In Corvallis, First Alternative Celebrates Its New Store

Many food co-ops established in the 1970s have come of age today, expanding their retail space, revitalizing their identity as cooperatives, and proving that co-ops can continue to thrive in an increasingly competitive natural foods market. First Alternative, located in Corvallis, Oregon, is no exception.

Like many others, our co-op was originally established as a buying club, a sort of town-and-gown collaboration in what was a sleepy university community. Sweat equity was required in exchange for the opportunity to acquire foods not available elsewhere at the time. The sense of camaraderie was strong and good friendships were formed. Several local organic farmers got their start by growing-to-order for First Alternative Co-op and are still farming today. And thanks to the cooperative ethic of educating members, many people learned about the intricate connections between food production and environmental and personal health.

Some 30 years later, our co-op is a $5 million business with 54 employees. Though work is no longer required in order to shop, we do still have a vibrant owner/worker system; it that brings people in for two hours a week to work side-by-side with our full-time staff. Founding members are still shopping here, having endured all the growing pains. We remain committed to our original site in what is considered the economically disadvantaged side of town, sustaining the ideal of neighborhood development. And First Alternative Co-op still functions as a gathering place for friends.

But in the past five years, we have grown exponentially in both size and sophistication. In 1996, practically gasping for air because the store was too small for the amount of business we were doing, our board began seriously discussing a significant expansion. This sparked a series of events that strengthened us as a co-op and led to an addition that doubled our retail space and provided wonderfully upgraded offices and back room facilities.

Early work on the project with various co-op consultants revealed gaps in our internal readiness that had to be addressed before even the thought of breaking ground could be entertained. Having recently finished a huge retooling of our owner/worker system to bring it into compliance with state and federal labor laws, we undertook the challenge of dissolving our not-for-profit corporate status and replacing it with that of a cooperative.

It took a good year of research and legal consultations for management and board members to master the complexities of such a change and another six months of member education before our members, now owners, overwhelmingly approved the switch. An accompanying ballot also dissolved our former by-laws and instituted new ones in keeping with the laws pertaining to cooperatives. Yet another ballot ended the $10 "lifetime" member fee and replaced it with a $70 owner share, the price of which can be raised or lowered at the board's discretion. (Take our advice: NEVER use the word "lifetime" in conjunction with "membership.")

Somewhere in there, our general manager stepped down, and a new one was hired after a six-month nationwide search. Our board of directors was holding together through all this rather admirably, but the work involved certainly took its toll on some of them.

As the issues of infrastructure were being successfully resolved, we turned to the hunt for the right location. Our town of 50,000 stretches along a north-south axis defined by the Willamette River, with most of the population in our demographic (and 70% of our membership) living significantly north of our current location. Consultants encouraged us to move into their midst in order to cut off potential competition from the likes of Whole Foods and Wild Oats.

At one point, a real estate developer for Wild Oats called us up to say they were planning to be in town within a few months and to ask if we just wanted to sell our business to them right away and be done with it. But there were precious few suitable sites available, and in the end neither we nor Wild Oats found anything in that area of town. They changed their strategy shortly thereafter to focus on much larger prey, and we recommitted ourselves to our "ancestral home." Many of our owners expressed their approval and pleasure with that decision, even many who lived in the more northern target area. But we know we will need to be proactive in the future in order to keep the co-op's control of the Corvallis market.

When the new general manager moved on to another co-op, our talented, dedicated, and energetic store manager was promoted into that position. Michele Adams has led First Alternative through the final design and construction phases of the remodel. She put together the owner loan program that financed the majority of the construction costs. She recruited and supervised owner/workers to assist with the construction at wages that helped cut our costs substantially.

In addition to her full-time managerial duties, Michele worked tirelessly as project manager. She carried her staff through the worst of the construction and disruption by plying them with food, praise, and bonuses, and by staying impressively upbeat. She managed the schedule so that the store did not have to close even one single day.

Throughout the project, sales continued to increase at a steady 11% rate even though we were handing out free earplugs to any customer who wanted them to block out the sound of concrete being sawed inside the confines of the store. Though there were some close calls, Michele did not lose a single manager to burnout or any other cause. To replicate our success, you would first have to replicate her.

The remodel expanded our total square footage from 5,000 to 11,000 and our retail space from 3,700 to 7,100. A four-day Grand Re-Opening Celebration in the middle of January boosted sales to 23% over the prior year, and we expect to sustain that rate for a conservatively estimated $5.8 million gross this year. In the meantime, we are taking some deep breaths, giving ourselves an occasional pat on the back for a job well done, and trying not to think too hard just yet about the possibilities inherent in the recent offer from our industrial neighbor to let us lease additional much-needed warehouse space from them. Except Michele -- she's already putting together another budget...