Making Two Co-ops Into One (Parts 1 and 2)

In June 1992 one of the larger co-ops on the East Coast failed. The Cambridge Food Co-op, dba Central Square Market, had an eighteen-year history and a big attractive new storefront in the center of town. But operations losses, a huge debt burden, and a fiercely competitive retail market proved too much to cope with, even with sales of $4 million/year.

This story has a happy ending, though. A lot of hard work and cooperation among cooperatives kept a co-op in Central Square, now bigger and better than ever. And the Boston area has a two-store co-op with sales of $10 million/year, better positioned to face the increasing pressures in a very competitive market.

Boston and Cambridge co-ops

Boston Food Co-op (BFC) was founded in 1971 and spent 14 years hovering around the $1 million mark in sales at its store in Allston. BFC grew very much out of a political counter-culture tradition, with an image, rooted in opposition to the Vietnam war and to mainstream culture, that never really went away. Membership came from all over the metropolitan area, drawn by product line, atmosphere, and low prices. BFC retained an inward focus for twelve years, allowing only members to shop and requiring them to work, and operated in a minimalist physical plant. During 1983-1985 most of that changed, and BFC began to grow seriously, reaching a volume of a little over $4 million by 1992, after three major renovations.

Prior to 1992, relations between the Boston and Cambridge co-ops had been a mix of cooperation and good intentions plus rivalry and suspicion.

The Allston store retains a strong commitment to large scale participation of working members in store operations, and sales are still mostly (75 percent) to members. Low prices and a commitment to less affluent shoppers have been important at the Allston store, along with an unrestrictive product policy which allows red meat, white flour and sugar, and a product mix that's about 30 percent conventional groceries.

Boston Food Co-op has also had since 1988 an organizational commitment (supported by a 5:1 vote in a member referendum) to grow, not only at the Allston site but by establishing another site elsewhere. Staffing patterns have been developed with expansion in mind, and we have gotten quite involved in specific sites, first in Arlington, then in Jamaica Plain, and briefly in Somerville. (See "Beyond Single Stores," CG #24, Sep-Oct. 1989.)

Cambridge Food Co-op (CFC) was begun in 1974, to a large extent as a BFC project to alleviate overcrowding. Located about 1.5 miles away in a basement on the main street in Central Square, Cambridge, it also hovered around the $1 million mark for its first 16 years. The Cambridge store had from the beginning a much stronger geographic commitment to Cambridge and the Central Square neighborhood, and to affirmative action, and less emphasis on a critique of mainstream culture. At times it had a much stronger natural foods emphasis than did BFC. Member work in operations was increasingly discouraged. Especially after a mandatory equity system was introduced, sales to members were a decreasing fraction of total sales (less than 30% during its last year).

In the high density Central Square neighborhood, a sizeable number of shoppers walk to the co-op. Parking, on the other hand, has always been difficult, and no directly accessible parking was available. The Cambridge co-op made most of its "mainstreaming" changes (opening to non-working members, and then to nonmember shoppers, including the store markup in the shelf price, etc.) earlier than the Boston co-op. Despite such differences, the two were probably more alike than any other two large co-ops in the country, due in large part to their common roots and environment.

However, during the years prior to 1992, relations between the two co-ops were a mix of cooperation and good intentions plus rivalry and suspicion. We tried to hire a single general manager for the two stores in 1984 when BFC hired its first general manager, but gave up after about six months of searching. We began to look harder for ways to work more closely together in 1989, and began publishing most of our newsletter as a joint project among all three urban area storefronts (including Arlington Food Co-op), with the outside page of newsprint produced separately by each co-op.

We tried running coordinated specials and a basic foods basket on the inside sheet of the newsletter, but soon outpaced our ability to agree on what products to choose. We advertised together occasionally, and sometimes worked a fair or other outreach event in concert, but never managed to institutionalize a working relationship. Major purchases, either of goods or equipment, were almost never coordinated and often not discussed. Most of the time, we just didn't work well enough together to cooperate. The feeling on the part of each co-op that its slightly different way of doing things was better and was more important to each coop than doing them together.

