Expansions & Resets: Reaching More Customers

“ D i v e r s e , I n c l u s i v e & R e s i l i e n t ”

1 8 t h M a r c h 2 0 1 7

G r e e n f i e l d C o m m u n i t y

C o l l e g e

G r e e n f i e l d , M A

A F T E R N O O N W O R K S H O P S

NFCA Sixth Annual Meeting 2017

NEIGHBORING FOOD CO-OP

ASSOCIATION

Sixth Annual MeetingEveryone is

Welcome!Co-ops Celebrate Diversity: Everyone is welcome here.

Co-ops Are Inclusive: We are better when we work together.

Co-ops Build Community: Join your local food co-op today!

Want to know more? Please visit us at www.nfca.coop.

Reaching More Customers


EXPANSIONS & RESETS

Reaching More Customers

Panelists will share their observations on key factors for successful expansions and resets, especially in terms of Board / Management alignment, planning, and execution. Whether your food co-op is considering a new location or store improvement, or is in the process, this panel will offer opportunities for shared learning on how we can grow our food co-ops in a competitive environment.


EXPANSIONS & RESETS

¡ Julia Curry, Board President, City Market, Onion River Co-op

¡ Alec Goodwin, Store Manager, McCusker’s Co-op Market (Franklin Community Co-op)

¡ Brandon Kane, General Manager, GreenStar Co-op Market

¡ John Tashiro, General Manager, City Market, Onion River Co-op

¡ Dami Odetola, Vice President, National Co-op Bank, Facilitator


OUR PANEL

TheGreenStarExpansionExperience

GreenStarwasestablishedin1971asabuyingclubfornaturalfoodsinIthaca,NY.

NFCASixthAnnualMeeting2017


Afirein1992forcedtherelocationofourfirststorefronttotheWestEndofIthaca,NY.



TheWestEndstoreisabout10,000SFwith60parkingspaces.RetailSFisonly5,700.

By2004saleswere$8millionoutofthislocation.Therewasaneedtoexpandtoeliminatethebottleneckingoccurringatthislocation.



In2003ourMember-Ownersvotedtoopenasecondstorefrontabout1mileaway.

OurDeWittmalllocationopenedinMay2004witharetailfootprintof2,400SF.In2017itisexpectedtoreach$2.8millioninsales.



Asecondstorecreatedahostofnewissuesforustotackleincluding:

- Purchasecoordinationandproducttransportationbetweentwostores.- Shelfpricingconsistencyatbothlocations.- Adminmakingsurethatstaffatbothlocationsreceivedequalservices.- PreparedfoodsproducedatWestEnd,BakeryatDeWittaddingfurthertothe

transportationwoes.

Itbecameclearthatcentralizingsomefunctionscouldhelpwiththis.OurfirstpurchasewasaDodgeSprintertotransportproducttoandfromourstores.Andslowlywebegantofigurehowtodistributeourresourcesappropriatelytoruntwolocations.Andthen…



In2007weleasedandthenpurchasedawarehouse/officespacewhich:

- Enabledustoreceiveandstorelargepurchasesforbothstores,paddingmargin.- Builtequityinlandownershipwhichweborrowedagainstinfutureprojects.- RelocateAdminofficesoutofourWestEndstorespace.- EventuallycreateaCentralKitchenandBakery offsiteinthisbuilding.- By2014wewereproducingpreparedfoodsforbothstoresandsupplementing

productwithhighmarginpurchasesstoredatourwarehouse.


Warehouse&

CentralKitchen

WestEnd

Dewitt


TheSpace

WecreatedapubliceventsfacilityadjacenttoourCentralKitchen.Thisisnowasignificantsourceofrevenueandahugeresourceforourcommunity.



By2015ourWestEndstorewasbottleneckingagain,exceeding$3,000perSFinsalesannually.Itwastimetoexpandinsomeformoranother.ProspectsforanewWestEndstoredidnotexistsowesoughtaprimethirdstorelocationinanareaidentifiedasunderservedbyGreenStarinourMarketStudies.



OurthirdstoreendedupadjacenttotheCornellcampusandisknownasGreenStaratCollegetown.About3,100inretailSF.

AnadditionallocationhasfurtherincreasedtheefficienciesofCentralProductionanddelivery,loweringthenumberofstaffneededtorunourstoreswhicharebecomingincreasinglyselfservefocused.



Still,theWestEndstoreisbottleneckingwithanexpected$18.2millioninsalesin5,700SFin2017(almost$3,200perSFinsales)atthislocationonly.

Ournewfocusisexpandingourflagshipstoretoan11,000SFretailfacilityby2020– 2021.

