SPECIAL REPORT: Cooperative Grocers Associations

By Robynn Shrader

As I dive into my role with the National Cooperative Grocers Association, the concept of creating a 'virtual chain' and methods for efficient, timely and effective collaboration among co-ops across the country is constantly on my mind. One of the reasons I was attracted to working with NCGA was the progress they had made as an organization in a short period. I sensed the urgency and momentum pushing a national effort to take measures against the marginalizing of our individual stores by the corporate chains. Momentum is a powerful thing, a wave we should ride.

Establishing a system of trust and accountability that defines a 'virtual chain' is not going to be simple. We have a rich history of independence, innovation, and self-reliance. Turning over control of the details of any program involving our business is tremendously difficult to accept. But this is why the corporate chains repeatedly and effectively roll out programs that threaten our individual stores.

Establishing this system is the key to realizing our vision of a national association that harnesses our combined strength into a competitive edge. If we can "act" like a chain, we can benefit from the market power, economies of scale, preferential programs, and strong identity that existing national chains enjoy. Accepting this idea, taking on its challenges, changing our mindsets, and trusting each other builds a process and foundation that will in the end be more valuable than any single program or service NCGA may roll out.

Part of what makes this hard to do, and inspires plenty of skepticism, is the fact that we do not have a history of successfully collaborating on a national scale. Yet there are some big ideas on the table. It would have been easier, for example, for the question of a national controlled label to come along well after NCGA had proven its effectiveness through some smaller, less risky initiatives. However, I believe that tackling projects of this magnitude right from the start will give us the infrastructure we need, that virtual chain. With so much at stake, commitment to participate is full or none. One of our directors said, "If we are not here to push the envelope (with NCGA), we shouldn't be here at all."

How will we do it? Here's a start: I'm asking each individual store to make, beyond your NCGA dollar dues, an extra 'pay-in' based on our common values, shared identity, and cooperative philosophy. Don't get me wrong: I'm not asking for a blind leap of faith. Challenge our ideas, diligently question the value of our programs, and use the pursuit of consensus as a tool to fully flush out the issues, rather than as a barrier to progress.

NCGA is both a business service provider and an opportunity. We've got to grab that opportunity enthusiastically. Be willing and able, if the end result of a particular idea outweighs any potential concessions you might face, to comply with the majority, recognizing that together we are so much stronger than alone. Be willing to give diligent support to the implementation of NCGA initiatives, strengthen our collaboration and manifest harnessing of our market power.

I go to work every day with the hope and expectation that we will take our rightful place as a recognized national force. I hope you are as excited about our potential as I am.

Robynn Shrader is the Executive Director of the National Cooperative Grocers Association. NCGA currently represents six regional Cooperative Grocers Associations with combined annual sales of over $300M. She can be reached at 916/725-6372; robynnshrader@mindspring.com.

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Northwest: Results and Changes

By Karen Zimbelman

In 1999 the Northwest Cooperative Grocers Association hit young adulthood. We began to see the first tangible results of our work together by delivering lowered cost of goods to members. And we started thinking about our future and what comes next.

Northwest CGA

Ashland Community Food Store Manager Daniel Wolfe Central Co-op Manager Steve Snyder Community Food Co-op, Bellingham Manager Jim Ashby Community Food Co-op, Bozeman Manager Kelly Wiseman First Alternative Co-op Manager Eric Stromberg Food Front Co-op Manager Holly Jarvis Moscow Food Co-op Manager Kenna Eaton Olympia Food Co-op Manager Grace Cox Puget Consumers Co-op Manager Jeff Voltz Skagit Valley Food Co-op Manager Todd Wood Sno-Isle Natural Foods Co-op Manager John Mabbott The Food Co-op, Port Townsend Manager Briar Kolp

The results: We devoted a great deal of 1999 to dotting the "i's" and crossing the "t's" of our joint purchasing agreement with our primary supplier, Mountain People's Warehouse. The deal went into effect until December 1 and proved more complex than any of us had imagined. In addition to negotiating the "memorandum of understanding" with MPW, we agreed to establish a legal entity to execute this agreement, and to purchase a surety bond as a means to guaranteeing all members' payables to MPW. We set up a limited liability company (LLC) under the name of Collaborative Ventures in Washington. This involved making ten separate lawyers happy -- the one writing our LLC agreement as well as each attorney representing each individual member. We also purchased a surety bond to cover our group's payables to MPW. This involved precise board resolutions and signatures by about 25 different individuals. In the process, we became adept at quickly routing our paperwork as well as handling conference calls with ten or more participants. The NWCGA is particularly indebted to our President, Jim Ashby (also general manager of Community Food Co-op, Bellingham, WA), for his leadership role in managing this process.