A fiercely competitive market

The impact of fierce competition in our marketplace is hard to overstate. I don't know of any place where large co-ops face anything like it, except perhaps Portland or Austin. In our area, most people looking for natural foods don't think first of the co-ops, they think of those other guys. Their nutrition and product information materials are excellent, they spare no expense in the pursuit of their mission, and by now they're big enough that those expenses can nonetheless be kept very manageable. Their execution is consistently strong. Their stores are attractive, upscale supermarkets designed to show off their strengths. Theyhave a stronghold over that affluent section of the market that most natural food stores really live on. They command the media attention when natural foods are in the news. They have a very strong local growers program. And they have a thirty-store chain and gazillions to invest backing them up. They're as good as anybody in the business.

This is a great market for natural foods. Unfortunately, not much of it belongs to us. Most of our choices are heavily affected by Them. Both of our co-op stores have a 20,000 sq. ft. store of theirs within a mile, and their three city stores (each with sales of $10-is million a year) surround ours on the east, west, and south (a fourth store is about to open to our north). Most of our shoppers drive by Them on their way to us.

But drive here they do, enough so that our sales in each store have more than quadrupled over the last ten years, and we think of ten percent as a slow growth rate. And while this level of competition makes our lives much more difficult, it also pushes us to do better more effectively than anything else I could imagine. What doesn't kill us makes us stronger.

What happened to Cambridge Food Co-op?

In 1990, CFC leased 14,000 sq. ft. of ground floor space and bult a new facility, borrowing very heavily to do so. Many aspects of the project went extremely well. CFC was able to leverage an amazing amount of debt financing with basically no collateral. If BFC represented the incremental approach to modernization, CFC embodied the go-for-broke, great leap forward. They created an attractive store which nearly tripled its sales from $1.5 to $4 million only a few blocks away from the flagship store of one of the more successful and well-run natural food store chains in the country (Bread & Circus). They came up with a workable, if imperfect, floor plan in a very difficult site. They assembled one of the most racially and economically diverse staffs of any large co-op I know of.

But some crucial factors went poorly. The construction phase was perhaps even tougher than usual. Their landlord had agreed to put in extensive leasehold improvements but didn't have any money, generating delays, lack of coordination of construction schedules, and extra expense. The project ended up costing more and taking longer than expected, and although additional funds were raised, Central Square Market opened in November 1990 without any reserves or funds for finishing touches. The equipment in the store was essentially all brand new, producing a very attractive store but perhaps an unaffordable one. (For more on this story, see "Site Development Saga," CG #34, MayJune 1991.)

The building improvements, on the other hand, varied in quality, and several areas had to be redone, some repeatedly. The layout is very problematic, with access to parking lots on either side of the building and to mass transit and the main street out front necessitating three entrance/exits, all forward of the entrance to the actual retail area (for security reasons). That in turn leaves a 100' x 17' "hall" leading out to the main street that has yet to find its best use.

Just in time -- or too late?

During the last year of their stay in the basement across the street, after several years of basically breakeven operations, CFC lost over $150,000. This problem was magnified by delays in preparation of financial statements, sometimes several months overdue. Consequently, most of this loss had already occurred before it was even discovered. Pursuing and opening a new site was in part what pushed expenses to climb so far beyond income. A management more focused on opening a new store than on keeping the old one operating profitably, and a conviction that the basement location could not be operated profitably, seem to have been other major factors.

Although sales soared to $4 million during the first year above ground, expenses grew even faster, prod ticing a loss of nearly $300,000. High debt service costs, high occupancy costs, and high labor costs were among the major factors. Management felt, especially during the first year, that the only solution was further dramatic sales growth. Cash flow, problematic from the start, became a crippling problem, even though principal repayment of most loans was never begun, and the predictable consequences followed: deferred maintenance and capital investment, higher prices, morale problems -- resulting in a halt in growth before the end of the first year. More severe expense control finally began in earnest at this point, but of course took time to take effect, and, having lost half a million dollars in two years from a business undercapitalized from the start, it was already too late.

