Ten years after food co-op leaders in our region first gathered to discuss working more closely together, over 100 co-operators met in Hanover, NH, on September 27th for the Fourth Annual Fall Gathering of the Neighboring Food Co-op Association (NFCA). The meeting brought together representatives from more than 40 food co-ops and start-ups and partner organizations. Keynote speaker J. Tom Webb addressed ‘The Co-operative Difference in Challenging Times,’ laying out the shortcomings of conventional business and the potential for co-ops to help build a better world.
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Neighboring Food Co-op Association Fall Member Gathering Presentation, 2014
1. 4th
Annual
Fall
Member
Gathering
27th
Sept
2014
Co-‐op
Food
Stores
Hanover,
NH
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
2. THANK
YOU!
Thank
you
to
the
co-‐operative
community
for
your
partnership
&
support.
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
3. THANK
YOU!
Thank
you
to
the
co-‐operative
community
for
your
partnership
&
support.
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
4. Welcome
AGENDA
FOR
THE
DAY
Glenn
Lower,
President,
NFCA
Board
of
Directors
Terry
Appleby,
General
Manager,
Co-‐op
Food
Stores
Staff
Report:
We
Want
Your
Feedback
Erbin
Crowell
&
Bonnie
Hudspeth
Keynote
Speaker
J.
Tom
Webb:
“The
Co-‐operative
Difference”
Lunch
&
Topic
Tables
Welcome
Cooperative
Fund
of
New
England
Trustees
Afternoon
Workshops
Appreciations,
Evaluation
&
Prizes!
Tour
of
Co-‐op
Food
Stores
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
5. WELCOME!
Glenn
Lower
President
&
Chair
of
the
NFCA
Board
General
Manager
Middlebury
Natural
Foods
Co-‐op
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
6. WELCOME
TO
HANOVER!
Terry
Appleby
General
Manager,
Co-‐op
Food
Stores
/
Hanover
Consumer
Co-‐op
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
7. We
want
your
STAFF
REPORT
feedback!
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
8. OUR
VISION
…a
thriving
regional
economy,
rooted
in
a
health,
just
and
sustainable
food
system
and
a
vibrant
community
of
co-‐operative
enterprise.
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
9. OUR
PRIORITIES
Supporting
shared
success
through…
Peer-‐to-‐Peer
Collaboration
Regional
Sourcing
Marketing
&
Outreach
Collaboration
with
other
co-‐ops
&
co-‐
operative
support
organizations
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
10. PEER
TO
PEER
COLLABORATION
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
11. REGIONAL
SOURCING
Vision:
Branded,
Regional,
Sustainable,
Scalable,
Co-‐operative
Cave
to
Co-‐op:
Promote
&
Grow
Program
Farm
to
Freezer:
Learn
&
Develop
Model
Future:
Distribution?
Private
Label?
Value
Added?
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
13. CONSIDER…
…the
priorities
and
examples
of
activities
that
we
have
outlined
and
in
the
summary
sheets
on
your
tables
and
posted
on
the
wall.
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
14. THINK…
…about
the
activities
of
the
NFCA
and
that
you
think
offer
the
most
value
and
impact
in
terms
of
1. The
NFCA
Vision
the
goals
of
the
Middlebury
Manifesto,
2. The
success
of
your
co-‐op
or
organization,
and
3. You
as
a
staff
or
board
member
of
your
co-‐
op
or
organization.
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
15. TALK…
Take
the
next
fifteen
minutes
to
talk
with
people
at
your
table.
What
jumps
out
for
you?
What
has
been
most
exciting
or
innovative?
Take
notes
on
some
of
the
things
that
stand
out
for
you.
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
16. DURING
THE
DAY…
Place
the
three
stickers
in
your
nametag
on
the
posters
on
the
wall
next
to
the
priority
areas
and/or
specific
activities
that
you
think
are
most
important.
(Yes
–
you
can
stack
them.)
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
17. SHARE…
On
the
‘Opportunities’
sheets,
write
down
any
ideas
you
have
for
activities
that
you
think
we
should
consider
as
we
move
forward
—
keeping
in
mind
our
vision.
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
18. Keynote:
J.
Tom
Webb
THE
CO-‐OPERATIVE
DIFFERENCE
IN
CHALLENGING
TIMES
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
19. OUR
GUEST
SPEAKER
J.
Tom
Webb
Co-‐op
board
member,
senior
manager,
consultant
and
educator
Co-‐operative
Management
Education
program
at
Saint
Mary’s
University
Global
Co-‐operation,
Inc.
