co-operatives work for the sustainable development of their communities through policies approved by their members.
adopted at the 1995 Congress and General Assembly of the International Co-operative Alliance
Now I'm puzzled. The owners of MEC -- i.e., the shareholders -- do control things, don't they? After all, they elect the board that runs the company. Or maybe I'm missing something here.
That's the point. In the normal meaning of things shareholders do not control MEC.
It's a consumer co-op. To shop there you have to join the co-op. The board is elected by votes of the members, ie the people who shop there.
MEC is a co-op and I'm quite proud to be one of its members. It has pioneered online democracy in a way that other large consumer co-ops have only talked about. It's not a perfect organization, but I have a vote that gives me the opportunity to express any concerns.
I don't understand who the supposed victim is here? The other bike companies? It don't understand the outrage.
MEC is providing real tangible support to cycling. For example, I volunteered at the first annual Ontario Bike Summit in September. Every participant got significant amounts of donated swag from MEC and MEC also provided all of the printing and a significant cash contribution.
They are also active in the broader co-operative movement. For example, they sponsor a week of Co-op Young Leaders camp every summer.
Now I'm puzzled. The owners of MEC -- i.e., the shareholders -- do control things, don't they? After all, they elect the board that runs the company. Or maybe I'm missing something here.
That's the point. In the normal meaning of things shareholders do not control MEC.
Sorry, I still do not get it. In the "normal meaning" of things, the shareholders are the people who own shares. I own a share. So in the "normal meaning" of things, I am a part owner. And I get to vote for the board of directors, just like I do in other corporations in which I own shares: thus, in the "normal meaning of things" I have control of the company in the same way. The only difference with MEC is that, because it's a co-op, nobody owns more than one voting share -- thus, nobody's vote carries more weight than anybody else. Indeed, at a co-op like MEC, the shareholders have greater control of the company than at a publicly traded corporation, precisely because no single shareholder, or no small clique of shareholders, can acquire a controling share.
Maybe you can explain the "normal meaning" of things, which distinguishes MEC, where "shareholders do not control MEC" from a publicly traded company where the shareholders do control things. In both cases, the board is elected by the shareholders: that's how the shareholders control things, in both cases.
BTW Scott I was pussyfooting around the question of the behaviour of MEC in order to have a side discussion on political economic analysis. I don't have big problems with how MEC behaves.
OTOH the side discussion didn't make much of a dent, at least with the poster.
I don't understand who the supposed victim is here? The other bike companies? It don't understand the outrage.
MEC is providing real tangible support to cycling. For example, I volunteered at the first annual Ontario Bike Summit in September. Every participant got significant amounts of donated swag from MEC and MEC also provided all of the printing and a significant cash contribution.
They are also active in the broader co-operative movement. For example, they sponsor a week of Co-op Young Leaders camp every summer.
I think you're the first person to use the word "outrage," Scott. The other bike companies are understandably upset because a large market player has declared its intent to muscle in on their turf. It's the same kind of alarm Apple raised when it declared its intention to enter the cell phone market. It's classic market politics.
I can't, of course, speak for others, but I made an observation--tinged, perhaps, with rose-coloured regret, since I used to share your enthusiasm for MEC--that MEC is operating no different than other big-box, big-tent department stores like Walmart. Walmart, incidentally, also "gives back" to the community through volunteer initiatives, charity donations, and funding drives for anything from cancer research to teacher support. So how could we possibly look askance at such altruistic actions? I'll only point out that MEC had some (not much) moral high ground when they "tangibly supported" cycling when they did not sell bikes (just lots of expensive equipment); now, how can their "tangible support" be separated from self-interested advertisement or promotion?
As anyone interested in the principles of democracy (or, gasp, socialism), I'm equally interested in economic models that attempt to circumvent capitalist pressures, which is why MEC, as a failed experiment, is particularly attractive. I'm not advocating a boycott, or whatever--although I'm pretty sure I won't be buying my next tent from MEC--but I do find it fascinating that people who won't shop at Chapters, Walmart or Starbucks have no such issues when shopping at MEC, or, to use another example, defending Google. These "nice" companies are no less expansionistic or mercenary than their pantomime colleagues--they just have less pointy mustaches and no vaudeville piano to play them off.
