Local Co-ops Build National Presence

By late April, regional food co-op associations will decide whether to transfer their assets and primary identity to a restructured national organization. Each of more than 90 local co-ops from nine regional groups also will vote on joining as a member of the new National Cooperative Grocers Association (NCGA). Approval of the new plan will establish these co-ops as the second largest retail buying group in the natural/organic industry and thereby position them to attain lower cost of goods on core grocery items. The NCGA reorganization aims to strengthen other shared programs as well and to bring co-ops improved visibility and industry services.

The reorganization plan would overcome the weak coordination of program development among the regional associations that presently comprise the voting members of the national organization. The new National Cooperative Grocers Association (NCGA) will have direct membership by local co-ops, and the anticipated structure signals the transition to a new era of unity and stronger shared programs.

My review was written shortly after the late February meetings in San Diego, where some one hundred managers, association staff and directors, and consultants reviewed the plan. The official NCGA documents will be mailed in March, and the actual vote has a deadline of April 20.

A vision: national strength, local focus

The emerging new landscape for the food co-op sector will succeed what could be called the pioneer stage in which most of these community-based businesses emerged. There’s many a rodeo rider out there—managers and co-ops needing more neighbors and more vision. But over the past decade, regional retail associations have added a much deeper level of cooperative collaboration.

All the co-ops in NCGA are independent organizations (as are the many, mostly small co-ops that are not currently members—see the adjoining “Clarification”). A dozen or so operate more than one store; and all but two of them are under thirty-five years old. The overall aim or “global end” upon which the reorganization plan is based retains those local roots: “Thriving retail food co-ops working together with the strength of a national organization and the focus of a locally owned cooperative.”

Eight months earlier, at the June Consumer Cooperative Management Association (CCMA) conference, the board of directors announced its conclusion that the existing NCGA regionally based structure needed to be replaced. Joint purchasing has received uneven participation and fallen short of its potential to improve co-ops’ position; at the same time, many purchasing cooperatives are performing strongly in other industries. Coordination among the regional grocers associations of product promotions and other projects such as peer support groups for departmental managers also has been uneven or weak.

Although co-ops have achieved and learned much through regional collaboration, they face additional pressure to move beyond the existing system from opportunities and threats presented by continuing growth and consolidation in the natural/organic industry. Stated the NCGA board’s proposal, “Unless we become more aligned on a national basis, we will continue to lose relevance in the sector. Unless we take advantage of this opportunity, we will never be stronger than we are today.”

“Joyful transfer”

The two-year agreements to join the new national body will require transfer of most regional association assets to equity in NCGA. That equity will be held at least three years before potentially (at the board of directors’ discretion) being revolved back to member co-ops. A major benefit that the plan projects will be visible in 2005 is reduced cost of goods through a national purchasing program negotiated with the primary supplier for almost all NCGA co-ops, United Natural Foods. United currently negotiates separate agreements by region. Other activities, including regional product promotions such as CAP (Co-op Advantage Program), regional training and peer support, and purchase of other non-core goods and services, will similarly be extended from their present bases to other regions, new interest groups, additional services, and national service staff.

These transfers require the regional associations to relinquish primary control of assets and programs that they have built over a period of years—prompting proprietary concerns for relationships and programs with known benefits that will be extended to other regions in a mostly untried structure. This “joyful transfer,” as it was termed, prompted questions as well a vein of humor among responses to the proposal: Would the valuing of regional assets be fair? (We’ll go along, but does it have to be joyful?) Would initiatives by local co-ops and regional associations be stifled? (After my joyful transfer, will you still be fluid and flexible?)

These and other concerns led to rephrasing a “non-compete” requirement that in a way summarizes the proposal’s foundation spirit. (The wording that follows adds to the original and is the version approved by the NCGA board on March 2.)

