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Natural Foods Merchandiser

Economic bust brings co-op boom

Having first appeared during the Great Depression, co-ops have ebbed and flowed since, following the tides of the U.S. economy. Since the downturn in 2009, a co-op boom has been underway, but will it last?

In the early 1970s, gas prices were soaring and dramatic inflation spikes held the nation in a panic. Concerned about mounting grocery bills, small groups of consumers around the country pooled their buying power to access bulk food discounts. Grocery cooperatives began to dot the American landscape.

Is history now repeating itself?

It’s 2011, and there may not be rationing at the gas station, but high gas prices, unemployment and talk of inflation are ubiquitous. And, as in the early 1970s, concerned people are turning to co-ops.

Around the country, roughly 300 cooperatives already run 330 stores, with at least another 250 under development, everywhere from New Orleans to Fairbanks, Alaska, Stuart Reid, executive director of Food Co-op Initiative, a nonprofit that provides resources and support for organizing groups, told the Associated Press in a recent story on the co-op boom.

“We have more co-ops in the pipeline than ever," said Adam Schwartz, spokesman for the National Cooperative Business Association, a nonprofit agency that helps develop, promote and protect co-ops.

Co-op boom not necessarily natural boom

Although the natural products industry may want to link a co-op boom to a growing interest in natural products, this probably is not the case, experts say.

According to Elizabeth Archard, member services director of The Wedge Community Co-op in Minneapolis, “This store was started to address the issue of rising food prices. It wasn’t about health food or food purists. It was about basic ingredients at reasonable prices.”

Founded in a basement in the early 1970s, The Wedge now has more than 14,000 members and brought in $30 million in sales last year. But, just as in the '70s, many customers don't come for natural products. “You’ve never been able to stereotype our customers; they shop here for more reasons than health food,” Archard said.

“When the free market economy is failing, the co-op movement gains ground,” Schwartz said. “Folks are looking for other ways to do business, and the co-op model serves both the economic and social needs.”

Many new co-ops are popping up in food deserts around the country, with the intention of providing affordable groceries to these areas, rather than bringing them gourmet grab-and-go items.

In New Haven, Conn., a $7 million food co-op is slated to open in October to serve the needs of the community, which has only one other large grocery store. “New Haven is a food desert. More than anything we are here to bring real food to everyone,” said Mark Regni, the store's general manager.

In Harrisburg, Va., Friendly City Co-op opened its doors in July to provide food beyond Slurpees to the town of almost 50,000 residents. "The closest places to buy food are 7-Eleven and Dollar General," General Manager Steve Cooke said in an interview with local news station WHSV. "Those are great stores, but they don't have fresh produce, and there are a lot of things that we're going to have as a full-scale grocery store."

Although many co-ops emphasize local food, it’s not a point of differentiation from other stores, including mass, said Phil Lempert, editor of “As we are seeing more supermarket chains adding 'local' foods to their assortments, we are seeing those sales increase and more shoppers going to those stores,” he said.

Will better times bust co-op boom?

Just as history shows that co-ops boom during down economic times, traditionally, many fade away as the economy picks up. “Starting a food co-op is not an easy process, and neither is keeping it going,” Schwartz said. He hopes NCBA will help co-ops to streamline their openings and operations to increase their chances of survival.

The co-ops that do flourish even in good economic times are those that keep up with the Joneses, such as the Ashland Food Co-op in Ashland, Ore., which brought in $24 million in sales last year. What began without even a storefront in the early 1970s is today a full-service store with seafood and meat counters and juice and coffee bars.

And when it comes to a store’s success, wild cards can always come into play.

Lempert points to the pending grocery store strikes in California as possibly improving the odds for co-ops. “If there is a grocery strike [in Southern California], I expect co-ops to be one of the big winners as shoppers get fed up with the strike inconvenience every few years and decide to be a 'part' of the food chain,” he said.

Distrust of Big Grocery could also play in the favor of member-owned stores. “Folks want to have access to groceries in their neighborhood," Schwartz said. "They want to have some control and not worry the that the Safeways and the Krogers can just pull out of town. Food co-ops can fill that need.”  

And cooperatives around the globe certainly may get a boost from the United Nations' International Year of the Co-op in 2012. "Cooperatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility,”
U.N. Secretary-General Ban Ki-moon, said in a release. The agency will promote the benefits of co-ops during the campaign.

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