The People’s Food Co-op in Kalamazoo, Michigan, is exactly the kind of success story we like to report. Their expansion planning, which they launched when the economy crashed in 2008, went very well, despite the difficulties inherent in getting and raising capital in such a challenging economic environment. It proves that with consistency and pluck anyone can make their own luck.
Now their new co-op, which opened in June 2011, went from 700 square feet to 3,100 square feet retail, is attracting buzz and new members in the community. Getting to this phase in their development is the result of the board and management doing the work of preparing the co-op for new roles in governance and operations that would take it to the next level. Their hard work of engaging the community and organizational preparation has paid off.
To look at People’s Food Co-op now, you’d probably have no inkling there was a time when a larger, thriving co-op seemed like a pipe dream to many people in Kalamazoo. The co-op was founded in 1970, and for a long time its vision remained as small as its diminutive size. The co-op struggled to eke out a profit year after year, and the co-op’s reputation suffered. The co-op’s leadership was confounded by what to do, but they knew they had to do something. In an act akin to raising the shades on a gloomy room, the board and management began to act on an audacious project to make their little store shine, improve operations, increase sales, and rally the membership behind an expansion for the co-op.
Hether Frayer has been on the People’s board for nine years and throughout the whole expansion process. She said that the board contacted Bill Gessner and read through the Relocation and Expansion Toolbox at the time. “We learned we needed to understand the board’s role,” she said. Before this time, the board had been more hands-on, and they had to take themselves out of the day-to-day operations to govern more effectively.
Then they began to work with CBLD consultant Thane Joyal. “We had a lot of questions about the board’s role and Thane answered them all. It is invaluable from the board’s perspective,” Frayer said. The co-op’s general manager, Chris Dilley, said, “Policy governance has worked really well for us. It has brought us clarity around our roles, and that’s really critical in an expansion process.” The approach built trust and created transparency, and with these accountability systems in place, the co-op was poised to enact its vision.
The co-op also changed its equity structure from a $30 yearly fee to $250 stock investment. “It was a tough decision, but we did our research and a lot of people recommended that we set it high enough that we don’t need to change it again for awhile. Plus we needed the money,” Frayer said. This also set the stage for the half million the co-op raised from members for the expansion through member loans.
The board also took this on, and they promoted membership at community events and called members themselves asking them to loan money. “It can be nerve-wracking. We’re dealing with a lot of money, and a lot of people’s money was at stake, money I asked people personally to loan the co-op.” Frayer said the support they got from CDS Consulting Co-op and the broader co-op community gave the board confidence to do it and believe that it would be a success.
Now whenever she shops at the co-op, she is still amazed when the automatic door opens and she can shop wide aisles with a full sized shopping cart. The co-op’s membership has nearly doubled in the 9 months the new store has been open. “It’s exciting to see that people want to be part of it.”
Relocation and Expansion Toolbox by Bill Gessner.
Member Loan Toolbox by Bill Gessner, Beret Griffith and Ron Griffith, published by Food Co-op Initiative.
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