NCG co-ops met the challenges brought on by the COVID-19 pandemic and ended the year with the strongest system sales growth since 2014. System sales increased by 4% in 2020 and are on track to grow by 3% in 2021. This growth combined with federal relief funds also generated higher than average earnings. As we enter 2022, the easing of COVID restrictions has allowed operations to resume more normally — prepared food operations are reopening, shopper metering has ended, and store hours have expanded. Most NCG co-ops are entering the new year strong financially and operationally.

There are, however, several upcoming challenges we should be prepared to take on. The most pressing are:

• The highest inflation in many years — especially food inflation
• Continued competitive pressure as Walmart, Target and Amazon battle for grocery sales
• Difficulty retaining and attracting co-op employees

While difficult, I believe we are well prepared to turn these challenges into opportunities.

Inflation

Operating costs — wages, benefits, insurance, rent, maintenance, etc. — will continue to increase. Because co-op profit margins are small, we must pass these cost increases on to our customers. While many co-op members and shoppers may be insulated from inflationary forces and any future economic slowdown, many others are not.

Faced with price increases across the household budget, many customers will quickly discover that spending on groceries is one of the few variables they can control. While paying less for gas, electricity or a cell phone plan is more challenging, if not impossible, choosing to shop at a grocery store with lower prices is relatively easy.

We can help our customers continue to find value at their co-op by offering less expensive options in every category possible. This is, of course, a unique challenge for grocery stores built on systems that are better for farmers, the environment and our communities. Our prices permit us to pay farmers and workers better wages, support organic and sustainable practices, and offer high-quality food to our customers. So, lowering costs without compromising the key values of the system is a challenge. 

While not new, this challenge is increasingly urgent, and it will be imperative that co-ops continue to meet it thoughtfully. I believe this is possible and encourage us to use this as an opportunity to meet people where they are and invite even more people to recognize the value of and engage in our cooperative business model.

Competition

In 2013, Amazon, big box retailers and conventional grocers became serious about natural and organic foods. As a result, our sales growth declined for several years. This period also resulted in strong growth for the super-natural retailers like Whole Foods, Sprouts, Natural Grocers, Earth Fare, The Fresh Market, Fresh Thyme, Lucky’s and Trader Joe’s.

In 2021, the pandemic accelerated the growth of e-commerce grocery sales which benefited retailers like Walmart, Target and Amazon. However, sales for most of the super-naturals slowed and declined while NCG co-op growth continued, exceeding the growth of most of our competitors. I believe Amazon’s management of Whole Foods may not be beneficial to customers in the long run, and the super-naturals employ an increasingly muddled market strategy.

This is good for NCG co-ops. Our competitors are ceding the high ground we have always occupied. The challenge is to remain competitive by exploring lower-cost and e-commerce options while continuing to put the care of our communities and high product standards first.

We have a fabulous opportunity to make sure our employees and communities understand our values. I cannot overstate the importance of communicating our points of differentiation. We will not be the only grocery option for most people, but we can secure the second stop for many.

Co-op Staff

While “The Great Resignation” continues to make national headlines as most retail and service sector employers struggle to attract employees, my conversations with food co-op managers suggest a better situation for many co-ops. Our staff-centered culture and participatory management practices have earned high levels of staff support and retention. This helped us navigate the pandemic with fewer disruptions than many of our competitors.

Our support of community, mission-driven focus and cooperative business model is attractive to individuals committed to improving their communities and the planet. We should not, however, take staff engagement for granted.

As we seek to present a consistent, high-quality experience for our customers, the behind-the-scenes work can be chaotic and demanding. Disruptions in the supply chain have made operations even more unpredictable and frustrating — trucks are late or don’t show up, shelves are empty longer than we’d like, we experience the burdens of the unique challenges faced by our local producers, etc. It is difficult for our staff members not to be impacted.

A co-op is essentially a people enterprise. The impact each co-op has on the health and wellness of its community is the result of those involved engaging with one another in positive, effective ways. To be successful, we must continue to make investments in staff development and management leadership skills.

Our current challenges and those to come will continue to test our commitment and dedication. But we know our inclusive business model provides better outcomes for every stakeholder. Our relentless focus on improving the health and wellness of our communities offers a clear choice for everyone interested in good food, better health and stronger communities. This work has never been easy — we don’t choose the cooperative form of business because it’s easier; we choose it because it’s better. I know the work is difficult, but I also know of no other endeavor with greater potential to positively impact our food system and our communities.