(This is the written form of the speech I delivered tonight at the very well-attended Town Hall forum concerning the Co-op. I departed from the text a bit, but not substantially, I believe. Usual disclaimer applies: these are my words only and not a position of the board or the Co-op.)
In a few minutes, Rob Stanek is going to talk about what we would have to do financially to turn the Co-op around. My task is to explain how the Co-op can be different in the future than it's been these past ten years and why a Co-op future will be better than the University's proposal.
You won't hear any nostalgia from me. In 2001, I left a job in Austin TX at what may be the best grocery store in the world-- the original Central Market-- and I took a job in computers at the University. I don't have to tell anyone here that the shopping experience at the Co-op these last few years has often been less than satisfactory. Empty shelves and broken registers can't be lightly explained away.
The decision to go into 47th Street and the way that decision was carried out has put the Co-op in a tremendous bind. And now with 20-20 hindsight, I can see that the boards during my tenure-- and we've all worked very hard to solve these problems-- with 20-20 hindsight, I can see that we should have long ago done what Rob Stanek will propose in a few minutes.
So, no, I don't have any fond memories of the Co-op. I know many of you do. For most of the Co-op's 75 years, it ran a pretty good business. But I have no fond memories. Because even in the last few years when I've been treated warmly by one of the truly excellent employees there, I've gone away wondering how they continue to excel, considering the poor resources they have to work with. Being a cashier in a grocery store and having to be nice to strangers for 8 hours a day was the hardest job I've ever had-- and I was at a store everyone was proud of. I can only imagine what it's been like for the best of the Co-op's employees.
Not that every Co-op employee is great. It's no secret that there are indifferent people working there, folks who should be doing something else, somewhere else. When I met with the employees’ representatives, Amelia and Jarrold, for the first time a couple weeks ago, I asked them for one change right away. I asked that the Front End manager and the Assistant Grocery Manager positions be taken out of the union so that two more managers can initiate discipline procedures when appropriate. We need two more managers who can do that part of maintaining a quality staff. Amelia & Jarrold agreed to do what they could straightaway.
But that's not enough. We also have to break the Co-op's cycle of indifference right now. The indifference from some employees is not the only problem. Mistakes by earlier boards have turned off our membership. And that problem has been exacerbated by boards that, in my opinion, have been overly secretive.
Of course, the board's secrecy is understandable to some extent. Even though I'm for more transparency, I still think there are some things you have to keep private-- like personnel matters, vendor relations and some real estate matters. But we could have communicated more than we have. One of the problems is that whenever the board hires experts to advise us, we tend to hire folks who have extensive corporate experience. And those experts, who are used to advising corporations, always tell us not to publicize our options.
The reluctance of board members to be more transparent is kind of understandable, I guess. But I think we need to go in a new direction from here on out. From now on, we need to listen to the experts, but sometimes we need to decide that their advice might be right for corporations but it's not right for a cooperative.
Yes, we need to start acting like a cooperative again. That's the only way we can break this cycle of indifference. This upcoming election is the first step toward doing just that. The Co-op's members will decide the future. And if y'all decide that we should soldier on, if your vote is a vote of confidence, then we need to continue being open about our situation. And we'll need to come to the membership from time to time to address our needs in concrete ways.
How can we pay for capital improvements while using our profits to pay off our debts? The same way other cooperatives do it. They go to the members and sell stock for specific purposes. They hold capital drives. Are there enough people in Hyde Park still willing to contribute in that way? Sure there are. You may not realize it, but many members have hundreds of dollars in Co-op stock. They could have withdrawn it over the last several years when it was obvious that their stock might end up being worth nothing—as it will be if we accept the University's proposal. They could have redeemed their shares, but they chose not to. I myself, knowing full well how bad our situation was, bought extra shares during the scanner debacle.
Yes, we have to start acting like a cooperative again.
Now, what's the alternative put before us? The University wants to buy back the remainder of our lease, which would otherwise give us 11 years to pay our debts and turn things around. My understanding is that th University feels it can re-let the space to another grocer and recoup their investment, more or less. That's a reasonable proposal and I'm sure they have good intentions toward the neighborhood. I think they always have had good intentions. Sometimes their plans work and sometimes they don't. Usually, it ends up being a mixed bag. In this case, the plan is to invest and then re-coup that investment with a long-term lease with another grocer. And by long-term, I'm sure we're talking at least 20 years, probably 25 or even 30.
So who would this next grocer be? They're not saying. They want you to approve their plan without even telling you publicly what grocer you're getting. Without telling you what grocer you're getting at this point in time. I say that because these chains, corporate or family-run chains, tend to change hands a lot. Even if the new grocery started out as a better store at first, we have no idea who it would be even eleven years down the road-- let alone what it would be like by then.
The new store could be better than the Co-op. Or it could be worse. Or it could be the equal of what the Co-op is now. On the other hand, if the Co-op can refinance and pay off its debts thru its 55th Street store profits, we know who the grocer will be and that the store will be better.
