Food Cooperatives & Alternative Grocery Retailers

By PETER KRONER, Editor, USC MPL

At the heart of every great civilization lies a sophisticated, accessible, and plentiful food surplus that sustains all members of its society. In modern society, food surpluses are only possible through a set of sophisticated relationships that facilitate exchanges of information about production techniques, efficient distribution networks, ease of access to markets, and trading arrangements.  The dynamics of these relationships have changed as society has progressed. For example, commodity prices can now be remotely and almost instantaneously accessed through electronic systems, as opposed to the past when farmers brought their harvests to market, hoping for a fair price.  Despite such changes several principles still hold true within our food system. The organizations and companies that can best translate these principles into consumer accessible experiences are rewarded with more influence and market-share.  In this entry I will examine the food coop aspect of the expanding local food movement, and I will be comparing the most successful food coop, the Park Slope Food Coop with two of the largest “alternative” grocery retailers, Whole Foods and Trader Joe’s in an effort to highlight common themes that have contributed to each organization’s success.  The food coop experience is very similar of the conventional mainstream grocery retail experience, and thus could potentially be readily adopted by community groups throughout the Unites States.

CHildThe modern food system is a detached experience for most Americans.  A Worldwatch Institute study shows that on average, American food journeys 1,500 to 2,500 miles from the farm to the table (Deneen, pg.1).  TV programs like Jamie Oliver’s Food Revolution reveal just how removed the average child is from the food he/she eats. When asked to identify certain vegetables, the children could not name or even recognize the items the celebrity chef displayed. Many Americans are additionally uncomfortable relying on a food system that is not easily sustainable, and that continues to expand the distance between the farm and their plates. Related to this discomfort, traditional grocery store sales are stagnating (Leamy). In response, alternative methods of food production, distribution, and access are beginning to take hold including backyard gardens, consumer cooperatives (food coops), farmer’s markets, Community Supported Agriculture (CSA), and specialty food manufacturing. As these new practices are experimented in local areas, Urban Planners need to stay ahead of trends in terms of lawmaking, and need to help embrace these organizations, instead of stifling them.  Most of these alternatives are arising out of the fact that with its complexity, the mainstream food system guns for efficiency in distribution and access, oftentimes leaving entire communities of people behind. USDA’s Local Food Systems report mentions the growth in “local food systems, or relocalization of the food system” as influencing the modern food system (Martinez).

coop

Consumer cooperatives can be traced back to the early 1900s, and were first formed to help consumers “control and to fight the unfair practices of private and company stores” (Zimbelman).  As the Great Depression, and World Wars disrupted the food system in the United States, many of these early cooperatives dissolved under government controls and food rationing programs. A resurgence of interest in the food cooperative concept occurred during the 1960s and 1970s as equality became increasingly central to the social psyche. As Zimbelman notes, food cooperatives were “[b]orn out of the ideas and philosophies of the 1960s counterculture, [and] these stores were opened by young and idealistic members.” From this idealist atmosphere, a small pack of Brooklyn friends in the Park Slope neighborhood wanted to find out if they could eat well and save money by purchasing food as a wholesaler (Younge).  The group rented a small space from a community center, and the Park Slope Food Coop was born (Park Slope website).

Park Slope

The Park Slope Food Coop has been a staple in Park Slope since its inception in 1973.  It currently has over 16,000 members/owners, 65 full-time staff, and occupies 6,000SF of space (Kowitt).  Since its beginning, the Park Slope Food Coop has emphasized an equalitarian ideal in which everyone, regardless of status, must work 2.75 hours every 4 weeks. The members work in “squads”, performing various work such as shelf-stocking, child-care center chaperone, cutting and wrapping bulk cheese, and cleaning the store.  Members cannot pay to get out of their obligation, and there is even a Disciplinary Board, which ensures every member pulls his/her weight.  Each member must also pay a non-refundable $25 joining fee, and give a refundable $100 investment that is returned upon membership cancelation. Each member is given voting rights, promoting healthy debate on purchases and the store’s strategic direction.  The Food Coop’s mission statement includes several items, which shows the sense of activism the members have; sustainable agriculture, recycling, locally sourced products, and respect for the environment, among other values.  These values help to instill that the Park Slope Food Coop isn’t just about saving members money, but instead puts its members’ purchasing power of those members behind organizations and companies that share their values.

The Park Slope Food Coop is also something to behold in terms of overall sales.  In its 2009 fiscal year, the Park Slope Food Coop produced a very impressive $39.4Mil in sales, which is over $6,500 per square foot annually (Kowitt).  This is significantly higher than Trader Joe’s average of $1,750PSF and Whole Foods of $800PSF which both exceed industry averages (Kowitt). What’s more, the Park Slope Food Coop advertises a 21 percent margin on all wholesale purchases, translating to just a 17% gross margin for all products sold.  The Park Slope Food Coop can afford these very tight margins because of the fact that 75-80 percent of the store’s work is performed for free by its members, allowing it to pass along the significant savings to its members. Labor and cost of goods are the two largest expenses for a grocery retail store. The Park Slope Food Coop is able to curb a huge chunk of its expenses through the efforts of its members.