What "gross benefit" to the board members? Every year, the profit is distributed among shareholders according to how much they spent that year. The people who benefit the most from any of MEC's profits are the highest-spending shareholders. It's not as if the profits are divided among the board members.
In 2008, the total profits were $12,941,000 of which $12,727,000 were returned to members in the form of patronage shares. The remaining $214,000 (a tiny amount for a company that large) was put aside for future contingencies. (There were also other minor earnings, so that the total net earnings were $492,000.) MEC has almost 3 million members (2,962,000 to the closest 1,000).
Thus, there was a total profit of about $4 per shareholder -- the only way to have something other than an "imperceptible return" to the shareholders would be to have substantially higher profits. As a shareholder, I prefer MEC to keep the prices, and thus the profits, relatively low, despite the fact that this does not produce a huge return to shareholders.
As noted above, the profit is not divided evenly among shareholders, but is divided according to how much each shareholder spent that year: total sales were $247,730,000 and roughly 5% of that (almost the entire profit) was returned to the shareholders. Thus, each shareholder's return is roughly 5% of what s/he spent in 2008.
Year-end financial statements can be found here: http://www.mec.ca/Main/content_text.jsp?FOLDER%3C%3Efolder_id=2534374302...
I certainly consider myself an owner.
You and yours have exactly the same agency as any other shareholder: you have exactly one vote. Nobody has more than one vote. If you are not happy with what the company is doing, then organize with other shareholders. If you get ten shareholders together, then you have twice as many votes as the board of directors on who is going to sit on the next board. Of course, in any organization with three million voting members, the amount of agency possessed by any single individual will seem small.
If you are really so unhappy with the company that you don't want to try to fix it, return your share and get your $5 back. After all, who would want to own a share in such a thing?
Well, I don't know about that (but you weren't responding to me anyway). I don't know what the necessary and sufficient conditions are for an organization to be capitalist. Owning a share in MEC is relevantly different from owning a share in a publicly traded company, and also relevantly similar.
Many of our institutions that started out as community based caught the neo-con disease in the last 10 years. My credit union Vancity is another example of an institution that has adopted the business model that it was set up to be different from. Part of the problem is the legally mandated responsibility of a Board to make sound business decisions. The Boards hire the upper management and if they don't follow their advice and things go very wrong they can be held responsible. The other dynamic is that the "experts" in upper management have MBA's and they are sold on the global neo-con economy. Big box stores makes money so ergo it must be the way for MEC to operate, if they are going to be fiscally prudent. Most of the people who run and get ELECTED for boards like MEC are fiscally conservative so they are willing to listen to the hired staff.
I was at a VanCity grant ceremony last week and there was a florist company that works with inmates to teach them a career. They are getting a grant because they need to build sales. The person receiving the grant talked about how they had began their work worrying only about their clients, but now understand that they need to be profitable to best serve their clients/employee trainees.
Yes MEC could limit their scope to a narrow product range of politically wonderful items and ask permission from all competitors before entering a product range. But that is no way to run a successful organization.
torontoprofessor: around 1% of MEC's members vote in its elections. I would not call that significant agency in how the company is run. If our country had 1% participation in its elections, there are some neo-libertarians who would blame the voters, but most sensible people would suspect something is wrong with the system. You may think that your share qualifies as ownership of MEC--in light of how MEC runs in practice, I disagree.
MEC is a nice company. I shop there occasionally. I am only saying that our idea of MEC is much more benign than the real thing.
I think they could be more innovative and green. I get to say that because I cast my votes for the Board's of MEC and Vancity. I am still a member of Vancity because they are still better than a bank but I have noticed a very definiite pattern of becoming more bank like.
Hiring people to run the coop or credit union who think outside of the box and won't bankrupt the institution is the hardest challenge for any Board.
