Resurgence of interest in member-owned co-ops said key to River Valley Market’s success in Northampton

By CHAD CAIN, Staff Writer
Friday, June 20, 2014
NORTHAMPTON — Six years after opening in an old granite quarry on North King Street, River Valley Market’s is doing far better than expected. The market is on target to exceed $20 million in annual sales by the time its fiscal year closes at the end of the month, up from $8 million in its first year.
This growth enabled the store to turn a net profit in 2013 for the second straight year, three years ahead of schedule.
Membership now surpasses 6,500, more than five times as many who signed up in its initial year, and it now employs more than 120 people, up from 70 at its onset.
When it opened, River Valley was one of only a handful of co-ops to open in 30 years. Since then, there has been a resurgence in the concept of member-owned stores, including one planned for Amherst.
Co-ops numbered in the hundreds in the 1970s, but shrank dramatically in the 1980s. Those that remained were able to change with the times, but those that didn’t — such as one once located on Market Street in Northampton — ran out of money.
But the community’s commitment to local foods and local control of the food supply never waned, said Rochelle Prunty, River Valley’s general manager.
“Food is something that everyone can come together on as a community-owned business because everyone buys food,” Prunty said. “We had that strength here all the time we worked on opening.”
At roughly 375 nationally, the number of co-op food stores remains small. But Stuart Reid of the Food Co-op Initiative based in Minnesota said 100 of those stores have opened in the last decade and another 125 stores in 40 states are in the pipeline. Additionally, 40 percent of existing stores nationwide are planning expansion or second stores, he said.
“This growth is across the country,” Reid said. “The interest is just huge. We’re getting new calls every week.”
He said there are many factors contributing to this growth, but perhaps the biggest is an intense interest in eating food that is locally grown using environmentally friendly, sustainable methods.
This emphasis is not exclusive to food co-ops. Corporate stores that focus on natural, organic foods are also growing.
Whole Foods Market in Hadley said its sales continue to climb as shoppers seek healthier food options.
“It’s a trend that is going up,” said Jaimee Rondeau, marketing team leader at Whole Foods’ Hadley store. “There is such a drive towards a healthy lifestyle. It’s a topic of conversation wherever you go.”
Rondeau said there is enough consumer demand to support Whole Foods, Trader Joe’s, River Valley Market and other natural foods groceries in the region, not to mention the many farmers markets.
“It’s great for the community to have these choices,” Rondeau said.
Bud Stockwell, who has owned Cornucopia Foods in Northampton for 34 years, can recall a time in the 1970s when natural foods products were non-existent. Today, people can find natural foods and other products in stores large and small, from large retailers to neighborhood convenience stores.
That demand is being driven by “scientific study after scientific study” that shows that natural products are better for people. Stockwell said other people facing dietary issues or worried about the cost of prescription drugs have turned to natural products to take care of themselves.
“The increase in the demand for these products over the years has been phenomenal,” said Stockwell, who declined to discuss how the new competition affects his business.
Strong start
River Valley Market opened at the front-end of this growth wave. That opening in the spring of 2008 could not have come at a more unsettling time, just as the Great Recession hit. By the fall, however, sales started climbing in a phenomenon Prunty can only attribute as a side effect of a bad economy refocusing people’s commitment to keeping their money local.
“It just seemed like it solidified commitment from the customer base to supporting local,” she said.
The growth despite a declining economy also benefitted local farmers who were getting squeezed. River Valley opened a new market for a lot of smaller vendors. Today, many are responding to increased orders by putting in more acres of strawberries, asparagus, apples and other popular products.
Prunty said the store spends about $3 million a year, about 30 percent of its total wholesale purchases, buying products from 350 local food businesses and farmers.
From her mezzanine office above the bustling store on a recent Friday around lunchtime, Prunty said she and others always believed a food cooperative would do well in a community where people feel strongly about shopping local and having a say in how the store operates.
“This is the type of co-op I would expect to see in a progressive community like Northampton,” said Prunty, who has been involved in the movement since the 1990s. “It’s done better than I thought, but I knew this success was within the realm of possibility.”