Starting December 1, members' invoices made it all worth it. NWCGA members are looking forward to their first quarterly statements since the joint purchasing plan went into effect. There's nothing like an enhanced bottom line to make the group's efforts more tangible and evident. Now we are looking to extend the agreement to our new members and to expanding the "deliverables" from our group to other areas.

The future: In May of last year, we began working on a strategic planning process for our group. First, in the spring we did an analysis of how our CGA is working and our common needs. Then in the summer we spent time discussing what we'd like to do and developing four core strategy statements, each with a number of goals.

One of our core strategy statements is to strengthen and improve our CGA systems and procedures. In that area, we developed procedures for taking in new members. In November, we received applications from three co-ops wishing to join. They attended our December meeting, where, we interviewed each. In the end, we accepted all three into the group, so the NWCGA now has twelve members. We're very pleased to have Ashland Community Food Store (Ashland, OR), Community Food Co-op (Bozeman, MT), and Port Townsend Food Co-op (Port Townsend, WA) join us.

By the end of the year, we were also ready to expand our store audit program. Accordingly, we developed a menu of options for additional types of store improvement/audit programs. In addition to the "basic" audit (which we do for each member at the first opportunity after they join), we now have a problem-solving or strategy session, an audit of the local market/competitors, and an audit of a specific department or core competency area. All three of these options also allow the manager to request a simple "walk through" audit of the host co-op -- a quick, 2-page overview of the store's operations.

Other core strategies are focused more on "deliverable" results for our member co-ops. We've begun joint promotional purchasing among Collaborative Ventures members and hope to include all NWCGA members in that effort soon. A PCC staff member negotiates the deals with manufacturers, communicates to all members, and collates the orders. At this point, we're promoting a handful of items each month with a goal of getting to a dozen within the year. We are working to extend the same EDLP programs to all members. Beyond that, we hope to do at least one joint marketing campaign this year, probably a seasonal promotion. In May, we will hold a meeting of grocery department managers from all NWCGA members. They will spend time deciding what they want to work on together, as well as visit stores in the Seattle area.

We've also been working to raise awareness about the NWCGA among our co-ops' staff, board, and members. We have a two-page flier with some background about NCGA, as well as a consumer-oriented brochure now available in all of our stores. We're working on a paper grocery bag as well as newsletter articles and other tactics.

Beyond our region: We are very pleased to be part of the National CGA and are especially excited about the controlled label project. Working together has brought tremendous benefits to all of our co-ops, both tangible and intangible. We are looking forward to working with other CGAs to achieve the same benefits on a national scale.

• A few facts about the NWCGA:
• combined sales volume: $96,000,000 (PCC accounts for 57%)
• number of co-op members: 12
• number of stores operated by members: 20
• number of consumer members: 91,000
• territory served: Washington, Oregon, Idaho, and Montana
• annual budget: $50,000

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Southwest: Good Buys and Goodbyes

By Michael Copley

Cooperative Grocers Association of the Southwest extended a welcome to other co-op managers who until recently had not taken an interest. At its January meeting in Albuquerque, five CGA members encouraged managers from four other co-ops in the region to discuss issues for natural food co-ops.

Southwest CGA

Co-op Market, Las Cruces Manager Frank Mueller Durango Natural Foods Manager Michael Copley Food Conspiracy Manager Diane Velasquez La Montanita -- Central Manager Donal Dinney La Montanita -- Valley Manager John Mulle Silver City Co-op Manager Kathleen Wigley Wild Sage Manager Tom Veliz

CGA-SW has been challenged over the last year as management changes in three of the members and exansion projects kept key participants in flux or occupied. The recent meeting was successful in bringing nine retail co-ops together from a three-state area. We agreed to launch a manufacturer joint buy program in order to establish a region-wide EDLP program. The group also initiated a proposal for joint purchasing among a larger group of participants.