Combination of the two -- or bankruptcy

BFC was contacted by CFC board members with a proposal that BFC consider some kind of merger with CFC. The CFC board felt that the underlying business was sound, as demonstrated by the strong sales, and that if the terms of the debt could be renegotiated and perhaps written down slightly, the financial strength of the BFC could pull both co-ops through. BFC felt that the $1.5 million in liabilities CFC had amassed by this time were far too large to assume, and that the half million dollars of losses of the past two years put the CFC beyond saving. We concentrated on ways of salvaging as much as possible. The CFC board had difficulty accepting this view of things, but as bankruptcy loomed more ominously, they realized that they had run out of time and needed to accept the best available alternative quickly.

Since bankruptcy seemed to be the most likely outcome and would form the backdrop for whatever resolution was found, we spent a lot of time studying bankruptcy rules. What we learned from the lawyers and various other business consultants was roughly the following: CFC had a secured loan from the National Cooperative Bank for nearly $400,000 (on which CFC had never been able to make any principal payments). Since CFC's value in a liquidation (Chapter 7 bankruptcy) would be much less than that, in a liquidation the bank would wind up owning CFC outright, leaving $310,000 in other secured credit, $445,000 in unsecured credit, and $310,000 in member loans and equity all out in the cold. The bank would take a large loss (after selling off whatever could be sold), and reaction from both members and vendors was bound to be bad for business, and bad for co-ops in general.

In a re-organization (Chapter 11 bankruptcy), we could try to submit a plan which could gain the approval of the various classes of creditors and the bankruptcy judge, presumably by offering them a better deal than they would get in a liquidation. That seemed possible, since no one but the bank would get anything in a liquidation; and if the BFC was willing to sweeten the deal, more money would be available to divide up among the creditors. However, the bankruptcy process is very expensive and gets first claim on the money; it would eat up the first $20-50,000 and would take 2-5 months if everything went well. The store probably would be closed for that period, so perishable inventory would be lost, staff members would have to find other jobs, ongoing expenses like rent would continue to pile up with no income to offset them, and shoppers would find other places to shop.

So, avoiding an actual bankruptcy seemed worth quite a bit, and we looked for ways to do that. Since it seemed absolutely certain that no creditor would get all of what it was owed, and most would get nothing, we thought we might try to get creditors to agree ahead of time (without an actual bankruptcy) to the large writedown of liabilities we needed to make the deal work. Their incentive to do so would be that we would give them more than a bankruptcy would. We drew up a schedule of creditors in order of their secured positions.

BFC's willingness to become involved was based on several factors. Operating the Cambridge store would bring the advantages we hoped for from a second store: economies of scale in buying, advertising, leveraging our skills, improved career tracks, a larger volume base to support co-op services, a higher profile in the marketplace, more influence with suppliers, etc. Cooperation among cooperatives is also one of the Rochdale principles that consumer cooperatives everywhere espouse. We would spend a larger amount that we would need to spend at a bankruptcy auction, but no more than we would spend to open a brand new store -- and the Cambridge store was up and running with strong sales.

BFC's chances for long-term success seemed much stronger than CFC's. BFC came into the project as a much stronger organizational financially, with eight years of steady operating surpluses behind us and a very strong management team. We owned the Allston building (and received additional rental income). The economies of scale of a two-store operation would yield some savings. We expected to negotiate a significantly better deal with the CFC landlord. We wouldn't have as large a debt burden. Prospects looked good.

Meanwhile, CFC's cash flow situation continued to worsen, and CFC's board became more anxious to resolve the situation. After hurried negotiations, in the end BFC purchased the note from the National Cooperative Bank, which had financed the largest share of the new store (secured by all of CFC's assets). Since CFC was already in default on this note, BFC foreclosed and took possession of the assets. CFC closed its doors for the last time on June 3 and took a full inventory the following day. BFC purchased the note, foreclosed, and opened as a second BFC store on June 5, 1993.