Neighboring
Food
Co-‐ops
Fall
Gathering,
2014
20. Global Co-operation Inc
The
Co-operative Difference
in
Challenging Times:
Why Co-operatives Matter
Neighboring Food Co-ops Fall Gathering, 2014
22. The long view…
Energy
Crisis
Environment
Crisis
Rate of Change Technology
Crisis
Urban Rural
Crisis
Financial
Melt Down
Food Crisis
Income
Distribution
Inter Related
Problems of a Market Driven
Investor-owned Economy
Erosion of
Democracy
Neighboring Food Co-ops Fall Gathering, 2014
23. Trickle up
theory of
economics
Neighboring Food Co-ops Fall Gathering, 2014
24. Global Co-operation Inc
Why Co-operatives Matter
Can
a
people
centered
democracy
coexist
with
a
capital
centered
economy?
Neighboring Food Co-ops Fall Gathering, 2014
25. Capitalism Works – For 20%
Neighboring Food Co-ops Fall Gathering, 2014
1996
26. Crisis of the Environment
Neighboring Food Co-ops Fall Gathering, 2014
27. Global Co-operation Inc
Why Co-operatives Matter
Our economy
needs an
alternative.
Neighboring Food Co-ops Fall Gathering, 2014
28. Global Co-operation Inc
Why Co-operatives Matter
Our
Planet
needs
an
alternative
Neighboring Food Co-ops Fall Gathering, 2014
29. Global Co-operation Inc
Why Co-operatives Matter
Human
Society
needs an
alternative
Neighboring Food Co-ops Fall Gathering, 2014
30. Global Co-operation Inc
Why Co-operatives Matter
Natural World
Economy
Economy
Human Society
Can
Capitalism
and
democracy
coexist?
Neighboring Food Co-ops Fall Gathering, 2014
31. Can we imagine: Co-operative Economics
All serves
Humanity
Capital
All depends
On Nature
The Natural
world
Humanity
Capital
Is a Tool
Neighboring Food Co-ops Fall Gathering, 2014
32. Financial
Gain is
central
Motivation
Theory
of why
capitalism
works
Key Beliefs of
Neoclassical
Economics
Assumed
Market
Perfection Progress =
Growth =
Scale
“Free Trade”
No barriers
Neighboring Food Co-ops Fall Gathering, 2014
for
Lower Corporations
Taxation
and Minimal
Government
Regulation
Voluntary
by Market
Players
33. Global Co-operation Inc
Depressing ?
Hope springs from
facing reality not
hiding from it.
Here comes the hope
Neighboring Food Co-ops Fall Gathering, 2014
34. Global Co-operation Inc
Why Co-operatives Matter
We can change the way we
think about:
• Our co-operative’s
operations
• Our economy,
• Our society
• Our planet
Neighboring Food Co-ops Fall Gathering, 2014
35. Global Co-operation Inc
Understanding the Co-operative Difference
The four pillars
of co-operation
Principles
Values
Purpose
Justice
Neighboring Food Co-ops Fall Gathering, 2014
36. Global Co-operation Inc
Understanding the Co-operative Difference
Co-operative
Investor
Owned
Values &
Principles
DNA
Clothing of
convenience
Purpose
DNA
Maximize return to
mainly wealthy
Ethical stance Justice Charity
Bottom line(s) Multiple goals One overriding
Others optional
People Members and
workers just
people
Workers are just
people
Neighboring Food Co-ops Fall Gathering, 2014
37. Global Co-operation Inc
Why Co-operatives Matter
A Lot
of
HOPE
Neighboring Food Co-ops Fall Gathering, 2014
100
Million
work in
Co-ops
US Food
Co-ops NFCA
CDS
NCGA
Environment!
Healthy Food!
Local Food!
Co-operative values!
Fair Trade!
38. Global Co-operation Inc
NFCA Co-operative Links
NFCA
Low income access
Public Profile
HOPE!
Saint Mary’s University
UMASS Co-op Certificate
New England Farmers Union
Organic Farmers
Anti Hunger
Valley CBA
CFNE
Workshops
And more…
Neighboring Food Co-ops Fall Gathering, 2014
40. Global Co-operation Inc
Co-operative Economics
There is an alternative:
An economy inspired by the co-op
business model.
A new definition: The economy is the
complex set of relationships that people
use to provide themselves with the
goods and services they need to live
meaningful lives in their communities.
Neighboring Food Co-ops Fall Gathering, 2014
41. Global Co-operation Inc
Co-operative Economics
There is an alternative:
An economics inspired by the co-op
business model.
A new definition: Economics is the
study of how effective the economy is
at meeting human need in a manner
that allows people meaningful happy
lives as an integral part of a healthy
planet.
