Letter: Centralized Buying Needed for Economies of Scale

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As part of a member education program, general manager Jon Roesser has been holding regular information meetings for members. One issue that comes up in discussion of the Ambler expansion suggests an ongoing problem for the Co-op as a chain of three food stores. 

According to Roesser, when Chestnut Hill opened, it was planned that about 80 percent of the products in the two stores would be the same, but currently this number is 48 percent. This is apparently the result of giving our managers great leeway in how they run the stores, but it also undercuts the argument that has been made so often that the third store will yield significant economies of scale. Those economies may appear in such things as back-office support such as information technology, but there has always been talk of a central warehouse that will allow us to achieve savings through centralized purchasing and storage. If we continue our current policy of such decentralized freedom in product choice, it is hard to see how those economies of scale will be realized. Management is aware of this problem, and we will have to wait to see what changes are necessary.

All our enthusiasm and optimism about Weavers Way should not make us forget that we are also subject to the rules of business. We cannot automatically succeed just because our stores are nice places, our employees are treated well, we are environmentally aware and we do other wonderful things. At the same time, we cannot act as though each of our stores is an independent entity.

— Larry Schofer