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Granite City Grocery: Testing a New Model

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Outside of City Place, Barre, VT. Photo by C.B. Hall.
Outside of City Place, Barre, VT. Photo by C.B. Hall.

by C.B. Hall

Once upon a time, 40 or so years ago, an energetic movement sprang up in Vermont as nonconformist consumers launched cooperative buying clubs to preorder whole-grain flours, dried fruit and other hard-to-get natural foods at reasonable prices. As surpluses left over from preorders accumulated and consumer preferences changed, the co-ops set up outlets with retail hours. Ideals slowly matured into businesses with little or no upfront capital to urge the process along. Things simply evolved organically.

All that’s changed. Hunger Mountain Coop, which began as a Plainfield buying club without capital investment, member equity or paid employees, has become a major Montpelier business employing some 160 workers in a 20,000-square-foot building. And Chris Riddell, president of the Granite City Cooperative, which aims to open a grocery in Barre next year, can tell you in great detail how elaborate opening a food co-op has become.

“You don’t just ‘build it and they will come,’” he summarizes.

After incorporating in July 2012, the Barre co-op, which plans to operate as the Granite City Grocery, raised about $25,000, Riddell explains, to finance, among other things, a market survey and a financial model, both performed by consultants in Minneapolis. Meanwhile organizers began recruiting members, who were asked to buy $200 capital shares in the enterprise. As of today 420 shares—from individuals and households—are paid up, current in their installment payments or subject to promissory notes. Once that number reaches 800, meaning a capital fund of $160,000, the co-op, Riddell says, will move to the next phase: settling on a location. “It’s a model used nationally for co-ops. There are milestones based around the number of owners [who have committed capital]. We’re planning to get to [800 shares] by late summer.”

Once the co-op has determined its future location and signed a lease or purchase agreement, it will approach banks for a loan which Riddell estimates will furnish 30 percent of the venture’s total financing. In all, he says, anywhere from $1 to 4 million will be needed to open the doors. Of that, about 20 percent will serve as working capital for the first year of operation. It’s a long hill to climb: that $1 to $4 million is $1 to 4 million more in capital than Hunger Mountain, for example, started with.

Where?

North Main Street’s Barre City Place, owned and developed by Williston’s DEW Properties, seemed the natural location for the co-op, at least at one point, and DEW and Granite City began discussing a lease arrangement before the co-op had even incorporated and DEW had even been awarded the development project, says DEW representative Steve Morton.

Barre mayor Thom Lauzon, a member of the co-op, encouraged it to consider leasing at City Place, but after many months of deliberation, the co-op abandoned the idea.

“We weren’t ready to open a store this spring,” Riddell says, referring to DEW’s development timeline. “To be honest, the City Place space would not be an ideal space to open a grocery in any event.” He cites, for example, the lack of the 35 dedicated parking spaces that the co-op feels it needs.

Lauzon, who continues to favor the City Place site, notes that DEW offered the co-op almost that many spaces—25 to 30—and that, outside office hours, far more parking frees up.

The 5000-square feet of first-floor space that DEW has envisioned as a grocery, and for which the developer even built a loading dock, remains unleased. In an artist’s conception on the DEW website, signs reading “Market” and “Cafe” beckon from the 82,000-square-foot building’s Main Street facade; but, after approaching Granite City and several established local grocers, including Hunger Mountain, the developer has found no takers for the grocery idea.

“I don’t really understand the co-op’s resistance to City Place,” Lauzon opines. “It really defies logic.”

Granite City is currently examining six other sites, all in what Riddell refers to as “walkable downtown Barre.” He declines to identify the locations. The co-op’s planning model calls for a space of 6000-square feet—not a small store, given both the dimensions of most downtown shops and what most Vermont co-ops started with.

All-natural? No thanks.

What distinguishes Granite City’s vision from many other food co-ops—aside from its considerable start-up costs—is what the co-op intends to sell. “We’re going to have a mix of organic, natural and conventional foods. It’s clear from what people have said in Barre: an all-natural foods market is not going to fit this demographic.”

The organizers are thus not relying on the model of the natural foods co-ops that began dotting the Vermont map in the 1970s, but on the example of an earlier generation of co-ops, such as the Hanover Consumer Co-op, established in its namesake New Hampshire town in the 1930s. The Hanover co-op, which now operates three large stores in the Upper Valley, handles the wide range of merchandise one associates with supermarkets. Riddell and his colleagues feel that the need in working-class Barre, which has seen two natural foods ventures fail in recent decades, is a grocery store, period, in a revitalized downtown that has not had a full-service grocery since the Grand Union checked out in 2001.

Locating downtown rather than on the city’s outskirts is a key issue for the co-op. A storefront on the route of the Barre-Montpelier bus, and convenient to other downtown amenities, would make the store handy to those who can’t or don’t want to drive. Still, while access on foot or by bus is a nice, politically correct plus, parking, or the lack thereof, continues to circumscribe the model for doing business in American downtowns, Barre included.

What is not part of the model, though, is hirsute volunteers repackaging preordered hundred-pound sacks of peanuts in an inconspicuous cellar. “In Barre,” Riddell says, “it’s plain that what’s needed is a retail food store in the community, not a buying club. [The model] has now shifted to, ‘Open an alternative to Whole Foods— corporate-owned natural foods.’”

As for an opening date, he says, “I would think about this time next year.” By that point he expects the co-op to have 1200 members. ”Most start-up co-ops take 24–48 months to open,” he adds.

“I just don’t see progress quickly enough,” Lauzon responds. “I hope I’m wrong, but I think that the co-op is going to be a story of missed opportunities. Doors open and doors close.”

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