OurtrackrecordofsuccessfullyestablishedexpansionshasattracteddevelopersandlandownerswhowouldnothavereachedouttotheCo-opinpastyears.Ittookusnearlyadecadetobuildthissocialcapitalthroughtheprojectspreviouslymentioned.


TheGreenStarExpansionExperienceLESSONSLEARNED

Beforeanyexpansionproposalisconsidered,ourBoardrequires:

- Anuptodatemarketstudythattakesaproposedlocationintospecificaccount.

- Afeasibilitystudywhichincludesaprojectpro-forma(sources&uses),atleast5yearsofprojectedfinancialsaswellasafeasibilitynarrative.

- UltimatelynewrealestatelocationsmustbeapprovedbyourMember-Ownersbyamajorityvote.

YouandtheboardshouldassessatwhattimeyouneedtoengagetheNCGDC.Itisusuallywhenthingsareappearingtoactuallytakeshape.WeengagedtheNCGDCaswestartedtocreateandreviewthepro-forma.

Beforeyougotolenders ormembers,werecommendafewinitialstepstohelpensureyoursuccessandlimittheamountofulcersyourstaffreceiveduringtheprocess:First,Gettoknowyourpotentiallendersandtellthemaboutyourprojectideas.NCBandCFNEhavefinancedallofourexpansionprojectsovertheyears.



- Next,getasolidLeaseinplacewhichiscontingentuponthebuildoutorfitoutreachingoccupancyconditionbyasetpointintime.

- Ensurethereareopportunitiesforyoutovacatetheleaseifcertainhallmarksarenotmetontimesuchasobtainingabuildingpermit,demolitioncommencement,certificateofoccupancy.

- Hirealawyertoreviewandhelpnegotiateanyleasesorcontractsforyou!Youhavememberswhoarealsoattorneysandtheymaygiveyouadiscount.



ReinforceanystoredesignandequipmentservicesfromUNFIorNCGwithsomeonelocal.Weendedupgoinglocalallthewayonourlasttwoprojects:

MaineFordEquipmentserviceshelpedsource,design,place,orderandfollowupondeliveryandinstallationforallequipment.Havingsomeonelocalthatyoucancallonmadeallthedifferenceintheworld.Regularsitevisitsforequipmentreviewwasessentialandsavedtensofthousandsinlatereturns,delayedopeningsetc.

Weallhavelocalsuppliersworkinginretailandinstitutionalequipmentservices.

Wealsocontractedwithalocalarchitecttoworkonourstoredesign.Shehelpedverifycodecomplianceagainstthelargerproject’sarchitect.Shealsoregularlyvisitedthesiteandcomparedtheconstructiondrawingstohelpdeveloperskeepontask,ontimeandfollowingourexpectations.

HavingtheselocalfolksworkforusenabledustohaveasmallerNCGDCcontractaswell,savingbadlyneeded$.



Theattorney,architectandequipmentdesignfeeswerebudgetedforinourpro-formaandtooktheplaceofatraditionalprojectmanager’ssalary.

Withtheseessentialitemsoutsourced,theGMandOperationsManagerwereabletoworkastheprojectmanager.



- Add5%toallexpenseestimateswhenbuildingabudgetforexpansion.- Overestimateeverythingexceptrevenue(time,expensesetc.).- Playaroundwithunderestimatingrevenueinyourpro-forma.Bettertobe

pleasantlysurprisedthansuddenlysaddened!- Haveyourattorneyrevieweveryagreementbeforeyousign,ensuringthat

expectationsalignwithyourpro-forma.- Holdregularstaffmeetingsinformingthemofprogressandbumpsalong

theway.- Updateyourmembersonaregularbasisontheproject.Anemailcontact

listsufficesnicely.- Whentheprojectisunderway,insistonweeklymeetingswiththeowner

andgeneralcontractortobeupdatedontheproject’stimeline.- Createcoolpromotionstostimulate

interestinyourco-opandbuildgoodwillleadinguptoopeninganewlocation.



Engagingwiththelocals.Don’tgiveanydetractorstheabilitytosaythatyoudidnotgettoknowwhatyournewcustomerswant.

Writelocalbusinessesinyournewlocationtellingthemofyourplansandputthemonthatemaillistforprojectupdates.

Hold“townhall”meetingspriortofinishingyourdesignworktogleanwisdomfromyourfuturecustomers.Createpressreleasesfortheseforums.

Reachouttoyourlocalplanningboard,firedepartment,buildingdepartmentetc.Letthemknowyourplansandtimetable.Youwilldesperatelyneedtheirhelpastheprojectwrapsupandcertificatesareissued.



Asaresultofourextendedengagementwithournewcommunityweopenedwithtremendousinterestandsupport.

