City Center Market

New store, new name, and still in transition

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In small-town Cambridge, Minn., MOMS Food Co-op opened the doors to our new store, City Center Market, on January 4, 2007. This was just 18 months after learning we needed to find a new home and only 14 weeks after signing a lease on a vacant storefront. It has been one heck of a ride, and a rocky one at that.

In July 2005, our landlord informed us that the building had been sold and would be demolished. Under the existing lease agreement, the lease was void as soon as the building was “in development,” which meant that we faced imminent eviction, described as “a few months to six months out” by our landlord. As soon as we heard the news, we did two things: started searching for suitable space—something hard to come by in our semi-rural community—and consulted the cooperative community.

With the guidance of Bill Gessner of Cooperative Development Services, we launched an initial member/owner loan drive in January even before we found a space, knowing that our timeline would be incredibly tight. By April 2006, we located the perfect space—a corner of an Econofoods grocery store that closed—and sought financing through Northcountry Cooperative Development Fund. But our small co-op, with fewer than 800 members, struggled to raise sufficient capital to trigger the financing.

A number of factors contributed to our difficulties in the member/owner loan drive. With the co-op’s facility at just over 1,100 retail square feet, almost all of our owners were already forced to shop elsewhere to meet their needs, and as everyone knows, organics are becoming widely available in conventional stores. Cambridge is just an hour from the Twin Cities, home to eleven wonderful, full-sized co-ops, and many of our owners shopped those co-ops more frequently than MOMS. The demographics in this community are atypical for communities supporting cooperatives, with lower income and educational levels. Finally, although in-store signage, bag stuffers, direct mail, and every issue of the monthly newsletter all focused on the reason for moving (the upcoming demolition of the building), we were unable to communicate to many of our owners that we actually had to move the store!

We went back to our owners again in June with a second phase of the loan drive, with somewhat dismal results. By August, we were still not quite halfway to our goal of raising $300,000 in loans, and we were running out of time. Our board of directors debated whether to close the co-op or to make a third try at member loans. Gessner encouraged both our board of directors and me, describing the situation as “extremely challenging” but “possible.” With that, we found $50,000 in gap financing from a foundation and pushed the loan drive to a total of $248,000.

With the financing secured, we were able to sign the lease at last in late September. Facing a December deadline for vacating the current store, the race was on.

Our owners clamored for a deli, a meat case, more product choices in every category, and room to maneuver a grocery cart. Based on the updated marketing study, we planned a 5,800-square-foot store with 3,300 square feet of retail space. We knew from our past history that our co-op also needed some stability—and our new lease secures this site for up to 25 years, with multiple renewal options and first options on available neighboring space. We also knew that in our new store, we would need to attact and welcome many new shoppers—and a long-discussed name change was in the works. In November, the board of directors adopted a new name for the new store—City Center Market. We retained our incorporated name, MOMS Food Co-op, doing business as City Center Market.

Shortly before we signed the lease, we agreed to sublease additional space to two co-locators, a local bookstore and a local coffee shop/roaster. Interestingly enough, after that decision was made, I came across a letter from Pete Davis, who did an earlier market study for the co-op, advising the former general manager that the ideal neighbors for a new location would be … a bookstore and a coffee shop!

The next 13 weeks were challenging, and decisions were made at lightning speed—no time to agonize over the infinite choices and decisions that had to be made. Thankfully, our very generous cooperative community was always willing to contribute time, expertise, and even equipment. Mead Stone of River Market in Stillwater shared his expertise on the labor plan. Jan Rasikas of Viroqua Co-op was on my speed dial, and I asked a million questions about their expansion and operations. Michelle Schry of People’s Food Co-op in LaCrosse spent a day with board and staff, helping us prepare for the stress of the move and the aftermath. Sister co-ops in the Twin Cities of Minneapolis and St. Paul shared equipment—we have freezers from Linden Hills Co-op, a deli case from Mississippi Market, uboats and more from Eastside Co-op.

We closed the old MOMS Co-op on December 30, did inventory, packed and moved to the new store, and opened for business on January 4. Our staff tripled along with our floor space, and most of our new staff were not able to train until a few days before opening. City Center Market has now been open for 25 days, and not surprisingly, we are still working on the remodeling. Our exterior work is still underway, and we’re running into sign ordinance issues with the city of Cambridge, so the building signage is still in progress. Our subtenants, Scout & Morgan Books, and Café Caffeine (roaster of organic, fair trade coffee), are hoping to open their doors in the next couple of weeks.

With only 25 days under our belts, it’s early to say much, except that we are continuing to experience the market shift that started last winter—with organics widely available here at Cub Foods (UNFI stops there before delivering to us) and Walmart, sales in the old store were dropping then. Our proformas for the new store were based on pre-market-shift reality—and we are running under projected sales about 14 percent so far. Obviously, this is a tremendous concern for us. Relocation project costs have been well-controlled and our project costs so far are about 15 percent under budget. The lowered debt will help us work with the lower sales.

In the meantime, the chaos is slowly subsiding. Shopping carts were delivered yesterday, and we’re waiting on just a few fixtures. Refrigerated equipment is stabilizing, and the management team reports fewer sleepless nights. With new staff settling in, we’re ready to focus on this amazing challenge before us: sales, margin, and labor.

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Rebecca Gaspard is general manager of City Center Market in Cambridge, Minnesota ([email protected]).

See other articles from this issue: #129 march - april - 2007