I've been a member since 1989 and I think it's really funny that "other bike retailers" are pissed that MEC is now selling bikes. As a "hardcore/avid/year-round-commuter" i think it's great. Obviously the market had an opening and MEC stepped in to fill it. and what is that opening? poor selection, poor customer service, and an elitist attitude at so called "private" bike shops. The bike i require for my riding needs starts at $1500.00. MEC does not sell anything like that. I've checked them out and they have a simple range of aluminum bikes with mid-range prices that are directed at commuter and mid-level riders. generally, so-called private retailers sell boutique high end bikes and accessories, or you get the canadian tire/walmart crap. so there was a huge gap in offerings that the "independants" weren't filling. MEC also generally only sells stuff their members have asked for, through the feedback they ask for online and with comment boxes at stores.
I think it's hilarious that privately owned, for profit, bike retailers are mad that a privately owned, not-for-profit co-op that listens and supports thier member/customers has encroached on "thier" market. what? no one can sell bikes unless they are an "independant" retailer? haha, the irony.
incidentally, i bought my most recent bike at Urbane Cycle in Toronto, a worker owned co-op specialising in the courier/commuter market. They sell nearly everything MEC doesn't. and they are a co-op. My bike is their house brand steel Urbanite. Where is the outrage or resentment about that?
People have always hated MEC because they get beat at their own game. boo hoo. it's a market economy. if you picked the wrong economic model, too bad. To paraphrase what i said to people during the Toronto civic strike who thought garbage men had it easy and made too much....well, if MEC is so successful (read: dangerous), would you convert your private-for-profit shop to a co-op model and share your profits with members and treat your employees the same way? no? didn't think so.
I hear you, farnival ha ha ha. Why bother to read this thread at all when you can paint hilarious caricatures of it in your mind?
Issn't like 99& of all the gear at MEC made from fossil fuels?
99% of everything is made of fossil fuels.
Right but not every store tries to claim greenness. Not really sure what is green about MEC. I guess it helps people enjoy nature which gives them more environmental consciousness, but that seems like a bit of a stretch.
I hear you, farnival ha ha ha. Why bother to read this thread at all when you can paint hilarious caricatures of it in your mind?
catchfire, the only caricatures being painted are the anti-mec ones. MEC is a business with a system of stores, sometimes called "chains" in business parlance. it started years ago in vancouver as a buyers co-op so climbers wouldn't have to travel down to the REI store in seattle to buy their gear. It's governed by B.C.'s co-op act. It's a legitimate business format that has proven quite successful. It's legitimate to critique that format, hopefully leading to improvements, but ultimately it is a business format employed to sell commodities. That format includes redistributing any profit generated back into infrastructure/overhead (the stores themselves) to keep costs low, and to members in the form of dividends, which is essentially a consumer rebate, as pointed out above.
The fact that MEC has grown to the size that it has is a testament to it's success in it's market. I'm not a business person, and find the irony hilarious that other business people are upset that another business is more successful than them. given it's success, instead of complaining you can't "compete", why not adopt that successful model for yourself? because there isn't a single businessperson in a private-for-profit enterprise that would tolerate other people telling them how to run things, what to order, listen constructively to their employees, and have a membership system that determines the content of your inventory through feedback, or, the horror!...sharing profits with anyone but themselves.
I used the example of the civic strike. people complained bitterly that garbagemen were unskilled and overpaid for what they did. Then Miller released the contract, which included salary grids. apparently garbage collectors make about $25.00/hour. that's about $52,000 a year. not a bad salary at all, until you consider the actual duties of the job...night shifts, backbreaking labour, toxic exposure, traffic, abusive public, etc. Not a single person that complained to me about them answered yes when i asked "if garbage men have it so good, why don't you go down and apply. they are hiring." the answer was invariably, "i wouldn't do that for any money" or words to that effect.
i also mentioned Urbane Cycle, a worker owned co-op about 5 blocks away from the Toronto MEC store. They don't compete with what MEC does. they specialise in an underserviced niche of the market, and do quite well. I bought my bike there and one of the owners also makes specialised bags and gear, which i also have. I make a point to buy local as much as i can. but not much is made here anymore, if you hadn't noticed. MEC does too. they even flag items made in canada, to inform your purchase decision. I don't see many other bike sellers doing that.
my point is, the so called independent bicycle retailers should really think about what they are complaining about. the only reason MEC is as successful as it is is because they offer a retail experience that people aren't getting elsewhere. When free marketers start complaining that someone is horning in on "their" market, i involuntarily laugh. the hypocrisy is stunning.