Neighboring Food Co-ops Fall Gathering, 2014
42. Global Co-operation Inc
Creating the Co-operative Difference
Values
Principles
Purpose
Justice
Operations
Community
Operations
Financial
Personnel
staffing
education
Marketing
Accounting
Product
Service
Buildings
Planning
Everything else
Community
• Environment
• Justice
• Responsibility
• Economic
• Social
• Co-operatives
• Global Co-operation
Educate by
doing and
explaining
Neighboring Food Co-ops Fall Gathering, 2014
43. Global Co-operation Inc
Co-operative Accounting – Why Measure?
Total Annual Revenue
Purchases of Local Products
Purchases of Regional Products
Purchases of Organic Products
Purchases of Fair Trade Products
Purchases from Supplier Co-ops
Donations to Community
Organizations
Total Members
New Members
Total Employees
Total Payroll
Percent Full-Time
Employee Benefits
Contribution to Local Taxes
You can’t manage what you do not measure
You can’t inform without accountable information
Neighboring Food Co-ops Fall Gathering, 2014
44. Global Co-operation Inc
Key Opportunities
Co-operative Accounting - Measure
your differences:
• Sales per member per year
• Community income equality
• Member engagement
• Member satisfaction
• Kilos of CO2 per member
• Community health impact
• % Local food
Neighboring Food Co-ops Fall Gathering, 2014
45. Global Co-operation Inc
Key Opportunities
Co-operative Accounting - Measure your
differences:
• Bigger the co-op the more sophisticated
• Share with others
• Start simple and build year by year
• Think of measures during the day and
send them in to NFCA to share
Neighboring Food Co-ops Fall Gathering, 2014
46. Global Co-operation Inc
Key Opportunities
Limits to Co-operative Growth?
• Market share
• Governance
• Competing amidst rampant materialism
Social Media and participation in
planning
• If 250,000 can create Wikipedia then?
Neighboring Food Co-ops Fall Gathering, 2014
47. Global Co-operation Inc
Key Opportunities
Explore Solidarity Co-operative model
• Consumers, workers, community, suppliers
• Interdependence vs Stakeholders
Vertical and horizontal co-operation
• Buy from, sell to and share with co-ops
• NFCA’s “Go Co-op!” Program
Co-op development resources that work
Funeral, Phone, Internet, Worker, etc.
Neighboring Food Co-ops Fall Gathering, 2014
48. Global Co-operation Inc
Collective NFCA Challenges:
Imagine a better world
Imagine 100 ideas for measuring the co-operative difference
Imagine 10 co-operative differences your members want
Imagine 80% of your members engaged beyond shopping
Imagine 5 ways to get members to ask questions
Imagine your co-op as the most trusted information source
Imagine creating 100 workplaces/year – How?
Imagine increasing co-op sourcing by 10 percent
Neighboring Food Co-ops Fall Gathering, 2014
49. Global Co-operation Inc
Closing Questions
How many co-ops do you know that
failed because they put too much effort
into co-op purpose, values and
principles?
How many do you know that failed or
are in trouble because they lost their
co-operative identity?
What is your greatest risk?
Neighboring Food Co-ops Fall Gathering, 2014
50. Global Co-operation Inc
Why Do Co-operatives Matter?
Because you are the
best hope my
grandchildren have.
Thank you
Tom Webb
Neighboring Food Co-ops Fall Gathering, 2014
59. Sprouts
• Founded 2001:
– 2011 merged with Henry’s & Sun Harvest
– 2012 acquired Sunflower
• Chain of 165 stores, based in Phoenix, AZ
– Southwest U.S. and now KS, MO, GA, AL
• IPO in 2013, traded on NASDAQ
• $2.7 B/year, 27% gross, 3% net
• “Healthy living for less” & “Responsible Retailing”
– Produce=25% of store sales
60. Lucky’s
• Founded in 2002 by Bo Sharon
– Lots of former Oats & Sunflower talent
• Chain of 13 stores, based in Boulder, CO
– CO, MT, WY plus FL, IN, IA, MI, MO, OH, & KY
– MW focus
• “Good food for all”
• Intersection between Sprouts and Food Co-ops
– More natural than a Sprouts
– More price-competitive than a food co-op
61. Natural Grocers
• Founded in 1955 in Golden, CO
– History as Vitamin Cottage, 2012 IPO
• Chain of 84 stores, based in Lakewood, CO
– Rockies, Southwest, Pac NW, pushing into MW
• $500 M/year, 25% gross, 2.5% net
– 5-16k sq. ft., 1/3 of mix and ¼ of space to Wellness
• “What we won’t sell and why”
– Strict product guidelines standards, only Organic Produce
62. Earth Fare
• Founded in 1975
• Chain of 33 stores, based in Asheville, NC
– Southeast U.S. plus IN, OH, and now MI
• “Connect communities and improve lives through
food”
– Company has a “Food Philosophy” of “selling food as close
to the ground as it gets.”