We also discussed potential advantages of affiliation with the National CGA and agreed to combine regional and national dues into one dues structure. CoCoFiSt was acknowledged as an essential national resource allowing isolated managers to gauge local performance. The group is concerned, however, that NCGA develop a menu of benefits whose return will easily outweigh the cost of membership.

Shortly after our Albuquerque meeting, it was learned that a manager from one of our new participating co-ops was released from his position at Gentle Strength, and another co-op in Taos, NM was about to declare Chapter 7 bankruptcy. In addition, one of our existing affiliates was forced to announce expansion plans in Las Cruces, NM as Wild Oats threatens to move into the same shopping center.

CGA-SW will meet again in May to follow up on our manufacturer joint-buy and consolidated purchasing proposals. Future discussion will include a genetically modified organisms policy and ongoing consideration of how the retailer association is to work with Tucson Co-op Warehouse on distribution.

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Southeast: Staff, New Projects

By Ruffin Slater

Six co-ops in North Carolina and Georgia comprise the Southeast Cooperative Grocers Association. We meet 4-6 times a year and rotate the meeting site among three sub-regions. Two years ago the Southeast CGA signed a joint buying agreement with United Natural Foods, our major wholesaler, but since then our focus has been on expanding our individual stores. Five out of the six co-ops expanded last year. Sevananda more than doubled its size and parking spaces by moving to a new store a block away from its old store. Hendersonville doubled its size by expanding into the storefront next store. Life Grocery, French Broad, and Weaver Street all increased their store size in their current locations, and Weaver Street opened an 80-seat restaurant.

Southeast CGA

Deep Roots (Hiring new manager) French Broad Food Co-op Manager Jim DeLuca Hendersonville Community Co-op Manager Chris MacElwee Life Grocery Manager Lisa Maden Sevananda Natural Foods Market Manager Dee Brewer Weaver Street Market Manager Ruffin Slater

The Southeast CGA is now returning our focus to the regional level by exploring ways to integrate into a productive regional unit. Our first step was to hire Chris McElwee (Hendersonville co-op manager) for 10 hours per month as the CGA administrator. Chris is our first employee. We are also working on hiring a regional buyer to purchase specials for our stores and to manage the buying agreement with United.

We have two potential regional projects under development. One possibility is to merge our accounting functions. We are working with CoCofist and Walden Swanson to analyze our accounting operations to identify areas in which we can improve accounting efficiency and reporting effectiveness.

We are also discussing implementing a Rapid Improvement Program with Mel Braverman of Cooperative Development Services as the lead consultant. This program will use CoCoFiSt data to identify the biggest improvement opportunities and bring in Mel as a consultant to speed the pace of improvements. An innovative aspect to this program is that Mel and CDS would initially work on a reduced fee, receiving the balance due after the improvement has taken place.

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Northeast: New Mix

By David Fowle

VISION: A unified cooperative identity and stronger cooperatives, understood and used by more and more people. MISSION: To strengthen locally owned cooperatives through collaboration and an integrated food distribution system. How CGANE (Cooperative Grocers Association -- North East) does that -- its STRATEGIES:

• Enhance support for managers;
• Create linkages with other cooperatives, cooperative organizations, and cooperative sectors;
• Develop and achieve shared standards for excellent business practices;
• Produce educational programs and materials for internal and external use.

