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Co-op sales thrive;
Mission fails
By Leslie Wright
Free Press Staff Writer
A year after its opening, City Market, Burlington's downtown supermarket, is a thriving business.
Sales at the store are triple of what they were when it was the Onion River Co-op, an exclusively natural foods store crammed into a brick and cinder block building in a threadbare Burlington neighborhood.
Today, City Market is housed in a new two-story building, roughly five times the size of the old co-op store, in Burlington's downtown. High ceilings, ample natural light and gleaming fixtures give the place a modern sheen.
An average of 2,150 shoppers visit City Market each day, up from about 600 a year ago.
City Market marks its one-year anniversary Thursday.
The rapid changes in so short a time posed challenges for the cooperative-run store. The product line changed dramatically with an influx of conventional products, like White Castle burgers, never before seen on the store's shelves.
With an extensive high-end wine and micro-brew selection, gourmet deli and more than 40 choices in olive oil, the Onion River Co-op has an urban-gourmet feel.
The addition of new departments such as floral, deli and seafood sections created management challenges. The store's staff was faced with a balancing act between the higher profit margins of natural foods and the narrow margins of conventional foods.
As recently as three weeks ago, another challenge arose when employees took steps to form a union, in part because they want a greater say in how the store is run.
Still, City Market hasn't completely shed its funky past. Lava lamps mark the checkout aisles, and cashiers tend to be younger, more pierced and more earthy than those found in mainstream supermarkets. City Market does not sell cigarettes or lottery tickets.
Although sales have exceeded targets, the store's mission was to provide groceries to all downtown residents, especially to those living on limited incomes. On that score, even board members say the store has missed its mark. That fact has not escaped shoppers, city councilors and city officials, all of whom expressed disappointment that the store hadn't swung more into the mainstream.
"I still wish there was a way to provide affordable groceries to low income people and that didn't happen," said Pat Lili of South Burlington, a former co-op member, as she headed into the store recently. "It's fine for me. I can go wherever I want. I have a car."
Transformation
Sally and Dave Conrad were wowed by the transformation of their tiny co-op store to a modern and bright new building on South Winooski Avenue.
They remember when the co-op was a buying club 30 years ago and they divvied up monthly bulk orders in their garage. The Burlington couple shopped at the co-op's last incarnation in a cramped cinder block building in the Old North End.
"I've been impressed with how many conventional foods there are. There's quite a selection," Dave Conrad said. "We're doing the bulk of our shopping at City Market."
When the Price Chopper on Cherry Street, Burlington's last true supermarket, closed in the summer of 1999, the Progressive city government heard an earful from local advocates for low-income people.
Mayor Peter Clavelle made finding a replacement store a top concern. The city offered a city-owned parking lot and the former police station as a site, and offered to prepare the lot for construction.
The opportunity was too good to pass up for the Onion River Co-op, which had been scouting for a new site for years. When the City Council selected the co-op to build the new store, the selection came with strings attached.
The project came under a great deal of public scrutiny. Critics publicly doubted that the co-op was up to the task. They scoffed at the idea that the natural food store could transform itself into a mainstream supermarket and questioned why a proposal from Shaw's for a more conventional supermarket wasn't selected.
Critics cried cronyism and elitism, citing City Council ties to the co-op. Supporters were happy to have a locally owned supermarket with a development plan that better fit the character of the neighborhood.
Don Schramm knew that building a downtown supermarket was a huge step for the 40-employee Onion River Co-op.
Schramm was president of the board in late 1999 when the co-op was picked to build the downtown supermarket. He stepped down from the board in June, shortly after the store's grand opening party, burned out by the intense scrutiny of the project.
Schramm recognized the challenge that lay before the co-op.
In going from the Onion River Co-op to City Market, the store would go from 45 employees to more than 180. Annual sales would rise from $4.5 million to $13 million. The daily customer count would more than triple.
All of these changes happened on accelerated timeline. What should have taken four years was crammed into two, Schramm said.
"We understood this was an outrageous undertaking," he said. "Most businesses go under when they expand at this rate."
Financing for the project came from a patchwork of sources. The cooperative asked members for $700,000 in loans. The membership fee was increased from $35 to $200. The city kicked in $300,000 for 3,000 square feet of second-floor, city-owned office space.
Two USDA loans came to $3.6 million. The co-op had about $550,000 in accumulated cash on hand. The city facilitated a $2 million federal construction loan to get the project rolling.
