After operating at loss for four of the past five years, Franklin Community Co-op last month painted for its member/owners a picture of a co-op that needs to grow.
Anyone who shops the Main Street anchor that is Green Fields Market knows it’s squeezed for space, just as Franklin Community Co-op’s other outlet, McCusker’s Market, faced the need for additional space before renovations a couple of years ago.
At its annual meeting, attended by about 200 members, with nearly 300 voting remotely, the 40-year-old business heard about $118,000 in losses last year as part of a challenging business climate blamed largely on competition from other supermarkets.
That loss, although worsening from 2016 profits of nearly $20,000, is still an improvement on losses in each of the three prior years — the worst being nearly $400,000 in 2015.
Worse yet, a decline in the co-op’s cash reserve has been growing with each successive year, so that the savings are one-third of what they were in 2012.
On the flip side, the co-op has seen a steady increase of new members, at or near 300 households in each of the past three years. Many of those, according to spokeswoman Sarah Kanabay, are in the co-op’s “Food for All” member program, who qualify by having “limited resources” and receive a 10 percent discount on purchases.
In trying to respond to its financial challenges, Franklin Community Co-op advised its members last month, “Austerity measures (i.e. job losses and significant wage reductions) don’t align with our values and are more likely to cause a downward spiral of slashing costs and collapsing revenue.”
Instead, the co-op proposed expanding its memberships, which now are over 3,000 households, “significantly” increasing revenues and pursuing renovation and expansion of Green Fields Market.
That expansion, described to members in a pre-meeting mailing as “a top priority” has been endorsed by co-op members, who want the store to remain and “grow in place” at 144 Main St., where it has been since 1993.
“It’s important to our members to be one of the anchor businesses downtown,” said Kanabay this week. As a values-driven co-op, she explains, that sentiment’s not only about this business, but also reflects genuine concern about helping downtown thrive.
The store, which is located next to an alleyway, needs more space for its kitchen, bakery and its receiving and storage areas. Its fastest-growing section is the prepared foods sold in its bakery-deli sections, and despite renovation of part of the former J.C. Penney store’s basement for bakery functions, Kanabay says, “We’re really bursting at the seams to physically accommodate safely our staff, and what we’re able to produce,” including refrigerated storage. In addition, said co-op board President George Touloumtzis, the store needs more storage space to be able to increase buying power, as well as added room to offer a wider merchandise selection, along with a larger dining area, a member-service area and possibly a children’s space.
The business has completed a market study, has researched real-estate options and has discussed expansion with city officials, and, according to Kanabay, “is something we’ve been working really closely on with town, to find solutions for the alley and for what could possibly happen for us.”
She said she couldn’t estimate how much additional space is needed — only that “We’d like to substantially expand our production space.”
The planned expansion, which members have seen as way to ensure that their business remains an economic hub for the vibrancy of Greenfield’s Main Street, is “in process,” she said, with no specific timetable. What is expected to change by July 1 is the conversion of the 2 percent fixed membership discount on purchases, which last year cost the co-op $111,000.
Nearly 90 percent of all food co-ops in the country have switched to a program of variable discounts, which are presented on specific member-savings days or through special member-only coupons.
Those new offerings, which are still being worked out and in discussion by members themselves, would be targeted to times “when we can also get really great deal, to take advantage of bulk purchasing that’s offered to us at bargain prices,” said Touloumtzis. The pinpointed discounts, in place of continuous discounts for members, “allows our operations to become more flexible and strategic.”
The co-op will continue to offer worker discounts of 10 and 15 percent, along with 10 percent discounts for Food for All members and a 2 percent senior discount for all age-eligible customers, not simply members.
While some shoppers said they were reluctant to give up the tangible 2 percent discounts for the promise of 10 percent discounts on limited occasions, Kanaby said several of them, in the core spirit of the co-operative, added, “If this is good for the co-op, the smaller amount of money I save with a fixed discount doesn’t matter to me.”
Although Northampton’s River Valley Market and a planned Amherst food co-op have entered the picture in recent years, Kanabay said both are too far away to pose a threat to Green Fields Market, and the attitude is “the more the merrier” when it comes to a model that’s focused on cooperation rather than competition.
A more serious impact has been the expansion of “natural foods” and organic offerings by conventional supermarkets that are closer, as well as the emergence of online shopping of products that have always been a mainstay of co-ops — including Amazon’s entry as a natural-foods retailer through its purchase of Whole Foods.
Remodeling at McCusker’s has included shifting production of prepared foods to Green Fields Market, adding beer and wine sales, expanding the bulk foods section and reducing in-store eating space. All of that, according to the co-op’s pre-meeting mailing “has paid off in reduced labor costs, improved margin and growth in average transaction size leading to considerable softening of losses there — but substantial sales growth will be necessary to bring the location from just breaking even into solid profitability.”
Touloumtzis voiced optimism about the planned changes: “The reason we’re looking into the expansion is because we feel hopeful.”