ReCooperate

Just a few hours before the historic bombing of the Center for International Affairs on October 14, 1970, the Harvard Coop dropped a bomb of its own.

Citing low earnings and increased shoplifting, then-Coop President Milton P. Brown '40 announced the store would slash its rebate by more than 50 percent.

The Coop has traditionally refunded its members a set fraction of the amount it spends on purchases during the school year.

The yearly figure for the rebate has varied, depending on the profits made by the Coop during the previous year.

Current Harvard students, however, are quite accustomed to receiving little or no rebate.

Coop members did not receive a rebate during the 1994-95 school year, although students were given a 10 percent refund on book purchases in the fall semester. The Coop did not give any rebate or refund during the 1995-96 academic year.

Current troubles notwithstanding, 1970's rebate slashing was unprecedented. The year also marked the first time Coop officials in the 1970s remember facing serious financial difficulties.

"From the point of view of earnings and patronage refund, this has been the worst year in the modern history of the society," Brown told The Crimson in the fall of 1970.

Although 1971 marked the most dramatic reduction, rebates had been dropping slowly in the preceding years. In 1965 the rebate was 10 percent for cash purchases and 8 percent for credit purchases. Rates dropped to 8 and 6 percent respectively in 1966 and then again to 7.5 and 5.5 percent in 1969.

But in 1970, the Coop announced that it would be cutting rates to 3 and 1 percent respectively, the lowest rebates in recent years.

The Coop's management gave several reasons for the reduction. The store experienced a 40 percent increase in shoplifting during the 1969-70 academic year. Coop security guards apprehended an average of one-and-a-half shoplifters per day that year, The Crimson reported.

In addition, the Coop faced both a business depression and increases in wages. The $30,000 cost to revise the Coop's bylaws and to hold the first annual elections for student directors added to its financial difficulties.

Brown cited other reasons for the Coop's precarious 1970 financial position--including internal pilferage, new charging policies, the cost of expansion and "parking difficulties" outside the building.

Despite all these problems, Coop executives seemed optimistic that the situation could be improved and the rebate restored.

"We'll bounce back this year," Alexander Zavelle, Coop general manager, told The Crimson in 1970. "At this time next year we will have a big surprise for everyone."

But no one was surprised when Zavelle was removed from his post and replaced by Howard W. Davis.

The new management team, led by Davis, was able to raise rebates the subsequent year to 4 percent on cash purchases and 3 percent on credit purchases. The Coop also changed its rebate system in the 1971-72 school year to give the same rate for both cash and credit purchases.

The Coop's successful financial recovery continued throughout the 1970s and 1980s, with the rebate nearing the 1966 level of 10 percent in 1989.

In recent years, however, the Coop has once again experienced financial difficulties, impacting directly on its ability to deliver on the rebate.

In 1990 the rebate dropped to five and a half percent, and in 1993 the rate plummeted to a minuscule one percent.

1994 was the first year in which the Coop operated in the red and was also the first year that the Coop did not offer a rebate. Since then, the store has not offered a rebate to its members.

Coop officials are hopeful that the store can once again rebound as it did after its 1971 difficulties.

According to current Coop President Jeremiah P. Murphy '73, the store is working to restore the rebate because its management believes its customers value the traditional refund.

"Most members judge the success of the Coop on its rebate," Murphy says. "I think in many ways, we've conditioned people to look at the rebate."

The Coop is also in the process of restructuring in order to adjust to changing market conditions. The Coop has hired Barnes and Noble Bookstores to manage its stores and has embarked on a major renovation project.

Murphy says he sees many similarities between the store's troubles in 1971 and those of 1996.

"25 to 30 years ago, selling suits was a big business, but not anymore," Murphy says. "The Coop had troubles because it had to adjust to serving a co-ed campus."

Murphy says he believes the Coop must now attempt to change the focus of its sales as it successfully did in 1971. Murphy says that the Coop must "get back to its roots" as a campus store, rather than attempting to be a department store for the general public.

"Rather than be a department store we wish to become more of a collegiate or academic book store that might also sell ties," Murphy says.

Murphy says he is confident that the Coop's new strategy will lead to renewed profit, allowing the store to again offer rebates to its members.