Report from the GM: Big Things Are Happening in 2018!

By Brandon Kane, GreenStar General Manager

I’ve written a lot over the years about the clear difference in outcomes between cooperative and conventional grocery businesses. Profits in cooperatives pay the bills, get reinvested in the business, go to various co-op values-based actions, and finally are distributed to the owners when there is excess, as an additional benefit of ownership.

Conventional business profits go to enrich a small and select group of shareholders or private owners. Ultimately, the co-op that is GreenStar uses the sale of groceries as a vehicle for a wide variety of supports for its community of co-op owners.

The current limitations of our West End campus keep us from reaching our true potential on these three critical fronts.

The list of engagement and support that is generated by GreenStar is extensive. This includes our low-income discount of 13 percent, the housing of the Winter Ithaca Farmers Market, and our sponsorship of the Dorothy Cotton Institute, to name just a few. I like to think that all these initiatives generally fall under an umbrella of desired outcomes: more local, organic, and sustainable food; a stronger local economy, and a community that is inclusive and embraces diversity. These are goals that GreenStar pursues constantly by expanding its business and service to our community. Simply put, in order to do more of what we’re already doing, we will need to size up our co-op appropriately. The current limitations of our West End campus keep us from reaching our true potential on these three critical fronts.

In the 25 years since GreenStar began operating out of its 701 West Buffalo St. storefront, the market for natural foods has changed dramatically. Your co-op used to be the only game in town for natural and organic foods. Now you can see smatterings of these products almost everywhere food is sold. But the food we sell is only part of our story. Our shoppers can also be owners, and our food sales serve to finance the triad of outcomes described above for important and profound community improvement. This is ultimately what really sets the business models apart.
Since our move in 1992, GreenStar has run a very lean operation in many respects. The 2-percent register discount that ended in July 2017 is the best example. While giving a 2-percent discount to our owners was a tangible benefit to the individual, it cost the Co-op hundreds of thousands of dollars per year and often resulted in the business posting a financial loss. This is why almost all consumer co-ops in the US ended a general register discount long ago. Because GreenStar gave almost all profits away to its owners for 25 years, we find ourselves with a relatively small amount in the bank to support the now-critical expansion of our cooperative. If we had just been able to put away half of a percentage of profit per year, we would likely have more than $3 million in the bank to invest in an expansion – rather than the few hundred thousand we will have saved between 2017 and 2019. These numbers seem large but are humbled by the fact that even a relatively small relocation of our business would exceed $8 million in cost.

This is where GreenStar will need to call on its owners to help finance its relocation. The process will start with owners voting on the expansion and new location itself in the spring of 2018. Assuming this passes (we need it to!), we will then engage with co-op owners on opportunities for them to invest in the growth of their business. Remember, GreenStar gave virtually all profits away for 25 years, so without significant owner-led financing, I don’t see how this project can succeed. Co-op owner investment is a common vehicle for cooperative businesses to get the equity they need to take on large projects. Our neighboring sister co-op in Buffalo, NY recently opened the doors on its second store largely thanks to nearly $2 million invested by its owners.

These owner investments are all about shared community wealth. Owners contribute what they can to the project and, in reciprocation, they receive a fair market financial return on the investment, even as their gesture ensures that their co-op will grow in its capacity to provide the desired umbrella of outcomes.

Following this model, the expansion of your co-op is truly a win-win for all stakeholders. In many ways, this is a direct action you, as an owner, can take to repel the effects of the gain for the individual that conventional businesses promote. Shared community capital trumps this entirely by harnessing the power of individuals to pool resources that literally create a better economy for themselves and the community at large. To me, this is the definition of cooperation.

I’m excited to be able to share more details with you over the coming year. On that note, I wish you all a year of being the change you want for the world! Happy 2018, GreenStar owners, and thank you so much for your support.