Folks complain that the Co-op needs to be more transparent. And sometimes there's plenty of truth to that. On the other hand, this is the second neighborhood forum in the last 3 years concerning the Co-op. Even non-members have been allowed to come and speak at both forums. But the Co-op isn't the only underperforming store in our community. You know, Village Foods is far from a shining example of retail acumen, too. When are we going to see a public forum about that grocery store?
Do you think the grocer the University wants to replace us with will be this forthcoming? Shoot, they won't even step forward and identify themselves. Years from now, when they're in the second decade of their lease, we'll look back and point out that their lack of transparency started before they even opened for business. If they can't commit to identifying themselves as the interested party now, what do you think their commitment to the neighborhood will be going forward?
So, sometimes the transparency complaints are a little unreasonable, when they're made out of context. But those are far from the most unreasonable complaints. I'm certainly willing to admit that the Co-op has often been a bad grocery store over the last few years. But I've also seen some patently ridiculous speculations on what that's meant for our neighborhood. Somehow, the Co-op has become a scapegoat for the shortage of retail, even though our retail deficiencies go back 50 years to urban renewal-- when the authorities in Hyde Park decided our neighborhood should be more like a suburb.
The critics have even begun saying that huge amounts of money are being spent on groceries outside our neighborhood. Oh, sometimes they'll even tell you that the Co-op is responsible for $50 or even $75 millions of dollars spent elsewhere. Let me set the record straight. The 55th Street store's sales have been flat at $25M since 1995. Maybe you can argue that we should be at $30M to keep pace with inflation in food prices. Ok, I'd accept that we're $5M short of where we should be. But let me ask you this-- if the people who drive to get groceries elsewhere all started shopping at the Co-op-- that $50M or more of other shoppers-- where are they going to park?
What Hyde Park needs is more choice in grocers. The Co-op board, over the last few years, has changed course, departing from the monopolization tendencies of the boards in the 90s and even before. We've sold one location to Hyde Park Produce and both plans would give the 47th Street location to Certified Grocers. If they want to put one of their client stores in there, they can. Say what you will about our boards’ mistakes, but at least we’ve been helping to facilitate more choices for Hyde Parkers.
And yes, Hyde Park and the surrounding neighborhoods could support at least one and probably two or three more large groceries. Choice, competition is the way out of our community's deficiency of grocery stores. So, why haven't they been built? Well, one factor, although certainly not the only factor, is that one large entity keeps buying up the land that a grocery store could be built on. The University, at any time, could solve most of our grocery problems by using some of its land for another large store. They choose not to do so. That's their right, but it's also their choice.
Now, the University comes to the Co-op members, and with the best of intentions-- I really believe that-- the University asks y'all to vote that an unknown corporate entity should enjoy a monopoly position here in Hyde Park for the next 20 or 30 years. Because that's the University’s choice.
The other ridiculous assertion is that cooperatives are a thing of the past, useless in today's world. Hyde Parkers make that assertion even though the best bookstore in the country for academic titles is a cooperative right in our neighborhood-- the Seminary Co-op Bookstore. For the last two years, I've gone to yearly conferences concerning cooperative grocery stores and I can tell you that there are plenty of Co-ops elsewhere which are doing great. Many, many are even thinking of expanding-- which I always warn them against.
Being a cooperative is not what has sunk our Co-op. Not acting like a cooperative has been the problem.
Some will point out, correctly, that most of the successful cooperative grocers-- most but not all-- are health food stores, stores that serve a specific niche. They try to do one thing well and succeed. Right.
Our Co-op hasn’t done that. Instead, we’re expected to be all things to all people. Somehow, we’re expected to satisfy the diverse tastes of Hyde Parkers-- and we’re truly a motley crew-- all in one 30,000 square foot stores. It’s an impossible task. I can tell you now that the corporate store the University has in mind won’t even try to do that. They’ll do what they do well and that’s it. If you don’t like it, you can shop elsewhere.
At these other successful cooperatives, does the board of directors run the grocery store? Of course, not. They hire a General Manager to run the store. The board’s job is to hire that GM, monitor that GM and to articulate a vision for that GM. We should not be running the store. The vast majority of successful cooperatives use Policy Governance, Policy Governance, as a process to govern the cooperative, to keep themselves from micromanaging. We should, too.
One of the board’s true accomplishments these last few years has been hiring and Bruce Brandfon, who’s a terrific General Manager. He's charting a different course for us, with realizable goals. Given reasonable resources and a vote of confidence from the membership, he and his successors can make the Co-op a store we can be proud of.
And it will be much simpler to monitor future GMs when we have only the 55th Street to worry about.
That’s my prescription for success. We refinance our debts and raise capital thru member drives to give our employees the resources they need. We should institute Policy Governance and and monitor a single location. We should stick to the course taht Bruce Brandfon has charted for us. And, in all things, we should start acting like a cooperative.
Now, some are saying that it's time for the Co-op to die a dignified death. Since when did Hyde Parkers choose to quit and die a dignified death? I'd rather go on fighting.
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