Sixmonthsafteropeningwehadadded700memberstoourCo-op’s12,000membersbase.



ThankYou!



RESET AT MCCUSKER’S CO-OP MARKET

¡Alec Goodwin, Store Manager, McCusker’s Co-op Market (Franklin Community Co-op)

¡Purchased by Franklin Community Co-op as second location – small rural town, some tourism


MCCUSKER’S CO-OP MARKET

Losing money for years: ¡ 2014: ($100,000)¡ 2015: ($53,000)

§ used tighter deli labor and work systems to improve efficiency.

¡ 2016: ($14,000)§ First year selling beer, also

switched to G&G in spring, added bulk room in fall.

¡ 2017: Q1 was profitable, growth trends are looking strong§ Reset completed early 2017


REASONS TO RENOVATE

Kitchen/Deli ¡ 50% of the labor and ±25% of

sales ¡ Poor margin due to high waste¡ Inconsistent sales and low

volume meant either too much staff or not enough for efficient made-to-order deli .

¡ Kitchen required $40k investment to keep it running

Store layout¡ Dead ends, lack of f low, and

confusion at registers. ¡ Gained space when wine store

that closed, and temporarily used it as an extra dining area / community room

General run-down vibe¡ Old laminate flooring was

dissolving, old paint and l ighting made everything feel dingy.

Product Mix¡ Shift from prepared foods

meant we needed products that would al low customers to do more actual grocery shopping here.


REASONS TO RENOVATE

Kitchen / Del i Losing Money¡ Stopped cooking and made-to-order

sandwiches¡ Greenf ie lds Market (s ister store)

suppl ies Grab & Go prepared foods.¡ Hired a del ivery serv ice to run up

pastr ies, de l i sa lads, pre-made sandwiches, and breads twice dai ly .

¡ Del i and k itchen prep space now avai lable to se l l product instead.

Store Layout¡ Previous design used two registers

at opposite ends of the store.¡ New design puts both registers in

tandem r ight by front exit .¡ Walled off a receiv ing and stock

room.¡ Narrow shelv ing for increased f loor

space, ¡ Layout favors ' f igure 8's over dead

ends.


RESET SOLUTIONS

Run-Down Vibe¡ New f loor ing, l ight f ixtures, paint ,

new coolers and sta in less steel topped cabinets make the whole space feel br ight and refreshed.

Product Mix¡ Reset an opportunity to rev iew non-

moving i tems, replace them with something new, or requested i tems.

¡ Beer and Wine have taken off .¡ Bulk: Customers have consistent ly

asked for a wider se lect ion of bulk products, so we converted our extra d in ing room great ly expanded bulk foods area.

¡ (February 2017: +45% Y.O.Y.)


RESET SOLUTIONS


EXPANDED BULK ROOM


THANK YOU!






EvaluateReview

Revisit & ImproveMaintain

• On Schedule Store Opening &

Delivery Criteria

• Performance & Impacts with

Other Locations

• General Cultural Implications

• Timely Access &

Communication

• Weekly to Monthly Reviews

on Progress

DiscoverAssess ExploreIdentify

• Current Store Status

• Financials

• Competitive Landscape

• Property/Locations

• Market Study

• Appraisals

• Board & Management Team

Engagement

PlanCommunicate

Engage & ConnectSchedule & Budget

• Board Authorization

• Management Alignment

• Connect with Stakeholders

• Establish Project Team

• Architects, Engineers, Legal,

Environmental, Traffic, Banks

• NCG Development Co+op

• Pro-Forma & Timelines

• Organizational & System

Changes

ExecuteProgress Monitor

Resolve & Manage• Weekly Construction Progress

Reports & Budget

Management

• Monthly Updates to Board

• Frequent Communication with

Management & All Staff.

• Periodic Updates to Members,

Community Partners

• Staffing & Training

• Centralized Services Support


Ability to Continuously

Adapt


South End

Burlington VT (South)

Within 1 mile radius of each other

14,000 Sq Ft

$15mil Estimated (of which $7.5mil new)

100 New Positions

Same #

Scheduled for Nov 2017

7am-9pm (Tentative)

108 cars, 75 bicycles

Location:

Distance:

Retail:

Sales:

Staff:

Departments:

Opening:

Hours:

Parking:

Downtown

Burlington VT (Center of Town)

Within 1 mile radius of each other

12,000 Sq Ft

$33mil (after $7.5mil transfers to SE)

236 Positions

Same #

Since Feb 2002

7am-11pm

65 cars, 50 bicycles

Future

Online?

Next Location?

+




QUESTIONS & DISCUSSION

Expansions & Resets: Reaching More Customers

Business