And, if you think the MEC green policies are bunk, as a member you can request copies of their factory audits. you can also run for a spot on the board, which determines corporate policy. how many of the "independent" retailers offer that to their customers?
i'll give you an annecdote that illustrates the arrogance and elitism in the bike industry in toronto, but generally applies anywhere in large urban centres. two years ago i was looking for Specialized's Sedona casual commuter SPD shoe. I went onlne and discovered them for sale locally at a high end shop near high park. I rode from the east end the length of bloor and when i arrived on my Urbanite, the local co-op house brand bike, i was given the full up-and-down look and ignored. my bike is worth $2500 the way it's built up. more than alot of the bikes on thier shop floor, but it is dark green, odd setup, and has no logos. very plain. the snobbery was palpable. i got my shoes, basically being ignored by the owner and staff, and left. wouldn't recommend the shop to anyone.
Last year i made the leap and got a leather Brooks saddle. best thing i have ever put on a bike. but it's leather. when it rains it can get malformed which ruins all the break in time. so i wanted a waterproof seat cover. i know they make them. went online and found one at a boutique store in my end of town that only sells bike accessories and parts. i was asking the young guy helping me what size i should buy, and we got down a B-17, the model of saddle i have and picked a size. i joked about one i saw at Urbane that was made out of spandex, and mused that the only thing it was good for was to protect your $300 selle italia white racing saddle from getting scuffed (a dig at the elitism in the sport). He laughed and thought it was funny that Urbane even had something like that, since "you wouldn't be putting a saddle like that on an Urbanite (read, shitty house brand bike). As i was paying, i noticed we had the same shoes. they had just started selling them and he loved them. i said that was great, thinking now i won't have to deal with the snotty west side shop. after chatting it up a bit, he asked what i was riding. I pointed out the window, and said...."oh, the green Urbanite outside". dead. silence. he went very red. i laughed and haven't been back since.
I do workshops on year round commuting at my work, for my co-workers. I have a few shops i recoomend, based on their stock and customer service. there are others i warn people about. The feedback from my favorite shops was not good from the new riders. then the MEC shop opened. i suggested they try it. i was curious. Unanimously the feedback is very positive. no pretension. no elitism. prompt service. same day.
that is why the retailers are upset. because they can't compete. and yes, i find that hilarious.
Hi, Farnival - I also own an urbanite, a blue one, and it's the best bike I've ever owned. I had no idea it was the "anti-snob" bike.
My husband's bike got kenked and he's looking to get a new one (and I need him to stop borrowing my urbanite - he wears out brake pads way faster than any human should). He was a courier but these days it's just a get-around-town bike he needs, so sounds like MEC is a place for the mid-range models.
I have no idea whether you invented this word usage or borrowed it, but it's brilliant.
I have no idea whether you invented this word usage or borrowed it, but it's brilliant.
Heard it from my husband, who says he heard it around...no idea who the originator was.
How long does it take for a neologism to make the OED? Anybody?
Likely a while. I expect breadth of usage to figure in too.
It has shown up in print (Now I think). So it will make it into some dictionaries.
I take your point about the elections. What's wrong with the system seems to be two things: (1) shareholders are not well-informed about how co-ops run and probably are barely aware that they have a vote; and (2) it's hard to organize with other shareholders when you have no idea who they are or how to contact them. So, even if you are eager to vote, to change things, to organize and have a say -- it's not clear to whom you need to get your message out. Maybe this is simply a consequence of having so very many shareholders: nearly 3,000,000 of them. Maybe it's also the case that people simply do not care as much about how MEC is run as they do about how our country in run. It could be argued that you have a duty to vote in national elections, but no similar duty to vote in the elections for board members of companies in which you own shares.
That said, I would guess that there are ways to exercise your potential agency as a shareholder at MEC -- and that it would easier to do than if you owned a single $5 share of a publicly traded corporation.
I do think that my other points (made in post #43) stand.
