Troy Food Co-op: we will have to close soon if sales don't improve
Later on AOA:
+ Pioneer Market and the gentrification of the Collar City
+ Inside perspective on the Troy Food Co-op's struggle to survive
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We had heard rumblings lately that things were not going well at the Troy Food Co-op, and today comes official word in an email to members (emphasis):
Thanks to our owners, the co-op started off reasonably well when it opened last October, and sales increased slowly but steadily through December. Since then, however, sales have declined. Sales were nearly $160,000 in December, but fell to only $134,000 in June. We need sales of at least $175,000 a month to break even. Our loss in June was $18,000. Unless sales improve dramatically, we will be forced to close the co-op in a matter of months.
The full message is after the jump. It says the market's board has "a strategy to address the co-op's financial crisis."
The Pioneer Market, as the co-op is also known, opened last October. And as soon as that December there were already signs of financial trouble. In January of this year, it announced it had gotten a $270,000 loan from the Empire State Development Corporation, and the head of the board of directors said leaders were "cautiously optimistic."
It's sad to see the co-op struggle. We've enjoyed the few times we've shopped there, and there seems to be a need for a market in downtown Troy.
From the Troy Food Co-op email:
An Urgent Message from the Board of Directors of Troy Community Food Cooperative, Inc.
July 20, 2011
Dear Owner:
Our co-op, the Pioneer Market, needs your help to survive.
When we began planning this venture more than five years ago, we all recognized that starting a new food market in downtown Troy would be a challenge, and that the business would experience some rough patches on its path to profitability.
Thanks to our owners, the co-op started off reasonably well when it opened last October, and sales increased slowly but steadily through December. Since then, however, sales have declined. Sales were nearly $160,000 in December, but fell to only $134,000 in June. We need sales of at least $175,000 a month to break even. Our loss in June was $18,000. Unless sales improve dramatically, we will be forced to close the co-op in a matter of months.
The Board of Directors, with its new members, has developed a strategy to address the co-op's financial crisis. These include changes to store operations and management and an appeal to you for more support.
What we are doing
We share your concerns that the co-op's product mix over time has shifted away from organic and natural foods. We have directed the co-op's general manager to shift the product mix back toward the kind of products you indicated you wanted in the community discussions we held prior to opening the Pioneer Market. If you have specific product requests or suggestions, please contact co-op general manager Bruce Storm at bruce.storm@troyfoodcoop.com.
After carefully reviewing the relationship between discounts offered to Pioneer Market customers and sales volumes, the board has decided to end the regular weekly 10% discount days for students, seniors and owners, effective August 22. Owners will still receive a 2% discount on all purchases. We will continue to offer a wide range of our store brand "Best Yet" products, and we are applying to become a WIC (women/infants/children) vendor to better serve the Troy community.
We have authorized the co-op's general manager to reduce expenditures. This has helped cut monthly losses, but increasing sales is the only sustainable strategy to reach profitability.
We continue to seek new sources of funding. We have submitted an application for a grant under the U.S. Government's Fresh Food Initiative. This program is aimed at bringing fresh food to underserved urban populations, and we believe we stand a good chance of being selected. However, the awards will not be announced until September.
We are working with other co-ops in the region and with the national co-operative movement, and we are receiving helpful guidance and assistance on management and marketing issues from them.
What we need you to do
Most importantly, we need more of our owners to shop at the co-op. As one of our owners urged at the annual meeting in April, "Shop co-op first!" Owner sales account for 43% of total sales, and owners who shop are now only spending an average of $110 per month. These are well below the assumptions we made in our financial planning prior to store opening. Furthermore, only about half of all co-op owners are actually shopping at Pioneer Market. The co-op currently has just over 1,000 owners; in June only about 500 shopped at the co-op. If just 200 owners who have not been shopping with us come to the co-op and spend as much as current owner shoppers, co-op sales would increase by $21,000 per month. These additional sales would substantially boost our chances of survival.
We need more capital. Our financial analysis indicates that the co-op needs to raise an additional $60,000 by September 1 to remain viable. We thank those owners who responded to our earlier appeal for additional equity. However, the amount raised through this appeal did not provide us with significant new liquidity. We are requesting that owners in a position to do so consider making new or additional loans to the co-op. Owners interested in making owner loans should contact us at info@troyfoodcoop.com .
Finally, we need your advice and participation. We will be holding an information meeting on the co-op's financial situation August 2, 7 PM, at Christ Church Methodist, 35 State Street in Troy to hear your concerns and suggestions. Prior to the meeting you can contact us at info@troyfoodcoop.com. In addition, there are several vacancies on the co-op's Board of Directors, and if you are interested in helping us take on the co-op's challenges, please contact one of us.