From its modest beginnings leasing space in a community center, the Park Slope Food Coop has focused on purchasing fresh, local, seasonal, and ethically responsible food from its suppliers.  Ahead of the times in pursuing these goals, other alternative grocery retailers like Whole Foods began embracing these virtues in the 1970s and 1980s. Current research on the modern food system indicates that consumers want to know exactly where their food is sourced from and are willing to support local farmers and food producers (Martinez, pg. 2). This is further reflected in the rapid growth of alternative grocery retailers like Whole Foods, which experienced a 65.5% increase in its number of stores nationwide from 2006 to 2009 (MIT Students, pg. 2).  Despite Whole Foods’ nationally identifiable brand, its beginnings are very similar to those of the Park Slope Food Coop.  With just 19 staff in 1980, Whole Foods leased a portion of its retail space to a local bakery in an effort to generate additional income (Hardesty). Similar to the Park Slope Food Coop’s mission statement, Whole Foods also has a broader vision of its corporate values. Its mission, “Whole Foods – Whole People – Whole Planet” is about more than just increased profits (MIT Students, pg. 11).

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Whole Foods’ success can be partially attributed to its adoption and evolution of values similar to those of organizations like the Park Slope Food Coop. Whole Foods and Park Slope Food Coop share similar values when it comes to trusting their full-time employees.  For example, Whole Foods empowers its store managers to “…stock up to 10% of each store with items” of his/her choosing (Hardesty).  This means each Whole Foods is completely unique from other Whole Foods stores, and this type of freedom helps enable its demand driven sales model.  Alternative grocery retailer Trader Joe’s also places a high degree of trust its employees, relying on lower head-counts per store, but offering its employees higher-than-union wages (MIT Students).

Despite being the industry standard, Park Slope Food Coop, Whole Foods, and Trader Joe’s do not accept “slotting fees” for product placement in their stores.  A slotting fee is “…upfront money [suppliers] must pay to earn a slot in a grocery store” (Andrews).  Instead they strive to better understand their customers’ wants and stock their shelves based on demand, not advertising dollars. This allows procurement teams to respond to demand more efficiently, and often times anticipate public trends (Kowitt). Furthermore, all three organizations have a significantly smaller store-footprint than traditional grocery retailers, helping to better manage its inventory.  Contributing to the effective inventory turnover in each store is the reduction of the range of products offered on shelves as Park Slope Food Coop and Trader Joe’s.  The limited assortment that Trader Joe’s offers, coupled with its small store-footprint, and lack of queues and conveyer belts at checkout all are very similar to that of the atmosphere of the Park Slope Food Coop.

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Alternative grocery retailers like Whole Foods and Trader Joe’s laid the foundation for “…what came to be known as the ‘natural foods” industry” (Zimbelman). Many of these alternative food retailers can trace their roots to the food cooperatives of the 1960s and 1970s. Over the years, food cooperatives have been laboratories for testing strategies, missions, values, and ultimate goals have been tested and collectively added to the public’s knowledge.  Both positive and negative lessons have been forged with each organization’s successes and failures. As alternative grocery retailers like Whole Foods and Trader Joe’s continue to expand and grab market share from the mainstream grocery retailers, opportunities for local organizations to also provide community-based options. These opportunities will further serve as new laboratories, instilling local virtues with the establishment of their own sets of values and mission statements, contributing to exciting possibilities for new ideas.  Within the greater Los Angeles limits there is a 30-year-old food cooperative called “Co-oportunity Natural Foods” that boasts 11,000 members, and in South L.A. a food cooperative titled the “SoLA Food Co-Op” which is currently in the starting stages of organization.  These types of unique, local answers to the various needs of the local residents they hope to serve will help to user in considerable pressure on the current food system.  The editor of Cooperative Grocer has noted that over 200 coops in the United States are in the starting stages or growth, a figure not seen since the 1970s (Food Porn). If this type of momentum continues to build, and cooperative organizations are able to learn from previous organization’s mistakes and successes, the grocery retail industry as we know it may be on the verge of another seismic shift, the beginning of which mirrors the “natural foods” industry’s humble beginnings in the 1970s.  Collaboration with local planning offices can help to further develop the “local food movement”, as city planners can facilitate access points, distribution space, and certain easements on space whose purpose is to provide food access to local residents.  Planners can play a big role in the current shift toward relocalization of the food system, and a recognition by the planning field of the importance the food system plays on overall health and well-being of a population is pivotal to innovative experiments between city planners and the local food movement.

Works Cited

Andrews, Wyatt. “Getting Products On Store Shelves.” CBSNews. CBS Interactive, 11 Feb. 2009. Web. 2 Sept. 2013.

Deneen, Sally. “Food Miles – Energy Consumption and Food – The Daily Green.” The Daily Green. Hearst Communications, Inc., n.d. Web. 3 Sept. 2013.

Kowitt, Beth. “The Rise of the Grocery Co-op.” CNNMoney. Cable News Network, 17 Sept. 2010. Web. 3 Sept. 2013.

Leamy, Elisabeth. “Save Big: Limited-Assortment Grocery Stores Offer Fewer Choices, Bigger Savings.” ABC News. ABC News Network, 1 Feb. 2011. Web. 2 Sept. 2013.

Lubove, Seth. “Food Porn.” Forbes. Forbes Magazine, 7 Feb. 2005. Web. 3 Sept. 2013.

“Park Slope Food Coop.” About the Coop : : Organic Food in Park Slope. Park Slope Food Coop, n.d. Web. 2 Sept. 2013.

Younge, Gary. “Are You Feeling Cooperative?” The Guardian. The Guardian News and Media Limited, 15 Mar. 2006. Web. 3 Sept. 2013.

Zimbelman, Karen. “Resources.” History of Cooperatives. Cooperative Development Institute, n.d. Web. 02 Sept. 2013.

Photos From:

http://i.ytimg.com/vi/bGYs4KS_djg/0.jpg (Child)

Peter Kroner (Coop)

Peter Kroner (Park Slope)

http://www.wholefoodsmarket.com/company-info/whole-foods-market-history (Whole Foods)

Peter Kroner (Produce)

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