"Your community-owned grocery is in danger of closing its doors unless drastic changes are made quickly."
So reads one of the opening sentences of a letter mailed over the weekend to the approximately 940 members of the Yahara River Grocery Cooperative (YRGC), the Stoughton-based co-op that opened to much fanfare in March, 2008 but now is in danger of closing.
With expenses exceeding revenues by $10,000 to $15,000 nearly every month it has been open, the co-op has exhausted its line of credit, owes $400,000 it borrowed from a Stoughton bank to launch, and is starting to fall behind on payments to vendors, said Myra Hajny, YRGC president.
"We're really in a terrible position at the moment," Hajny said early this week. "We can't get a lot of new product in because we're only able to pay our vendors a little bit on our bills. The vendors are starting to hold back or insist on cash. I can certainly understand that, especially in this economy."
The letter mailed to the YRGC membership this week says YRGC sales are about half of what they were projected to be and the store continues to lose money each week.
Hajny said the future of the YRGC could very well hinge on the outcome of a general membership meeting scheduled Tuesday, Oct. 28, 6:30-8:30 p.m., at the Stoughton Area Senior Center.
The agenda for the first part of the meeting (6:30-7:30 p.m.) calls for reviewing and enhancing a long-range action plan developed by board members and management that reflects what they've learned through surveys and focus groups about what people are and are not purchasing.
The letter to the membership says, "The Board and management think that changes in pricing, product mix, customer service and community presence will make members' shopping experience more satisfying and will help bring in new customers."
The second part of the Oct. 28 meeting (7:30-8:30 p.m.) calls for brainstorming ideas to keep the YRGC open. The letter states: "The short-term challenge YRGC faces is an immediate need for cash to keep the doors open; i.e. capital fundraisers, increasing membership, getting more volunteers involved, cuttings utilities, etc."
As part of the effort to keep the doors open, Hajny said the YRGC board plans to apply for $50,000 loan from Dane County Planning Development. Because the loan requires a dollar-for-dollar match, the board is considering a fundraising campaign. That campaign also will be discussed at the Oct. 28 meeting.
Hajny and other board members say the co-op failed to sustain the momentum evident during its planning stages and opening.
The co-op's genesis traces back to the summer of 2006 following the closure of the Main Street Market, a long-time grocery store that featured many off-brand and specialty items one would expect to see to find in an organic grocery store or cooperative.
Unlike a traditional grocery store, a cooperative is a member-owned and controlled business that operates for the shared benefit of its members, with common principles such as democratic control, member economic participation as well as a shared concern for the community and working on principles such as sustainable growth.
That means members support the community by supporting local farmers. Members even have a say in the products offered. As present, the YRGC supports more than 50 local farmers and growers who supply the store with more than 500 products.
Co-op memberships cost $75 and although YRGC members receive a five percent discount, board members stress you do not have to be a member to shop there.
Even before it opened, nearly 600 people had signed on to be members (that number is up to about 940 now), which led YRGC board members to believe the future bode well for the co-op.
But as the months went by, board members found that almost one-third of the members hardly ever shop at the co-op at all, said YRGC vice-president Norma Sampson. ""We've also found that the average basket (customer purchases) is under $20," she said. "Obviously we need more shoppers and we need people to be purchasing more each time they shop."
"We're still analyzing why it has been so slow," she said. "Maybe it's partly the economy; maybe it's because we haven't found our niche in the Stoughton market. Maybe it's because we tried to be too many things to too many people. We're just a small store and a lot of people thought we were going to be just like Main Street Market."
Sampson said a lot of customers complained when the store first opened that the prices were too high and there were not enough 'conventional' items.
"Yes, we were more 'natural' at first, but we're tried to bring in more conventional items, she said." Sampson said there also may be a misconception that there is not enough parking, due to the co-op's location on Main Street. That's one problem that never materialized, she said.
Hajny said the board has tried to save money by adjusting hours, reducing staff hours and by trying to reduce utility consumption.
YRGC treasurer Warren Kmiec said the co-op is averaging about $10,000 a week in sales "but we need to about double that to cover our expenses.
"We have more than 900 members, but only 200 to 300 are shopping at the co-op on a regular basis," said Kmiec. "Even then, they're only averaging about $18 a visit. Obviously they are not connecting."