CGANE

Berkshire Co-op Manager Patrick Wyman (MOC*) Brattleboro Food Co-op Manager Alex Gyori Flatbush Food Co-op Manager Barry Smith Green Fields Market Co-Manager Suzette Snow-Cobb GreenStar Co-op Manager Patrice Jennings Hanover Co-op Manager Terry Appleby Hunger Mountain Co-op Manager Leslie Nulty Lexington Real Food Co-op Manager Tim Bartlett Northeast Co-ops Rochelle Prunty Onion River Co-op Manager Ned Flinn Syracuse Real Food Co-op Manager Sheri Gustofson Upper Valley Food Co-op Manager Don Benham (MOC*) Weaver's Way Co-op Manager Ed McGann Whole Foods Co-op Manager Cathy Driscoll Wild Oats Co-op Manager David Fowle * Manager on Contract through Northeast Cooperatives

In what may appear as a perennial statement, CGANE had another transitional year. Just as the marketplace and our wholesaler, Northeast Cooperatives, have been quickly changing, so too CGANE has been re-evaluating its role in the mix of cooperative development endeavors in our region. The variety, needs and priorities of our members are quite diverse, yet CGANE has fulfilled an important role for all participants.

CGANE's focus shifted from group projects to management mutual support, and the structure and focus of our meetings helped meet this need. However, while clearly most all of the participants value the support and resources available through CGANE, it seems the daily focus on each manager's store continues to steal attention from the benefits of working together. We are trying, but we are not always doing.

CGANE's limited success at follow through on group projects became quite evident. One very positive result of this recognition was the formal hiring of Marilyn Scholl as a CGANE consultant to help us plan and facilitate meetings and give us a critical eye on our progress. The group also recognized that we were hampered by not having a true executive staff person. But with a major increase in funding for the NCGA, we did not have the financial resources to prioritize both at this time.

CGANE has helped solidify NE managers into a network of mutual support. More time at meetings devoted to peer support has led to more linkages in areas of common need. Wage scales from all participants were collected and shared, which helped several stores refine their systems. Development of business plans will be the focus of our next meeting. Store audits continue to be a major benefit of membership, both to the audited store and to the auditors.

In addition, some important groundwork for the future has been established. We set benchmarks for measuring group and individual store success around profitability, sales increase, market share, and CGANE membership growth. We established the structure for a financial stability team of our best financial managers, which would use CGANE's benchmarks and the CoCoGap analysis to identify, analyze, and assist stores facing financial difficulties.

We were glad to add as members this year Whole Foods Co-op (Erie, PA) and Onion River Co-op (Burlington, VT), and we expect to accept as new members at our next meeting Leverett (MA) and Takoma Park Silver Springs (MD).

CGANE has been quite successful at fulfilling the "collaboration" aspect of our mission statement as well as most of our stated strategies. While regional progress on the "integration" aspect seems lagging, CGANE has been an active supporter of the NCGA, which we hope will be able to accomplish much toward creating useful aspects of a "virtual chain."

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Mid-Atlantic Alliance

By Rachel Rice

The Mid-Atlantic Cooperative Alliance (MACA) comprises seven co-ops located within 120 miles of the District of Columbia. We have evolved considerably from our original focus of joint purchasing. MACA's present purpose is to assist in the improvement of business conditions for its members, to conduct joint purchasing and marketing activities, and to develop education programs and materials for retail co-ops. We have in the past year initiated dues to be paid by members, hired a buyer for volume purchasing, conducted joint workshops with consultants and initiated steps necessary to start a MACA newsletter. MACA business representatives and buyer representatives meet monthly. We have annual strategic planning meetings as well.

MACA

Arlington Co-op Manager Emily Carnes Bethesda Co-op Manager Shahid Mustafa Common Market Interim Management Team Glut Food Co-op Collective Management Greenbelt Co-op Manager Bob Davis U of MD Food Collective Collective Management Takoma Park Silver Springs Co-op Manager Bob Davis

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Twin Cities Aligned

By Corinne Shindelar

With the growth of Twin Cities Natural Food Co-ops (TCNFC) over the past 18 months and the depth we are achieving in our member stores, we decided to create an "in house" newsletter. This newsletter attempts to be very brief; its audience is general managers, board members and department managers. Some items included are:

• newsworthy items about our individual stores that are staff related and don't fit into Co-op Consumer News, our bi-monthly newspaper;
• schedules of upcoming TCNFC meetings and events;
• reminders of deadlines, e.g. survey due dates;
• store staff training or other training opportunities that could meet the needs of our members;
• small reports about each of our activity areas. Our first newsletter went out last month, and the reception to it was tremendous. (All CGAs should consider this idea.)

