The Goldilocks
Solution
Finding a Just Right Store Size
Agenda
Fairy Tales & Co-ops: What should you believe?
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Once Upon a Time
Goldilocks (& the Three Bears)
The Three Little Pigs
The Moral of the Story
Happily Ever After
Myths & Misconceptions
• Co-ops can start small and grow– haven’t they
always?
• People will support us because we are a co-op
• Small stores don’t require as much organizing and
planning to be successful.
• Bigger store = bigger risk
• If we don’t do something soon, our members will
abandon us.
Updating a few fairy tales
Grocery stores:
• Have very low profit margins– WHEN SUCCESSFUL
• Your competitors invest in state of the art
equipment, information systems, merchandising
and promotion.
• Economies of scale matter
• You can buy Silk ® at Walmart ® cheaper than
through your distributor
Goldilocks as Mentor
• Review the Options
• Test the Fit
• (Avoid Angry Bears)
Too Small
• Revenues are low, expenses are disproportionately high
• Unlikely to qualify for NCGA membership
• Limited ability to meet the community’s needs and
expectations
• Perishables (local food) require lots of space and high
turnover
• Susceptible to competition
• Even if profitable, capital will accrue verrrrrrry slowly.
• Future expansion will look a lot like starting over.
Too Big
• Overhead costs not covered by sales volume
• Empty space/empty feel
• Rare
Just Right
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Inventory mix and selection matches market needs
Enough space to operate efficiently and shop comfortably
Room to grow into mature sales projections
Sales revenue and margins can cover expenses and
generate surplus
Store size should be a business decision, based on hard
numbers, analysis, and vision.
Porridge
• Yelm Food Co-op, Yelm, WA
population 7,000
• Spiral Natural Foods Co-op & Grocery, Hastings, MN
population 23,000
• Common Ground Food Cooperative, Champaign-Urbana, IL
population. 82,000/41,500
Yelm Food Co-op
Retail square feet
Year open
First year sales
Current sales
Employees
Volunteers
Hours of Operation
1,000
2007
$400,000
$912,000
None until 2008
Yes
Mon -Sat 9 am - 7 pm
Sun
10 am - 5:30 pm
Spiral Natural Foods
First Store(s)
(3 downtown locations)
New Store
1979
2011
3,150 ft2 retail
1,855 ft2 retail
$400,000
$765,000
$1M projected this year
Common Ground
First Store
New store
Expansion
Opened in 1984
2008
2012
900 ft2 retail
2150 ft2 retail
5700 ft2 retail
$650,000 (in 2008)
$1.9 million (yr. 1)
$7.2 million (projected)
$3.9 million (yr.4)
Goldilocks Revisited
Finding “Just Right”
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Vision
Market Study
Feasibility Research
Community Survey
Site Selection
3 Little Pigs
• House of Straw
o Quick & Easy!
o Immediate gratification
o Huff and puff…
• House of Sticks
o Recognition of need for more structure…
o … but inadequate execution
o Huff and puff…
• House of Stone
o Extra care and investment
o Built to last
o Wolf Kabobs
What if Small is the
Only Option?
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Careful business planning is critical
Are there potential reductions to operating expenses?
How long will they exist?
Is the competitive environment stable?
Do you have the best possible site?
• Is a buying club a better option?
The Moral of the Story
Use good business plans,
Get professional advice,
Build the right sized co-op,
And…
Questions?