Surprise for the staff

We met with the Cambridge staff on the morning of June 4, and with the Allston staff on June 5. One of the most unpleasant aspects of the financial transaction was that it was important to maintain strict secrecy in planning all this, because any vendor or other creditor who found out about it might have been tempted to force repayment of their debt right away, before it was too late. That would probably have immediately pushed the co-op over into bankruptcy, where no unsecured creditor would have gotten anything, but people often act irrationally or on incomplete information in situations like this. Consequently, neither staff nor members at either store knew about the biggest thing to hit either co-op in the past ten years until after the fact, and nobody was too happy about it. After some explaining, most people could understand the need for secrecy, but it didn't start things off on the best footing.

We rehired all of the former CFC staff except the general manager, and while that was definitely the right thing to do for ethical as well as practical reasons, along with expertise about running the Cambridge store we acquired morale problems and operating procedures that proved hard to alter. The Cambridge staff had in the preceding twelve months been under the extreme pressure that impending bankruptcy creates, so they started out with severe morale problems. What they heard from BFC after the foreclosure was that their jobs had been saved, but that we were also going to be under strong pressure to control expenses and increase income at that store in order to at least breakeven.

Making Two Co-ops Into One (Part 2)

In order to maintain some continuity for former Cambridge Food Co-op (CFC) members, the Boston Food Co-op (BFC) board of directors offered to add seats on a transition board for any former CFC directors interested in serving. But after the huge workload and strain of resolving CFC's situation, only two of their former directors wished to serve on the new board. However, they played a crucial role in representing Cambridge members and stitching things together.

In November 1992 the board size reverted to its original eleven, with good representation from each store. We made an explicit decision not to create representative seats for each store. Board committees, such as finance and marketing, were combined and function with an overall, rather than single store, perspective.

Money

In the negotiations to ensure the continuation of a co-op in Central Square, BFC tried to determine a "fair price" to pay for the Cambridge assets. CFC felt they had a legal and a moral obligation to obtain as much money as possible for their creditors and members -- but they entered the process not realizing that most of that money was already lost. In the end we decided on a schedule of voluntary payments to other CFC creditors of declining fractions of what was owed them, based on the order of the list of secured creditors.

The standardization process drove many of the hardest things we've done in the last eighteen months, but the result -- an efficient, coherent organization ready to grow -- is the one we have to have to survive.

We spent the first month in Cambridge explaining to people what had happened: creditors, vendors, members, other shoppers, the press, etc. We offered the remaining secured creditors (mostly vendors) the payments we had decided on, and offered the remaining accounts payable 20 percent of what was currently owed to them. We explained that CFC was unable to pay its debts and had gone out of business; that BFC had bought CFC's assets, intending to operate a second store there; and that BFC was willling to make voluntary payments to CFC's creditors as a goodwill gesture, expecting to continue to buy from them for our Cambridge store (as we in most cases already did in Allston).

Management teams

Cambridge wages and salaries were in many cases much higher than in Allston, and the two pay scales needed to be brought together. While Cambridge pay rates were not cut, they were in most cases frozen until we could afford to bring Allston rates up to parity.

Having to work with new individuals at the man agement level was a strain for Cambridge staff, as was their having to adjust to a fairly different style of management. Responsibilities were delegated differently than under CFC, and so the person to ask about X in the past was no longer the right person. In addition, personal antagonisms between a few staff members added significant amounts of tension and unpleasantness.

The Allston management team had had two food "department managers," one for "perishables" and one for "non-perishables." They were responsible for buying and vendor relations, product selection, pricing and margins, merchandising and promotions, and some supervision. There were, in addition, managers for finances, physical plant, education and marketing, and a general manager. Then, in each department, inventory control, supervision, and overall maintenance of department standards was the responsibility of an assistant manager. We had moved to this arrangement in part because it seemed easily expandable for additional stores.

After some discussion, we concluded that having most senior managers manage in both stores would best leverage our management talent. We adjusted titles so that the perishables and non-perishables managers became "merchandisers," oversee ingboth stores. The financial manager, the education, marketing and membership director, the physical plant manager and the newly established personnel manager also have responsibility for both stores. The assistant dept. managers became dept. managers, with their original duties plus more supervision and overview responsibilities.