Dorian Gregory, who recently took over as president of the co-op’s board, said that in addition to providing local food to customers, most members love to shop at a store they own.
“The whole idea that we own it really matters to people,” Gregory said. “The store provides us with what we want: good, healthy organic fresh food in the Valley that people want to eat.”
The 17,000-square-foot co-op, at 330 N. King St., is located at the site of an old bowl-shaped quarry whose granite was used to build routes 5 & 10 and King Street. It is owned by 6,500 members who paid $150 for an equity share in the business. Prunty said members can cancel their membership at any time and get their money back, which happens in small numbers every year.
Prunty describes River Valley as a small grocery store with a comprehensive supply of products from top-selling conventional items amid a larger selection of organic, natural foods.
“We aren’t strictly a natural food store … we blend small and local with conventional,” she said.
Jeff Napolitano, who became a member two years ago and serves on its board, likes the fact that members have a say over business operations and that most of the store’s employees are full-time and paid fair wages. Plus, keeping money local is important, he said.
“It’s more ethical and sensible to me,” Napolitano said. “Rather than a big corporation taking money out of the economy, the co-op keeps money in.”
Too expensive?
Natural food stores all suffer from the stigma that they are expensive. That’s why prices have become one of the major talking points for the Amherst Community Co-op, a start-up group that envisions opening a locally owned store downtown.
“There’s a tremendous perception that it’s too expensive, and to some extent it’s true,” said Alex Kent, a member of the co-op’s steering committee.
Kent said his group envisions a store that posts prices accessible to everyone in the community. This is possible by offering a list of staple items — milk, butter and cereal, for example — at prices competitive to other stores in the region but also carrying items that come with a higher price tag because growing and raising organic food is more expensive than conventional food.
Reid, of Food Co-op Initiative, said educating customers about why natural, organic items cost more is key.
“If you want to buy food that is raised sustainably, if you want to keep the farmers in business, if you want to have employees paid fairly, then the real cost of the food is paid at the cash register,” Reid said.
At Cornucopia, Stockwell said he tries to keep prices down. But he also notes that there are more costs involved in growing organic food. In the long run, people who don’t eat products that are healthy have a greater chance of paying more to deal with health issues.
“If you are truly on a natural products diet, you are going to have less health issues,” Stockwell said. “You spend money one place but you will save it somewhere else.”
River Valley has made strides since it opened in giving customers a wider selection of natural foods at all price points, in part in response from complaints that the store is expensive. Prunty said that while it’s true some high-quality items cost more than at a conventional grocery store, customers can often get comparable deals on local organic greens and other in-season produce, organic breakfast cereal and more.
Like other stores in the business, River Valley offers about 100 staple items at competitive prices, holds weekly sales specials and offers a “buyer’s club” in which people can save money by buying in bulk. More recently, it has launched a Food For All program that enables people who are on food stamps, Social Security income or WIC to receive a 10-percent discount on most purchases.
“Everyone always feels like the cost of food is too expensive,” Prunty said. “We’ve always done it (offer competitive priced items), but we’ve gotten better about it and we’ve been able to do more.”
Room for growth
River Valley’s success is leaving organizers of the Amherst Community Co-op feeling optimistic. The Northampton co-op grew beyond the original fifth year sales projections of $10.8 million in its second fiscal year and reached its 10-year projections of $13 million in its third year, according to its 2013 annual report. The report also states that the market gets more than 9,000 weekly shoppers who buy an average of $350,000 in groceries.
“It has exceeded my dreams,” Gregory said. “I did imagine it would be a real live genuine store, but I didn’t appreciate how successful we would become so quickly.”
Kent, of the Amherst group, feels strongly that there is a demand for such a store in downtown Amherst, especially given that the town has not had a full-service grocery downtown in nearly three decades. The group intends to use the money it has received from 65 people who have agreed to become members and pay a $175 one-time fee and a loan from River Valley Market to conduct a market feasibility study this summer. If everything goes as planned, the group will pick a site early next year.
“There’s no question that the timing is right for a full-service market here in Amherst,” he said.