Rebate rates from the Harvard Coop may be lower this fall than last due to rising operational costs.
Last year the rebate percentage was eight per cent on cash purchases and six per cent on charge purchases. For the fiscal year ending July 1, 1969, the rates may go as low as seven and five per cent.
Frank Zavell, acting general manager of the Coop, said, "We have been affected by normal inflationary costs." He attributed the possible rebate cut to increasing taxes, wage rates, and maintenance and repair service costs.
Milton P. Brown '40, president of the Coop and Lincoln Filene Professor of Retailing at the Harvard Business School, predicted the rebate cut last April. He said, "Nobody wants to cut [rebate rates]. But we can't pay what we don't earn."
Brown said, "There are only two ways to keep to Coop profitable enough to continue paying rebates. Either we get the margin [of prices] up or the expenses down. If we get the margin up, people will cut our throats because prices are higher. If we get expenses down, we have to cut services."
Brown said other problems are the busy Harvard Square traffic which prevents people from parking and the hippy attire of many of the customers, which frightens away many Harvard wives. However, Zavell said tat sales are not the major problem. Sales rose eight per cent this year, but expenses nullified this increase.
The Coop must pay back to its members all profits after taxes and operating expenses. Of the $870,000 profit last year, the Coop paid its members $700,000 or approximately 80 per cent.
Recommendations from the Coop's auditing company, Arthur Anderson and Co., determine the rebate percentage. The recommendation must be approved by the general manager and voted on by the board of directors.
Auditing for the fiscal year which ended this July is not yet complete. However, in compliance with Internal Revenue Service laws, the Coop has distributed notices warning its members that may be cut.
From 1950 to 1966 rebates rates were ten and eight per cent. However, in he fiscal year ending July 1, 1967, rates were cut to the present level of eight and six per cent