The Little Co-Op That Could
Turning 40, the Silver City Food Co-Op looks to what's next.
by Richard Mahler
Seated in a booth at Nancy's Silver Café, Joe Zweibach — known since high school days as "Joe Z" — looks up from his lunch plate. An expression of wonder graces his face as he leans forward and speaks in a stage whisper.
Joe Zweibach, aka “Joe Z,” manager of the Silver City Food Co-Op, in front of the Bullard Street storefront. (Photos by Richard Mahler)
"Y'know," admits the Silver City Food Co-op's avuncular manager. "I'm still trying to figure out why we're so successful." He pauses between bites of enchilada. "We actually grew during the recession — and are continuing to grow. So we have to be doing something right." (Full disclosure: I've been a member of the Silver City Food Co-op since spring 2007.)
Who could argue with Joe Z?
At age 40, the Bullard Street grocery store next door to Nancy's — both occupying structures built in 1916 — now grosses over $3 million annually in sales, has more than 2,000 member-owners, provides 34 well-paid jobs, and owns outright the downtown building it occupies. The mortgage balance on a separate Sixth Street warehouse/office complex is minuscule. Since Sunday shopping was added last October, business every day of the week is on the upswing.
"To me," says Joe Z, such indicators suggest "our community wants more from its Co-op. The situation we're in right now is really exciting."
Still bubbling with enthusiasm after being on the job for less than two years, the new arrival ticks off several factors contributing to the longevity of Grant County's first (and only) organics-oriented natural food store. He cites — among others — manageable competition, a loyal customer base, strong community outreach, and close oversight of its products and services. "We are a magnet," Joe Z believes, "for people who already like this kind of food, who have the consciousness about how important it is."
Several customers interviewed for this story insisted they would not have moved to the area without the Co-op's presence. And would not stay without it.
"I think," Joe Z ventures, "the Co-op is actually helping to form the demographics of Grant County. That in and of itself is huge."
Those who've been around much longer than Joe also find the Co-Op's continued growth remarkable, given the vagaries of the economy and the region's gradual loss of population.
Susan Van Auken, a Gila-area resident who has shopped at the Co-op since 1987, takes a break from her grocery shopping to offer a partial explanation. "The Co-op has taken off during the same time period when the whole emphasis on organic and natural food has skyrocketed," notes Van Auken, who served as Co-op board president from late 2007 until April of this year. "It's not just our store [that's made a mark for itself]; the consciousness of food across the country has changed." A growing number of consumers, like her, see fresh, nutritious, organic food as essential to maintaining robust health, even if it costs a bit more than the "mainstream" food grown, packaged, promoted and sold by large corporations.
With only three other major grocery stores serving Silver City, the Co-op has been a direct beneficiary of these shifting preferences. And while the business has barely turned a profit during the last two years, sound management has left it virtually debt-free in the middle of 2014.
But with success comes challenges.
The Co-op has virtually no room for new products, services or parking, despite a chorus of requests for such amenities from many shoppers. Its warehouse is also small, serviced by two truck deliveries each week from an out-of-town distribution center
In terms of retail dollars, the store faces increased competition locally from Wal-Mart and Albertson's, chains that regularly add more "natural" and organic products, some sold at lower prices than the Co-op. Specialized purveyors of meat, baked goods and dairy items are also competing for many of the same customers. In terms of future investment, the Co-op grapples with the question of whether it can reasonably expect its customer base to expand significantly in a community with a shrinking, aging population typified by low incomes. Finally, the Co-op is a member-owned cooperative corporation that must maintain a business model that is significantly different from most, committed to upholding such non-financial values as service to its members and the community at large.
Van Auken speculates that, for Co-op members, "I don't think the primary motivation should be paying a rock-bottom price for our food. We need [to provide customers with] education about why our prices are what they are, about what it takes to get local fruit and vegetables into our produce section, about why we do or do not carry certain things, and about what the differences are between commercial and organic in dairy foods."
Members appear to support the Co-op's ban of products containing high fructose corn syrup and its efforts to eliminate (or at least label) any items contained genetically modified ingredients. Whenever possible, the store stocks organic versions of its foods as well as earth-friendly household products.
Paying attention to such specific details affects the bottom line, as Joe Z is quick to point out. "I won't say we are 'thriving,'" he allows. "But we are a very stable business.
"There is no sure bet for anything, but I think that with more education about natural foods we have the potential to expand our market share. I think with that and better parking we might get 10, 15 or 20 percent more members than we have now."
Perhaps the most visible way the Co-op has responded to its current challenges is by taking out a lease through April 2015 on a larger nearby commercial building — the former Yada Yada Yarn space at 614 N. Bullard — in order to study the feasibility of expanding operations. The board of directors signed the rental agreement after concluding that another tenant would likely seize the space if the Co-op did not act quickly. At some point during coming months a decision will be made about whether to purchase the building.
"We're bursting at the seams," Joe Z sighs, echoing a sentiment expressed by staff and customers alike. "Personally, I think our biggest impediment to our growth is parking. It's difficult to get down here and there aren't many spaces [on adjacent streets]." Conceding that some would-be customers will still refuse to shop downtown no matter what, Joe Z points out that the new satellite building is directly across from a large parking lot. Unlike the also vacant former Western Stationers building on Bullard, the former Yada Yada space is available for purchase if the Co-op decides to relocate there.
"As far as getting new members to come downtown — to expand our membership — I think it's going to be hard without additional parking," Joe Z believes. The manager hastens to add that no firm decision has been made about any potential use of the rented building at 7th and Bullard. And when it comes to moving the grocery itself, he cautions, "even if we decide to do something it may be up to five years before we notice big changes."
The future-gazing currently underway at the Co-op is nothing new, although both Joe Z and Susan Van Auken acknowledge that the lease on the former Yada Yada Yarn building is speeding up the latest round of self-examination.
"What would make people shop here more?" asks Joe. "We want to find out exactly what our members want."
Launched in 1974 as a basement-based buying club, the Co-op has uprooted itself several times over the decades, including from a storefront on Broadway established in 1975, when annual sales reached $26,000. Each relocation boosted sales, perhaps surprisingly, and sales are now up nearly five-fold from the $650,000 of 1996. Employee wages have kept pace as well, and today's Co-op staffers are intentionally paid more in wages and fringe benefits than they would receive at comparable jobs in the area.
"Should we move out of downtown?" Joe Z asks, rhetorically. "Our gut feeling is 'no.' But, realistically, would we reach more people if we were located somewhere else that had easier parking and access? It's something we have to look at."
Joe Z's most recent co-op experience provides a cautionary tale. Before taking over as manager in January of last year, Joe volunteered at co-ops in New York state and had a staff job at a co-op in Tempe, Ariz. The latter, like all three Phoenix-area co-ops, closed its storefront grocery after many years of operation.
It's a situation replicated in many US cities. Big-city co-ops have not fared well in the face of nationwide expansion by such chains as Whole Foods and Natural Grocers. (The latter has opened New Mexico stores in Las Cruces and Farmington as well as Albuquerque and Santa Fe.) Trader Joe's, which operates three New Mexico stores and is owned by a German grocery giant, is also making inroads.
While Grant County's isolation, small population and low per capita income have spared the Silver City Food Co-op from such head-on competition, the expansion of corporate "natural foods" has not gone unnoticed.
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