“Members shall act in good faith, with consideration for the whole—NCGA and its members. Members agree to support NCGA programs, products, and services. Innovation and incubation will be encouraged. Groups of members will fully communicate and freely share ideas and programs that result from collaboration with member groups or other NCGA member co-ops. NCGA will be given the opportunity and first right of refusal to offer, expand or promote programs, products, and services collaboratively developed to other member co-ops. NCGA will have 90 days to exercise this right.”

Trust—or bust

The high-powered sessions in San Diego were ably led by the NCGA board of directors and a project team of Marilyn Scholl and Bill Gessner of Cooperative Development Services and Rosemary Mahoney of Mainstreet Cooperatives Ltd. and were guided through excellent facilitation by Ari Weinzweig and Stas’ Kazmierski of Zingerman’s Training Inc.

Spirits ran high. Disagreement and hard questions were addressed and leavened with humor. By the end, a hundred cooperators had established a high degree of unity around a vision and trust in a plan to achieve it.

The proposal had been discussed at all levels of the network in prior weeks. Nevertheless, its review in San Diego, by 76 co-op managers from all 9 regional associations and more than 20 staff and consultants, was impressive in the group’s level of intensity and focus. Unity could easily have broken down, given the number of attendees and subgroups with a stake in a multi-faceted proposal that combined vision, planning, and implementation in one dense, 80-page document.

At the February meeting, the thoroughness of the preparation and the board and project team’s responsiveness to member concerns helped ensure that the plan would gain overall acceptance. Since their announcement the previous June, the NCGA board had spent months of preparation, listening to co-op managers and regional associations and continuously refining the proposal. The board members again demonstrated an ability to listen and accommodate member concerns during the national sessions, where numerous proposal points were amended, clarified, or deferred for later consideration. Following the vote this spring, having already done extensive preparation for rollout of the new organization, the board and staff and designated transition manager Rosemary Mahoney will be ready to move quickly.

It was trust or bust—or, in the Ben Franklin phrase, “Hang together or be hanged separately.” Either co-ops consolidate their position and thereby gain the level of services and respect they need, or a rapidly changing industry will leave them behind as a weakly organized network of retailers. In my view, the impending vote will support the reorganization and is hugely significant. Trust was established by months of groundwork at all levels of the system, a high degree of shared commitment to continuous improvement, and a planning process that was highly participatory and carefully managed while remaining flexible.

For the organizations involved, their own as well as earlier co-op history underscores the importance of the new organization. Recent enough for easy recognition is the example of cooperative distributors that supported retail development in earlier years but were largely lost after failing to unite. In a surprise move that recalled that recent background, the Midwest association inspired others present in San Diego by announcing they were contributing to NCGA $100,000 of the proceeds from the sale of Blooming Prairie, their former co-op distributor.

For additional perspective I had brought to the meeting my copy of an earlier editing job, the 1983 “Report of the National Planning Task Force for Food Cooperatives.” The Task Force was a blend of leaders from the previous generation of consumer food cooperatives, now largely gone, with those from what was once termed the “new wave.” The Report called for an integrated national system featuring a co-op label program and other elements of common services and identity. But their proposals, like similar ones that preceded it, failed from lack of national unity and resources to implement a program for the entire cooperative system.

By delightful contrast, at the February national meeting a final visioning exercise among participants looked just a few years into our co-ops’ future, tapping our powers of imagination and the exciting potential of our new structure. We desire and can achieve: greater recognition and public understanding of cooperatives, improved co-op market position, professional teams for store improvement, new store development, and more. At the next CCMA conference, to be held June 10–12 in Minneapolis, these themes will be revisited, the next steps discussed, and the new landscape surveyed and celebrated.

The recent NCGA meeting and anticipated support for the reorganization signify shared commitments that, this time, are matched by widespread professional experience and organizational maturity along with a well-grounded plan for achieving the vision: “Thriving retail food co-ops working together with the strength of a national organization and the focus of a locally owned cooperative.”

See other articles from this issue: #112 May - June - 2004