– “Boot List” of banned ingredients, particularly HFCS &
artificial ingredients
63. Effective competitors
• Know the consumers in my market – not just
the ones in my store
• Know that demographics are changing
• See mid-level shopper sales as the opportunity
• Know today’s mid-level shopper could be
tomorrows core shopper
• Set goals to attract more mid-level shoppers
64. Case Studies
• Existing Co-op acquires conventional store
• Existing Co-op merges with another co-op
• Existing Co-op partners with a start-up group
69. >> Results
• Increased
sales
from
$100k
to
$180k
per
week
• Profitable
within
first
three
months
of
operaTons
• Increase
in
memberships
• Increase
in
staff
morale
–
beWer
pay,
benefits
• Expansion
of
the
cooperaTve
model
with
no
impact
on
our
friends
at
Upper
Valley
Co-‐op
71. People’s Food Co-op La Crosse:
Established as a buying club in 1973.
FY2010 Sales: $10.9 Million
FY2010 Members: 4124
72. Rochester Good Food Store
Established as a buying club in 1975.
FY2010 Sales: $3.4 Million
FY2010 Members: Annual dues paying members ~ < 500
73. Some statistics of interest to the People’s Food
Co-op (these are 2012 stats):
La Crosse,
WI
Rochester,
MN
Bachelor's degree or higher 24.1% 38.1%
Married residents 39.1% 57.6%
48.4%
Family households
(WI 66.5%)
63.0%
(MN 66.2%)
% Ethnically white 91.1% 82.0%
% Living in poverty 25.2% 8.8%
7.6%
July 2011 unemployment rate
(WI 7.8%)
5.8%
(MN 7.2%)
Daytime population change
(commuters) 19,395 27,477
Household income
$37,476
(WI $49,993)
$62,420
(MN $55,616)
74.
75. • There are always a lot of good reasons NOT to do
something.
• Our challenge is to weigh the COSTS vs
BENEFITS of any given strategy.
• Being a good manager is as much about knowing
what NOT TO DO as it is about knowing WHAT
TO DO.
• Start with a gut check. List the obvious benefits
versus challenges.
• ARE THERE ANY DEAL BREAKERS ON THIS
LIST?
76. We dug in and tried to approach this opportunity
systematically –
• First we created an “OPPORTUNITIES & CHALLENGES”*
assessment.
• Then a “GOALS” sheet
• From there the board asked me to layout a “MODEL
TIMELINE” based upon the development limitations we
were operating under.
• Once the board had a chance to review those items they
asked me to generate a “MEMBER ENGAGEMENT
TIMELINE” that included a “DRAFT LETTER” that would
go to all members explaining the opportunity, the actions
taken to date, as well as what we saw as the benefits and
challenges.
*Note: Documents bolded above are available from the NFCA
by e-mailing info@nfca.coop.
77. At the same time I was working on an
“EXPANSION PLAN”* that included market
research conducted by two outside consulting firms.
A “SOURCES & USES BUDGET” was drawn up
that was used to create a set of “FIVE YEAR PRO
FORMA BUDGETS” to demonstrate the financial
feasibility of the plan.
Discussions began between the Rochester and La
Crosse BODs in early February 2011. By mid-July I
had to present a well formulated case
demonstrating a solid plan for the merger AND
expansion.
*Note: Documents bolded above are available from the NFCA
by e-mailing info@nfca.coop.
78. Process Successes:
The La Crosse store was operating at a high level so that
when my attention was turned to focusing 90% on the merger
and expansion planning the co-op didn’t suffer. (I eventually
hired a store manager for La Crosse, but not until 18 months
in to the project.)
The boards of both organizations found trust in one another
and didn’t turn on one another during times that were difficult.
We over-communicated. We took our lumps and found
comfort with open disagreement and hostility toward the
proposal. (It was small but very loud.)
The board and management expressed our support and
belief in the proposal, but we didn’t do the hard sell. The vast
majority of members saw the benefits clearly.
79. Process Successes, continued:
We did our homework. We anticipated to the best of our
ability what the questions would be and worked to find
answers to them wherever we could. We did not however
make promises we couldn’t keep, and we were comfortable
saying, “We don’t know.”
When the first vote in Rochester failed to reach the required
threshold for passage (it passed with 66.2% in favor – MN
statute requires a 67% threshold) the Rochester board
conducted a listening tour, called every member, and
investigated and decided that there were enough “anomalies”
to warrant another vote.