Twin Cities Natural Food Co-ops (TCNFC)

Lakewinds Natural Foods Manager Kris Nelson Linden Hills Co-op Manager Paula Gilbertson Mississippi Market-Randolph Manager Gail Graham Mississippi Market-Selby Manager Gail Graham Seward Community Co-op Manager Stuart Reid Valley Co-op Manager Kerry Larson Valley Natural Foods Manager Susan McGaughey Wedge Community Co-op Manager Dan Foley

TCNFC's goals for 2000 are ambitious. We have two strategic directions with four goals under each direction and measures of success (below, the measures are the bullets listed after each goal):

Strategic Direction 1: Develop TCNFC as a leading organization.

Goals under this direction are:

a) Build capacity to work together at all levels.

• Staff view TCNFC as positive and a resource. (We felt this may be difficult to measure and that if all other goals are met this one would be too.)

b) Store Audits -- increase store profitability by identifying and implementing best practices.

• Use of CoCoFiSt in one single department
• Two best practices identified and implemented

c) Work with board presidents to facilitate alignment.

• Successfully achieve aligned fiscal years
• One board training for presidents
• Board President handbook completed

d) Integrate efforts with NCGA.

• If we continue, to fund in 2001

Strategic Direction 2: Plan and implement projects and programs.

Goals under this direction are:

a) Human Resources -- integrate systems and programs.

• Employee Handbook completed by April 1
• Benefits -- joint purchase proposal/decision August 15
• Develop training program by June 15
• Implement 2 stages of training program

b) CAP Development (Co-op Advantage Program).

• Meet or exceed budget
• Effectively deal with current issues as identified in survey
• Agree to fund another two years of program

c) Marketing -- increase our joint marketing efforts.

• Use current budget as allocated
• Approve proposal of increase in funding and activity
• Implement proposal
• Begin cost saving at individual store

d) Co-op Consumer News to improve financial performance

• Break-even publication
• Editorial review committee formed
• Examine feasibility of monthly publication

The CAP Program [described in the Jan.- Feb. edition of CG] and the Co-op Consumer News continue to be our biggest challenges, along with communication. We are showing an activity increase in promotional purchases of 50% monthly. We are learning much about the importance of redundant communication and coordinating a program for 15 organizations with 17 locations (soon to be 19).

We have a very exciting year ahead, as do all the CGAs, as we move toward the vision of "collaborating to meet competition." The TCNFC stores' combined impact:

employees: 625 annual sales: $45,000,000 member households: 22,000 retail square footage: 46,000+ customers per month: 180,000

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Midwest: Profits, Share, Capacity

By George Huntington

The Cooperative Grocers Association -- Midwest continues to grow and thrive in the seventh year of our organization's existence. Currently eight members strong, we work cooperatively at building stronger organizations through both individual and collective efforts. Our primary goals for the year were simply stated: build profitability, build market share, and build capacity. A series of projects (work sessions, expansions, research) has been our primary methodology.

CGA Midwest

Bloomingfoods Manager George Huntington Community Mercantile Manager Jeannie Wells Neighborhood Co-op Manager Francis Murphy New Pioneer Manager Dennis McLearn Open Harvest Manager Jean Helms Outpost Natural Foods Manager Pam Mehnert People's Food Co-op Manager Peg Nolan Willy Street Co-op Manager Anya Firszt Wholesaler: Blooming Prairie Jesse Singerman, Sue Futrell Advisors: Coop. Development Services Bill Gessner, Marilyn Scholl

Building profitability: CGAMW has undertaken a three-pronged approach to building profitability: identifying and implementing best practices in our stores, developing an exceptional work force, and driving costs out of our systems. Our primary tool for determining best practices has been the utilization of CoCoFiSt data (kudos to Walden Swanson and the folks at CDS for this useful tool). Educating our managers on understanding and using this information as well as setting benchmarks for individual department is a useful and ongoing project.

Developing a stronger workforce has involved store level training in customer service and natural foods, monitoring and sharing wage/benefit/turnover reports, and continuing professional education for our mid-level managers.