Front end

Another area of adjustment was front end and "storekeeper" responsibilities. In Allston, we employed a "floor manager" system which combined head cashier, front end supervisor, and storekeeper responsibilities in one person (at any given time), which I felt would better meet the needs I saw in Cambridge as well. We were unable to establish this system initially with the staff in place, however, and it took nearly a year to redo everyone's expectations about this job.

An area in Cambridge where we have yet to make much progress is cross-training and crossing of dept. boundaries for hourly staff. At the Aliston store, most paid cashiering was done by grocery stockers, who moved back and forth between the registers and the grocery dept. as store needs required. (The Allston store also uses a large number of weekly member workers as cashiers.) A strong emphasis on versatility remains, and all new staff in most food depts. are required to get cashier training and be available to cashier during their shift if need be.

In Cambridge, strict boundaries exist. Only cashiers cashier, only grocery stockers stock groceries, and only product stockers stock produce. This seems to give us much less flexibility to respond optimally to the notvery-predictable ebbs and flows which are the only constant in retailing. Changing this will (again) be a major activity of the coming year.

At our larger size, figuring out how to move information around adequately has been surprisingly challenging. We've ended up with a dept. manager meeting and a separate floor manager meeting each month in each store. The senior managers attend alternate meetings of each group, and also meet alone once a month. Each dept. also has a meeting each month at each store. And the entire staff ofeach store meets once every two months. We've become much more deliberate about planning part of the dept. meeting content to make sure we're focused on the results we need. We have planned but not often achieved inter-store meetings. This still doesn't seem to be enough communication, and we're looking at other methods.

Standardization

One of the major currents of our tenure in Cambridge has been an effort to standardize everything that makes sense between the two stores. There will always be differences based on the different markets they occupy -- in product line, for example. But in most respects (efficiency, fairness, consistency for shoppers), it makes more sense to standardize wherever possible. We're not done with that project yet, but we're finally in the mopping up stages. The standardization process drove many of the hardest things we've done in the last eighteen months, but the results -- an efficient, coherent organization ready to grow -- is the one we have to have to survive.

Standardizing our personnel policies and pay practices seems pretty obviously required by fairness. Luckily, our personnel policies were quite close -- both modeled on work by Carolee Colter. Pay, however, was the object of considerable discontent in both halves of the organization. we ended up using a hybrid of what we thought were the best aspects of each store's method, consolidating some depts. and breaking out others.

Standardized pricing has been more complex and controversial. If the stores were farther apart, we might not have done it. The Cambridge store has significantly higher operating expenses than the Allston store, even with its debt burden reduced dramatically, and had noticeably higher prices. But it's in an even lower income neighborhood than the Allston store, and we think that an aggressively competitive price image, along with our unusual product mix, has been critical to our success. So we've committed to keeping the prices the same in both stores, except in meat and deli, because of peculiarities of those depts. Actually doing that is a big, on-going project, given the hundred and fifty vendors we buy from and the difficulties many of them have with custom systems for Suggested Retail Pricing. However, the Allston store has been scanning since October 1993 very happily, and we expect to begin in Cambridge sometime in the next six months, using a single price file in both stores.

Standardizing product lines has also been slower and more work than we expected. The Cambridge store had been more heavily oriented toward natural foods than the Allston store, but their move upstairs opened them up to a neighborhood clientele which wanted a lot more commercial groceries. As a result the two stores have very similar product lines in general terms, but quite different in their details, often just because no one has had the time to examine similar products or vendors to choose the better one. We do expect to retain a lot of variances based on differing ethnic makeups and preferences of the two neighborhoods, however.

One of the first concrete consequences for members ofjoining the two stores was the search for a new name. For many Allston members, Boston Food Co-op had been good enough for us for twenty years, and they couldn't see why it wouldn't suit us for the next twenty. (If we needed reminding that change is usually unpopular, we got it over and over again.)