But it's up to you whether you wish to exercise your voting rights, yes? And if only 1% vote, but you choose to be among them, your vote is effectively 100x more effective than if every member voted. If anything, my agency increases if others don't vote. If I were the sole voter, my agency would be absolute.
So those who choose to vote certainly have no agency, but I don't see how they can diminish MY agency if I choose to vote.
For the most part I agree: when I spoke of profits I knew that they weren't going to the board members, but I mistakenly believed that the board members made more money than they do--they (ten members plus a chair, I think) make a fairly modest $20 000 a year for about (also modest) 40 hours a month. Not exactly highway robbery. I was working on hearsay and conjecture (based on claims like National Geographic is still the largest "non-profit" organization in the world, etc.).
I'm also operating under a few other motivators that I suspect other MEC members are not. First: I recognize the genesis of MEC to make it easier for Canadians (specifically, BC'ers) to access affordable and good-quality outdoor sporting equipment. To a great extent MEC still does this. But the hole in the market that sparked the idea for the store in the first place can no longer be said to be there, especially in terms of cycling. Obviously, some posters above would differ from this opinion. I don't.
Second, and I'm willing to admit this may be my nostalgic, rose-coloured glasses, but I also think there was a spirit of camaraderie and ethical social democracy underwriting the birth of MEC. That meant ethical and environmental work practices as well as ethically sourced materials with a focus on local resources and workmanship. Indeed, MEC's blog asks consumers the all-caps question: WE BELIEVE BUSINESS CAN ADVANCE HUMAN RIGHTS. WHAT DO YOU THINK? For a company that still buys from Israeli military suppliers and claims a product is "made in Canada" when its materials are manufactured under questionable practices in southeast Asia, this statement aligns more with Walmart's "concern" with breast cancer than with the robust ethical centre on which, I believe, the company was founded.
Which leads us to the next question: why join a co-op? For me, I use and donate to a local bicycle co-operative to repair and upgrade my bike, and I shop at a community co-operative grocery store, when possible, to buy my food. I volunteer at the UBC farm when I can to plant and harvest vegetables then sold at weekly farmers markets. This is because I believe that local, community-based businesses are less harmful to the environment, employ better labour practices, provide better quality service and products and are sometimes more economical than bigger chains doing the same work. Which is to say, I'm a socialist, and when I can, I'd like to support alternatives to profit-driven capitalist enterprises like Safeways or whatever. We're all capitalists, of course, even the co-ops, but we can try--live your life as if the maxim of your actions, etc.
But I know that many don't care about any of these things, and shop at MEC because they have affordable, decent outdoor equipment that has fostered a love of outdoor activity in Canada. I've used a Tarn 3 tent for over ten years, and I don't know that I would still be camping as much as I do, or hiking as much as I do if it wasn't for MEC. But that's not to say that I can't put this appreciation in tension with what I would prefer MEC to represent, even to be. And I don't feel enfranchised enough within the current system--even motivated enough, knowing the membership of MEC--to action for different practices. Tellingly, and perhaps ironically enough, I feel only slightly more motivated with regards to our nation and our democracy for pretty much the same reasons.
Since when does being a co-op mean you are also a non-profit? I can think off the top of my head of any number of co-op businesses that turn regular profits which are distributed to owners (members) or used to fund internal growth. Perhaps there should be a tutorial on how a co-op works.
You can be not for profit and still turn a profit, as long as the coop/not for profit was not formed with profit as the primary purpose. MEC is registered as a not for profit. There can be for profit coops, but they don't get the tax break.
I see nothing on their website about being a non-profit. Can you verify that. All I see is that they are a member owned co-op.
Clearly they are not a non-profit, it is simply the co-op structure (profits paid as patronage dividends - rebates to customers) that allows them to pay less tax.
Clearly they are not a non-profit, it is simply the co-op structure (profits paid as patronage dividends - rebates to customers) that allows them to pay less tax.
And that's somehow a bad thing? MEC makes no claims to be "non-profit". right on their FAQ page:
"Does MEC make a profit?Yes, MEC is a healthy business and is profitable. However, like all co-ops, its reason for existence is not to make profit, but to provide benefits to its members.