Once the decision was made to move forward those who
were opposed got behind the co-op to help us find success.
80. Process successes, continued:
PFC La Crosse has built a culture of cooperation among co-ops
for many years. Our management team got behind the
merger proposal and helped wherever they could. Our
members also got it – the merger proposal passed in La
Crosse by 83%.
When the first vote missed the threshold (by 11 votes!) the
board parted ways with their GM. I worked with them to find an
interim GM who I hoped to eventually hire as Rochester Store
Manager should the merger become a reality. She was key to
building bridges with staff and members.
PFC La Crosse provided operational assistance throughout
the merger period when GFS was financially struggling,
continuing a history of 5 years of outreach with that co-op
during a time of great leadership turnover and upheaval. It
was also a time when the co-op emerged from decades of
stagnation.
81. Process Weaknesses:
GFS had a GM who was at odds with his Board prior to the
merger proposal and expansion opportunity. The inability of
his Board to manage his performance along with my failure at
managing his ego led to his undermining of much of the
process with staff.
We did not anticipate the level of paranoia that would evolve
among the GFS staff. The GFS Board and I met with them on
multiple occasions to keep them informed of the process and
the plan, but we couldn’t counteract what was going on
between visits. We saw everything from a Front End Manager
who quit to picket against the merger outside of the store, to
ballot tampering during the voting period.
GFS was an annual fee co-op rather than equity based.
Determining a member joining date for vote eligibility and
finding a way to allocate equity to a loosely defined
membership was a challenge.
82. Process Weaknesses, continued:
As a fee-based co-op that had for nearly 25 years been run
as a privately controlled business, there was not a strong
tradition of member participation and investment.
Our collective balloting systems were loose and did not
provide for adequate security during high stakes election. We
have since revamped – we no longer collect ballots in the
stores for any election. All election counts are now conducted
by our auditor. We are moving toward electronic balloting
within the next two years.
Cooperative mergers are relatively common, but not in the
food co-op world. We were lucky in that we were able to find
attorneys with experience in ag co-op mergers, but sadly, the
way many ag co-op mergers are handled aren’t necessarily
the ones we wanted to emulate.
83.
84.
85.
86.
87.
88.
89.
90.
91.
92.
93. At the end of September when FY2014 ends for PFC and the
NEW Rochester People’s Food Co-op celebrates its first
anniversary:
FY2014 Consolidated La Crosse Rochester
Sales $23.0 M $13.0 M $10.0 M
Sales Growth 33.28% 4.00% 90.00%
Total Members 7,603 5,180 2,423
Total Employees 210 119 86
FY2011 Pre-Merger Consolidated La Crosse Rochester
Sales $15.6 M $11.5 M $4.1 M
Sales Growth 8.94% 5.72% 18.98%
Total Members 5,118 4,364 754
Total Employees 156 120 36
94. Existing Co-op & Start-up
Partnership
• Case Study: Gateway start-up group dissolves
& members join Mississippi Market. MM opens
store in start-up community.
• Much quicker to open
• Significantly easier to get financing
• Stronger balance sheet & cash flow
• Strong operations from day 1
96. Thank you
Dave Blackburn: dave.blackburn@ncga.coop
Michelle Schry: michelle.schry@pfc.coop
Terry Appleby: terry@coopfoodstore.com
97. EVALUATIONS
&
APPRECIATIONS
Thanks
to
our
attendees,
guests
and
supporters
Please
fill
out
a
meeting
evaluation
form
to
be
entered
in
our
end
of
the
day
raffle
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
98. HIGHLIGHTS
&
RAFFLE
PRIZES
Meeting
highlights
Raffle
prizes
for
early
registrations
and
meeting
evaluations
Save
the
date
for
our
4th
Annual
Meeting,
21st
March
2015.
Please
return
your
nametags
at
the
registration
desk!
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
99. THANK-‐YOU!
Co-‐op
Food
Stores
Teaching
Kitchen
Tour
Directions:
Leave
the
Black
Center
Drive
past
Hanover
Co-‐ops
and
Mobil
Service
Station
(rte
120).
Go
through
the
next
two
sets
of
lights.
Be
in
the
left
hand
lane
at
the
third
set
of
lights
and
turn
left
into
Centerra
Plaza
Take
2nd
right
into
store
parking
lot.
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
100. WELCOME!
Thank
you
to
the
co-‐operative
community
for
your
partnership
&
support.
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014
101. WELCOME!
Thank
you
to
the
co-‐operative
community
for
your
partnership
&
support.
Neighboring
Food
Co-‐ops
//
Fall
Gathering,
2014