We looked for a name which would suggest natural foods, freshness, and full service shopping. After some debate, we elected to retain "Cooperative" in our name feeling that we need to be assertive and proud ofwho we are rather than apologetic (although the word clearly carries some undesirable baggage in this city -- work requirements, dirty, granola and rice). We had a contest and looked at hundreds of names: some very funny or clever, some just awful. After a false start, we chose Harvest Co-operative Supermarkets; in a few years we'll probably be used to it.

Changing discounts

Before the Aliston members had finished digesting that one, we hit them with something even worse: discount reductions for working members (typically our most involved, vocal members). With large differences between the two co-ops' systems, they had to be operated in isolation without any crossover. What we and members wanted was a system which allowed them to work in one store but then receive their discount in either store -- which required the same system in both stores.

Pressures to bring the Cambridge store to at least the break-even point would clearly not allow discounts as generous as in Allston. On the other hand, it seemed clear that one of the reasons for the small number of member workers in Cambridge had been that member work wasn't a very attractive deal. The in-between option we settled on after long discussion was 10% for 3 hours per month, or 20% for 2 hours per week. These numbers move the relative discounts closer together while lowering them both.

To soften the blow, we grandfathered the discount conditions for everyone working at the end of 1992 until the end of 1993. So far, at the Allston store discounts are down a full percent of sales, from 5.7% to 4.8% in a recent quarter. Member work in Cambridge has increased slowly, but we're limiting it and managing it pretty carefully to ensure that we use it all productively.

Membership requirements

Another area to standardize was membership requirements. CFC used a mandatory equity requirement of$150, although nearly one-third of their membership wound upjoining with either $50 or zero equity through one of two low-income programs. In Allston members had the option of paying either an annual non-refundable $5 fee or a refundable $100 equity deposit. We extended this system to Cambridge, but equity has not been a popular option there following the loss of CFC. However, in 1994 I expect a higher membership fee to boost the percentage of members who choose the equity option.

Each store had its own system for orienting new members until this fall, when we completed a tenminute new member video, designed to be self-service and viewed on demand.

Merchandising and marketing

Merchandising and marketing was yet another area to be wrestled into agreement. The Allston store had relied heavily on strong promotion of deep specials for price image. Both the theory (why cut into your margin so deeply?) and the practice (how do you keep this stuff in stock?) took some getting used to in Cambridge. We also needed to coordinate publicizing specials.

For both stores, we decided to use both specials advertised in a weekly handout and bi-weekly specials advertised in the monthly newsletter. We use the weekly flyer primarily for perishables, where the lead times for the newsletter is often unworkable anyway,and emphasize groceries and bulk in the newsletter. Learning to coordinate these specials in both stores was more challenging than we expected.

We also moved to take immediate advantage of the economies of scale our larger size gave us. In the Boston area, most of the important media cover the entire metro area (and charge for it). While public radio sponsorship or a quarter-page ad in the Boston Globe are still unreasonably expensive, spreading the cost over twice as much volume brings them much more within reach. We used both of these plus direct mail in 1993, after working with Dave Webb to hone our strategy, message and presentation.

Once we had a new name, we developed a new logo to use everywhere and standardized outdoor signage and awnings to raise our profile. The design and permit process took another year to complete. We also built on the product information signs we had developed over the past ten years to standardize and dress up our interior signage.

Dozens of other policies needed to brought into agreement in order to present the shopper-friendly stores we were after: check policies and other forms of payment; coupons; returns; case discounts, etc. We're not done yet, but we're through with the bulk of it. Having described all the work that has gone into standardization of systems between the two stores, I feel obliged to point out that we do think that, in some situations, one of the real advantages of operating two stores is the opportunity to try two different approaches side by side, look at the results, and pick the better one (or continue the experiment). A second store also offers the opportunity to learn from our mistakes in a more tangible way. These options obviously extend to additional stores we hope to open.