At the end of the year, after we pay our suppliers, employees, and our operating costs, we return any surplus to our members in the form of patronage shares."
and it does make one wonder if by choosing to do business as a retail co-operative, you get to pay less tax, why all businesses aren't set up that way. oh, right, because as they state at the top of the linked page, it's a "democratically owned business structure", meaning the members and employees and elected board get to make the business decisions, not a few execs at the top who drain the business for their own profit, and pay their employees peanuts.
we live in a consumer economy driven by markets. i'd much rather shop at a company doing business the way MEC does than a private-for-profit joint who do nothing for anyone but themselves.
YOU CAN BE NON PROFIT AND STILL MAKE A PROFIT! Why can people not get past this?
Here is the linkedin profile www.linkedin.com/companies/mountain-equipment-co-op
The quick facts on the right show it as a non profit. Their tax status is an indication of this. The whole "surplus profit paid as dividends to single vote shareholders" defines them as a non-profit coop. A for profit co-op does not have this option, which is a great way to reduce your net and hence your tax burden.
Okay, and thanks for forcing me to look into it further. Here is an Ontario link.
http://www.ontario.coop/upload/FACTSheet%20NFP%20vs%20FP.pdf
Co-ops can be 'For-profit' or 'Not-for-profit'
In the case of co-ops, the Co-operative Corporations Act
applies to all co-ops, with only slight differences
required in the incorporation documents to designate
not-for-profit status. This means that a co-op can
operate as either a not-for-profit or a for-profit and still
be considered a co-operative under the Co-operative.
Corporations ActIn the case of not-for-profit corporations, they must
actually incorporate as corporations under the
Corporations Act
a for-profit corporation, they will do so by
incorporating under the Business Corporations Act.
Just to make sure, I wrote to them on the website asking if they were a non-profit or a for profit coop, and the reply was that they were non profit.
Corporatism
and it does make one wonder if by choosing to do business as a retail co-operative, you get to pay less tax, why all businesses aren't set up that way. oh, right, because as they state at the top of the linked page, it's a "democratically owned business structure", meaning the members and employees and elected board get to make the business decisions...
Kind of like shareholders in a stock company?
I have no idea whether you invented this word usage or borrowed it, but it's brilliant.
Heard it from my husband, who says he heard it around...no idea who the originator was.
How long does it take for a neologism to make the OED? Anybody?
It's from Igor Kenk:
New York Times story
Kind of like shareholders in a stock company?
Co-op members are not merely like shareholders -- co-op members are shareholders. There are at least two relevant differences between the co-op arrangement and the standard arrangement in a publicly traded company: (1) no shareholder can hold more than one voting share; and (2) you cannot buy and sell shares (voting or nonvoting) on the open market. So no shareholder's vote is worth any more than any other shareholder's vote.
I was at MEC this weekend to pick up a sleeping bag and some new gloves and had a bit of a look at their bikes. I can see why the other manufacturers and retailers are worried.
I think that in the end, MEC will in the end have little or no impact on the bicycle market. There are just too few stores to have a real impact. The closest outlet they have to me is in Burlington. I won't buy there because when I need service on my ride, I want to deal with someone closer and who I can develop a relationship with. In my area there are at least a 8 to 10 locally owned sepcialty bike shops. In every case, a tuneup or parts are cheaper than MEC. I also get a level of personalized service and choice that aren't available at MEC. I also appreciated the fact that my last major repair was done by a local shop in a few hours, because the weather was to nice to miss.
Perhaps not- I think it may have significant impact in certain markets, my own (Vancouver) being one of them.
To Toronto Professor's last comment I would add
3) MEC is not legally required to put its shareholders' interests above that of it's staff, customers, business interests, statement of purpose or ethical values.
Clearly it is up for debate whether or not they truly are an ethical business. I will concede, however, that it is better than many alternatives.
Perhaps not- I think it may have significant impact in certain markets, my own (Vancouver) being one of them.
To Toronto Professor's last comment I would add
3) MEC is not legally required to put its shareholders' interests above that of it's staff, customers, business interests, statement of purpose or ethical values.
Clearly it is up for debate whether or not they truly are an ethical business. I will concede, however, that it is better than many alternatives.