By working closely with our warehouse partner, Blooming Prairie, we are attempting to identify ways of driving unnecessary costs from our systems.

Building market share: To increase our combined rate of sales growth, CGAMW and TCNFC have hired David Butterfield to direct our CAP program (Cooperative Advantage Program), which leverages our combined buying power through a common monthly promotional calendar. By consolidating much of our promotional/marketing efforts, we have freed time for buyers and merchandisers to focus on new and exciting projects.

Recognizing that produce departments should be a major draw for our stores, CGAMW sponsored a three-day session in Madison utilizing the talents of Walden Swanson of CDS and Mark Mulcahy of Organic Options. Flow charting/best practices and "the numbers," coupled with a lively exchange of ideas and strategies, and a closing emphasis on "hands on" merchandising provided the over twenty attendees many tools to take back to their respective co-ops. CGAMW hopes to develop more of these department-specific workshops.

Perhaps our largest accomplishment in regards to market share in the Midwest has been the commitment to expansion by our member stores. We are proud of Willy Street Co-op's move from a 6,800 sq. ft. retail to a newly renovated space of 21,000 sq. ft. in October 1999. Outpost Natural Foods just opened their second store of 14,000 sq. ft. New Pioneer is projected to open their 20,000 sq. ft. second store, also housing their bakehouse operation, in nearby Coralville in August.

Building capacity: In order to continue to build capacity within our organization, CGAMW is attempting to better define and implement standards for control of our projects. Proper delegation, accountability, continued peer support and education are other important components to our future successes. And, following the lead of other regional CGAs, we are exploring the concept of adding an administrator or executive director.

CGAMW continues to be actively involved in the development of the National Cooperative Grocer's Association as a means to build our capacity as well as that of regional CGAs.

"We envision a cooperative network which builds stronger businesses, unified and driven by cooperative values, used and understood by more and more people." CGAMW continues to strive to live up to our vision. Based on our continued cooperation and mutual support, we are proud of our recent accomplishments and look forward to our collective future.

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Pacific CGA Forming

By Karen Zimbelman

In late March, 12 co-ops gathered in Davis for an exploratory meeting to discuss forming a California area Cooperative Grocers Association. Hosted by the Davis Food Co-op, the meeting planning and invitations were coordinated by Paul Harton (BriarPatch Co-op), Karl Kruger (Davis Food Co-op), and Karen Zimbelman (NWCGA). This was a very diverse group of co-ops -- from sales of $500,000 to four with sales of $12 million or more and one with sales of over $25 million; consumer co-ops as well as a worker co-op; co-ops using general manager, team, and collective management structures; co-ops in large urban areas and those in very rural areas. Co-ops in attendance spanned from just north of the California border (Ashland) to San Diego; from east of the Sierra to the Pacific coast. Those in attendance included managers who have worked for their co-ops for almost 15 years as well as those hired within the past month.

Nonetheless, the group recognized the tremendous common needs and value in working together. There was agreement to proceed with forming a new CGA -- to be called the Pacific Cooperative Grocers Association (with a nod to our colleagues along the coastline to the north of us).

Groups in attendance and considering participation in the PCGA (and their representatives to this meeting) were:

• Ashland Community Food Store (Marta Boyett)
• Briar Patch Co-op (Paul Harton)
• Chico Natural Foods (Cheryl McCoy)
• Consumers Co-op Society of Palo Alto (Bob Claxton)
• Co-opportunity Consumers Co-op (Will Simon)
• Davis Food Co-op (Karl Kruger)
• North Coast Co-op (John Corbett)
• Ocean Beach People's Food Co-op (Nancy Casady)
• Quincy Natural Foods (Lucinda Berdon)
• Rainbow Grocery (Don Reynolds)
• Sacramento Natural Foods Co-op (Paul Cultrera)
• Venice-Ocean Park Co-op (Nissa Drake)

In addition, two other co-ops were hoping to attend but unable to join us: Isla Vista Food Co-op and Ukiah Natural Foods. All groups will be confirming their participation in the PCGA by May 1. The group will hold its first meeting on May 30 in Sacramento.