Four Years Early

One of Neighborhood Co-op’s board members recently said, “We’ve achieved the co-op in 2010 in 2006!” With this curious statement he was referring to the result of a “Future-Back” planning process that a group of co-op board, management, staff, and owners participated in during 2002. This process had the group envision our community and the world in the year 2010, and then picture our co-op as successful in that world. We described that desired co-op in terms as concrete as possible in a document which came to be called “Co-op in 2010.”

This vision statement included five sections: our role in the regional economy, marketing and outreach, ownership, physical plant, and mission. Looking at this document now, it does appear that we have made significant strides in achieving our vision for our co-op, particularly in the physical plant. On May 1 of this year, Neighborhood Co-op Grocery relocated to a store approximately four times the size of its former location. This colorful new store has many of the characteristics described in the Co-op in 2010 statement, including high visibility, entry from a main thoroughfare, and adequate, paved parking that allows customers easy access to and from the store. In this process we’ve become a comprehensive market, providing for one-stop shopping, and have a hot and cold-service deli, meat and seafood department, and seating in a multi-purpose community room.

An expanding history
Neighborhood Co-op Grocery began as a network of neighborhood buying clubs serving Carbondale, a university town, and opened a storefront in 1985. In 1997 the co-op moved next door to its original location, doubling in size. In 2000, Neighborhood Co-op undertook an expansion, leasing additional space for a receiving/stock room area and resetting the retail space with new fixtures and equipment. That project moved the co-op in a more market-driven direction and triggered a crisis in which some within the co-op, fearing the loss of its identity, resisted those who advocated change. Gradually, a transformation of the roles and responsibilities of board, management, and staff took place, and the organization became stronger and more capable of further growth.

In 2003 the co-op ordered a market study to evaluate the sales potential and relocation opportunities in the Carbondale market. Pete Davis, a Cooperative Development Services consultant, was commissioned to evaluate the total market potential and to review five possible relocation sites. A major conclusion of the study was that given its location, the co-op would have to relocate to a larger facility, with significantly improved site characteristics, in order to position itself for the future. What became our new store site was judged to be the most desirable of the five relocation sites. In fact, this site’s mature sales potential was considered the optimal forecast for any site in this market.

In October 2004 the co-op’s board developed a relocation/expansion policy to help guide the project. This policy stated that the co-op would expand and/or relocate in order to capture at least 20 percent of the natural-food market in its trade area. To that end, the general manager was charged with developing and implementing an expansion/relocation project while adhering to a number of guidelines including project cost, site characteristics, store size and design, and financing.

In early 2005 an owner survey was conducted in part to determine the degree to which owners supported this vision and direction. One of the survey questions was, “If expansion and growth are only possible with a move to a new location, are you in favor of the Co-op expanding/moving?” Of those owners who expressed an opinion on this question, 70 percent said “yes.”

As the survey results were being tabulated, an unexpected opportunity arose to enter into lease negotiations for our new store site. We had included this site in our market study because we also believed that it was the best site in our market. However, the response to our previous inquiries about the status of the previous tenancy was that it was secure. Suddenly, a series of connections were made, the previous tenant was let out of his lease, and we were given a chance to rent the site on favorable terms.

Taking the leap
Even though the new store site most closely matched our vision, had pro formas that worked, and had been the focus of preparation for years, it was still difficult to commit ourselves to a project that represented such a huge leap for the organization. We signed a lease contingent upon receiving financing, which proved easy to get. The City of Carbondale loaned us $325,000 at 3 percent interest for 10 years and a local bank also provided a favorable loan package with minimal fuss. Owner loans of $350,000 were also critical to financing our $1.5 million relocation project.

Pretty soon we were selecting an architect, hiring a general contractor, and buying equipment. Within a year of beginning lease negotiations we were opening our new store. During the month before opening we received a tremendous amount of support from our sister co-ops Bloomingfoods, Outpost, Wheatsfield, and New Pioneer, which sent us some of their talented and hardworking staff to help. The other part of “Co-op in 2010” where we have seen significant progress is in the area of ownership. We envisioned ourselves as a genuine co-op with an owner equity system that generates a strong capital base in addition to creating a more vital sense of ownership. Neighborhood Co-op was incorporated in 1990 as an Illinois not-for-profit corporation, but in 2003 the members elected to reorganize under the Illinois cooperative statute. With the reorganization from a not-for-profit to a cooperative, the co-op moved from using the terms “members” and “membership” to “owners” and “ownership,” for both legal and practical reasons. Since becoming a cooperative three years ago we have raised approximately $100,000 in owner equity, which was crucial to financing our relocation.

The challenge now is to make the new store a financial success while simultaneously broadening our focus to include some of the other areas in our vision. Expanding the market for local produce and other local items, and providing information on food and nutrition, holding workshops and conducting cooking classes are areas in which we still have work to do.

This transition has been wonderfully challenging for our management team, who worked very hard at building systems for the staff and ensuring that they were working together as a team. If asked, most would tell you that the goal now, five months after the move, is to get into a daily operations mode, where challenges feel more natural and the new store more like home. Some say it is like we have always been here, which is heartening and invigorating, since this new store gives us the opportunity to implement so many things that we were only able to dream of in our old, cramped environment. We are looking forward to seeing how close to our vision our co-op will actually have become when we reach the year 2010!

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Francis Murphy is general manager and Lisa Smith is brand development manager at Neighborhood Co-op Grocery in Carbondale, Illinois ([email protected] and [email protected]).