Conceived as a $3.5 million project, the final cost was $5.9 million and elements of the store were not completed, such as a community room and a parapet on the outside of the building. Schramm hopes those will eventually be built, though there are no immediate plans to do so.
The delivery date was delayed. A June opening turned into September and then January. City Market finallyopened Feb. 20, 2002.
Schramm is proud of what the cooperative and its employees have accomplished. Sales have exceeded expectations by 15 percent to 20 percent a month since the day the doors opened. A believer in cooperatives, Schramm sees the store as one the community can call its own.
"It's doing extraordinarily well," Schramm said. "There's just no doubt about it."
Reaching the poor
The store might be exceeding sales forecasts, but in one area it is not meeting projections. That is in serving low-income residents.
In a city of 38,889, where 20 percent live below the poverty level, food stamps account for just 2 percent to 3 percent of sales. In and around downtown, the poverty rate is as high as 40.2 percent.
The co-op's goal was 5 percent to 7 percent of sales in food stamps. Burlington City Councilor Jane Knodell, P-Ward 2, was among those who voted for the co-op. Today, the associate professor of economics at the University of Vermont is not fully satisfied with her choice. For her needs, the store is great, she said, but for those without means, the store isn't what it should be.
"It isn't as far along as I'd hoped it would be as far as broadening product line and being a grocery store for everybody in the community," she said.
Attracting low-income shoppers has been difficult for the store, General Manager Ned Flinn said.
Flinn puts part of the blame on the store's inability to spend much on advertising as it gets up and running. A food resources booklet distributed to people receiving subsidized housing and food stamps included coupons for $2 off a $10 purchase at City Market. About 450 of those coupons have been used, he said.
"It's a hard thing because you want to be respectful of people as well," Flinn said. "You don't want to single them out."
City Market does have one person dedicated to familiarizing the community, including the elderly and low income, with the store, he said.
In addition, the store tries to keep prices on basic food items, staples such as milk, bread and butter, as low as possible, Flinn said.
He estimated that 40 percent to 45 percent of the items on the shelves are so-called conventional items, such as frozen dinners and soft white bread. Between 55 percent and 60 percent are natural, depending on how items are classified, Flinn said.
Schramm had the impression that the staff was initially reluctant to go overboard with conventional products in part because they were more familiar with natural and organic foods, and in part because the store makes more money on those items.
The staff isn't as opposed to conventional items now that the store is financially successful, he said.
Co-op board President Mike Rogers said the board is acutely aware that the store is falling short in its efforts to serve the poor. The board recently named Wanda Hines, director of the Chittenden Emergency Food Shelf, to the board.
"There aren't too may people in the whole county who understand the needs of low-income shoppers and grocery shoppers as Wanda does," Rogers said. "We are really seeking input on this."
Clavelle, who supported the co-op choice over Shaw's, supports the store. He agreed that the store has work to do in meeting the needs of low-income shoppers.
The co-op had the best proposal for the property, Clavelle said, noting that the Shaw's proposal, which required underground parking and the purchase of abutting lots, was seen as unworkable.
"I'm happy that we were able to reverse a national trend," Clavelle said. "At a time when supermarkets across the country are leaving central cities, we were able to bring a store downtown."
Growing pains
A few weeks before City Market's one-year anniversary, the co-op board and management faced a new, unexpected challenge. Workers at City Market, unhappy with low wages and poor communication with management, decided to unionize.
More than 110 employees signed union cards. The store employs 187, including management.
Monday, the board met in closed session late into the night on whether to endorse the union or to call an election, but failed to reach a decision. Another board meeting is scheduled Monday evening to decide the matter.
Rogers said that so much change in such a short time made for a turbulent year.
"Even in an organization that doesn't move, this amount of change creates some difficulties in communication," he said.
Improving the communication between management and staff is Rogers' list of things to do in City Market's second year. Also on the list are improving the selection of conventional goods and increasing the co-op's membership. The co-op's membership stands at around 3,000 since before the store opened. Only about 20 percent of sales are to members in the new store, off the national average for cooperatives of 45 percent to 50 percent.
Overall, Rogers is satisfied with how the co-op's supermarket venture has turned out. The market has made a major leap and landed on its feet, he said
"There were a lot of people who said it wouldn't work; it would be a waste of time," Rogers said. "Beyond a shadow of a doubt, it does work."
Contact Leslie Wright at 660-1841 or lwright@bfp.burlingtonfreepress.com
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Burlington's City Market A.K.A. The food Co-op
Burlington's City Market A.K.A. The Food Co-op
(Previously known as the Onion River Food Cooperative)
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