Where we stand

Our results in Cambridge have been gratifying. After a summer slump much deeper than usual immediately after the foreclosure in mid-1992, the Cambridge store took off in the fall and has grown since then at a 20 percent per year pace, now exceeding the Allston store. The Cambridge store has ample space to expand, unlike the Allston store, and probably anchors a stronger market. Certainly its location in a busy district makes it an easy add-on shopping stop, as opposed to the Allston store, which is mostly shopped by people who make a special trip to go there.

We were prepared to lose perhaps $100,000 during our first year in Cambridge, expecting that Allston profits would cover most of that and that we could afford the rest if we planned for it. Instead, we made $80,000 last year, and the Cambridge store was profitable during the winter quarter for the first time ever in the new space. I expect the Cambridge store to be slightly profitable for the current fiscal year.

But the Allston store stopped growing at the beginning of 1993 (for the first time in eight years) and has so far resisted efforts to get it going again. Many factors suggest themselves. Many members returned to the Cambridge store, presumably because it is more convenient for them. The Allston store has gotten less attention from senior management staff since the expansion, and we're trying to rectify that now. Some interim policies (most notably new membership) favored the Cambridge store while we figured out a longterm policy. The Allston store interior also suffers physically in comparison with the Cambridge store, so we'll focus on improving the aesthetics of that store. We want to see some level of growth there.

On the other hand, we've been growing at a rate of 10 percent or more overall, meaning that we'll add about $1 million in sales per year. Our expectation is to continue this pace while we finish consolidating, and then return our attention to finding a site for a third store. If we do our work well in the next year, our third store will be easier. We expect to emphasize as many of the things that make us different from our competition as possible (discounts, member work, mixed commercial and natural product lines, strong price image, high percentage of sales to members) and to try to reach multiple markets: our local neighborhoods, natural foods fans, and people receptive to the idea of a community controlled food store.

Lessons

More than one store offers the opportunity to develop expertise. As a single store, we always did everything for the first time, once. We just finished installing a scanning system in the Allston store, for example. The process went much better than I expected, as a result of a lot of hard work and careful planning, and we learned a lot. I expect the installation in the Cambridge store to be even easier. Similar coordination should be possible between separate coops, in theory, but I've rarely seen it happen.

Our sense is that members and shoppers are by and large very happy about the results of all this, that the practical improvements in selection, prices (especially for Cambridge shoppers), customer service, physical plant, atmosphere, etc., and the convenience of being able to shop or work in either store, make up for a feeling of being less "in control" because of the additional store.

One of the more unexpected aspects of this change has been the shift in the kind of work our senior managers do. In this new setting, most of us find we have very little time for working directly on the retail floor with shoppers and hourly staff; we're much more tied up with coordination and the centralized aspects of the business. For most of us this has been an unexpected and unwelcome change. A conscious choice we made early in all this was to try and do all this as gradually and gently as possible, rather than go ahead and break all the eggs that were going to get broken all at once and get it over with. Incremental change seemed likely to let the organization bend rather than break under the stress. I don't think there can be a definitive answer to which way is better, but I think we're glad we did it this way. This process has certainly heightened my awareness of how difficult change is for most people, and I think we felt nearly overwhelmed by the pace and scale of change at times, slow as it was. It's certainly an issue that needs to be thought out carefully in advance.

This project required more specialized expert advice than anything we've done before. The suggestions we got about feasibility and financing from Fred Stapenhorst and from Walden Swanson were particularly useful to us, and Walden's help was critical in walking us through the endgame of making the deal actually happen. Our general counsel, Paul Cooperstein, and the bankruptcy lawyer he found for us, Richard Hackel, worked very hard on the project and gave us consistently good advice. We got advice from other coops who had gone through (or avoided) bankruptcy and combined with other co-ops or who had absorbed other co-ops. Northeast Cooperatives recognized both the oportunities and risks of the situation and was consistently supportive and helpful, even though they took a big loss in CFC's demise. The advice we got from co-op people all over really made this project workable.

For Harvest Co-operative Supermarkets, the future looks pretty promising. We've built a foundation which should, with careful stewardship, support co-op development in Boston for a long time.