Sincerely,
Steve Muller, President
Mike Avent, Vice President
Tom Kenney, Treasurer
Jill Nagy, Secretary
Mary Brand
Allison Dragotto
Pauline Kamen Miller
Lou Quillio
Ed Smyth
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(Thanks, K)
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Comments
The problem with the Pioneer Market is that it has no draw for anyone that doesn't live downtown. I go out of my way to shop at Honest Weight for the selection of organic foods, the cheeses and the prepared foods. Most of the people with funds to shop that live downtown also have cars to get themselves to larger markets with more of a selection. Either add more organic and more gourmet which would appeal to the members or add formula, diapers, cigarettes and beer to appeal to most of the downtown population.
... said Jen on Jul 20, 2011 at 6:40 PM | link
Some straightforward ways to boost sales:
1. Sell beer. Every other grocery store does it, so instead of 1 stop shopping at Price Chopper, you have to make 2 trips.
2. Sell more meat. They have an enormous selection of cheap faux meats, but there is very little pork available, and almost no steak/ roasts.
3. Get rid of the dry goods section, which dominates a solid chunk of floor space, and sell a wider variety of foods. I never go to the coop to buy laundry detergent: they have low turnover on dry goods which drives up their prices. If they used that shelf space to sell a wider variety of food items, like baking supplies, they would have less cycle time on inventory and less dead space in their aisles.
... said Wanttobeanonymous on Jul 20, 2011 at 11:54 PM | link
"a strategy to address the co-op's financial crisis."
Seems like they probably should have started out with a strategy of some kind before they got into a financial crisis.
... said Eric on Jul 21, 2011 at 1:47 AM | link
This sounds more like a crisis of management than a crisis requiring them to guilt owners into shopping there more. Again. At least this plea is more gracious.
Full disclosure: I'm an Honest Weight shareholder, but don't shop there as often as I mean to.
... said LB on Jul 21, 2011 at 8:16 AM | link
The Pioneer Market is one block up from a family homeless shelter and two blocks up from a day shelter. They are a block away from one of the busiest bus stops in Troy, and walking distance to Russel Sage. To not cater to the majority of the local population, to only cater to the gentrified elite of Troy, smacks of a naive, pie-in-the-sky, if-we-build-it-they-will-come business model. A grocery store in downtown Troy that does not carry formula, diapers and basic supplies for day to day life, that is not WIC eligible, that does not work with Food Stamps, is catering to an idealized population, a wealthy elite so small that, as Jen said, they have no difficultly driving to HWFC for their natural food and organic needs.
The Niskayuna Co-op is the closest similar business model in the area, but it serves a completely different population. That being said, even the Nisky Co-op carries diapers, formula, baby food and one of the best selections of beer out there. They are an upscale quick stop shop with decent parking. Not so much for The Pioneer. I wish them drastic change of their business model and much, much luck. They will need both.
... said Leah the Nosher on Jul 21, 2011 at 9:06 AM | link
Mazel tov Leah So refreshing to read a blog entry so well written and thoughtful.
... said TM on Jul 21, 2011 at 9:28 AM | link
Leah -- "A grocery store in downtown Troy that does not carry formula, diapers and basic supplies for day to day life, that is not WIC eligible, that does not work with Food Stamps, is catering to an idealized population..." --- great point. If you live or work (I do) here in Troy, you have an understanding of the percentage of those living in poverty in this city.
... said donna on Jul 21, 2011 at 9:39 AM | link
I have to agree with everyone here. Venturing into Troy for those that live outside Troy is just not appealing. Even the farmers market realized that parking was an issue a few years ago and move to a location that would afford better access/parking and their business has increased (IMHO), I don't shop at HWFC nearly as much as I'd like because parking can be a PITA. People that shop at these locations that are coming a distance want easy in and out, and a good variety of organic and local product options. As for the local shoppers, these all seem like very valid points. If you aren't connecting with your every day shoppers then you are clearly missing the point of Co-ops.
... said Josh on Jul 21, 2011 at 9:44 AM | link
The Co-op definitely accepts food stamps...
... said Ike on Jul 21, 2011 at 11:07 AM | link
“We share your concerns that the co-op's product mix over time has shifted away from organic and natural foods. We have directed the co-op's general manager to shift the product mix back toward the kind of products you indicated you wanted in the community discussions we held prior to opening the Pioneer Marketâ€
“We will continue to offer a wide range of our store brand "Best Yet" products, and we are applying to become a WIC (women/infants/children) vendor to better serve the Troy communityâ€
Seems like these two statements address the comments above - need to have more natural/organics and need to bring in neighborhood business (WIC).
... said Jessica R on Jul 21, 2011 at 2:34 PM | link
"Seems like these two statements address the comments above"
Seems like these two statements came at the end of a financial crisis instead of before the store opened like they probably should have.
... said Eric on Jul 22, 2011 at 3:05 AM | link
Leah said it so succintly that to try and add to it would be redundant.
KNOW your geography
Isn't the first rule of business Location, location, location?
As for someone going out of their way to visit Troy? I have been involved in Troy politics, and have lived here for a majority of my life...
NO ONE wants to come here...they get stuck here
... said James on Jul 22, 2011 at 10:46 AM | link