Unpopular changes and loss of long-term employees have caused many shoppers at the River Market Co-op in downtown Stillwater to question the future of the business. In a standing-room only meeting room Aug. 13, member owners of River Market Co-op spilled into the hallway waiting for a turn to voice concerns about the state of the co-op to the board.
Over the span of an hour, members asked the board about the number of employees who have left or been let go, changes to the products stocked at the market and why the 10% senior discount program was ended.
“I go into the co-op and I don’t see any familiar faces,” one member said. Those familiar faces, knowledgeable staff and community feel is what makes the River market Co-op shopping experience different than standard grocery stores, she said.
Other concerns also revolved around a smaller selection of local produce and products, and the introduction of plastic containers used in the bulk food section. These changes are driving members away from shopping at River Market, the members said.
Board members and River Market General manager Evan Sayre said the changes have been made to increase profitably and keep the co-op going in a competitive grocery industry.
“I know we are going down, I know we are in the red, but I want to go down with integrity, with grace and with pride,” member Mary Ann Litfin said. “Something has to change because we can’t compete with Kowalski’s and Cub. We have to do something revolutionary.”
As River Market is a private business, it’s complete financial records are not public. When asked by the Gazette to comment on the market’s financial outlook, board president April Rust did not return an answer at the time of print.
However, the board’s monthly meeting minutes show ongoing financial issues.
In the minutes of the November 2018 board meeting, Sayre told the board that the co-op “still goes into a negative cash flow in order to write the checks for bills but by the time the checks are cashed the money is in. He is more confident on the long term financials than the short term.”
In the same meeting, the board noted that the net income has been out of compliance with its policies since the remodel.
In 2014, the River Market Board unanimously approved a $1.1 million remodel of the building to include a burrito bar, salad bar and overall refresh of the building. In order to pay for part of the remodel, some co-op owners bought investment shares of $500 or more — called C-shares. These share holders earn an annual dividend of 5%. According to board meeting minutes, the total amount from the C-shares is $277,000. The dividend payments are approximately $13,000 a year.
Member Fred Brandt was at the June 2019 board meeting to voice concerns about the co-op’s financial outlook. According to the meeting minutes, Brandt said that in December 2018, his C-share dividend check was delayed with no initial explanation.
“This had never happened since inception of the C-share program in December 2013 and triggered my call to Evan [Sayre.] I was informed about a ‘cash crunch’ and the concept of delayed payments,” Brandt said. “As a point of consideration, in the investment world delayed dividend payments are generally not viewed as a positive investment metric.”
During the Aug. 13 meeting, Brandt spoke again about his concerns and urged the board to act.
“Put the other agenda items of the meeting to rest for now and come up with an aggressive plan to right the ship,” Brandt said.
One action the board has taken is to eliminate the popular 10% senior discount on Tuesdays — an annual savings of $42,000 per year, according to meeting minutes. The board cited that the discount was not equitable to all shoppers at the market and transitioned the rewards program to a 1% cash back program open to all members.
In the June 2019 meeting minutes, Sayre said the decline in sales and the concerns in the financial indicators are multi-faceted including the bridge closing; increased competition; more natural food options in other stores as well as depreciation and amortization showing in the market’s financial calculations. Board Vice-President Nate Hart stated that the change in the discount structure was part of what is needed to take action for the survival of the co-op. The nature of many of the shoppers is that they only shop for some things at the co-op. The decline in sales is due to more than the bridge closing and largely due to the availability of organic and natural items found everywhere.
According to the Organic Trade Association, 2017 U.S. organic sales, including organic food and non-food products, totaled $49.4 billion. That was a 6.4% increase from the previous year. According to a transcript from a 2015 earnings call, Costco’s chief financial officer Richard Galanti estimates the retailer has made “at least” $4 billion annually from organic sales alone making it the largest retailer of organic products.
In February 2019, River Market sales where dramatically impacted by severe weather, the board minutes said. In the minutes Sayre said that he had discussions with consultants regarding the possibility of financing, if needed.
“The weather has made things challenging over the last couple of weeks but that things are going better now,” Sayre said in the minutes. “The storms did reveal that River Market is most likely not the primary grocery store for most people, however, as typically grocery stores have increased sales right before and after a major weather storm — which we did not experience. We therefore do not recapture the sales lost in those times.”
When reached for comment, board president April Rust gave the following statement: “River Market Community Co-op is committed to cultivating a healthy community through its: equitable economic relationships; positive environmental impacts; and inclusive, socially responsible business practices. This community cooperative is democratically controlled by 5,460 members that annually elect the Board of Directors.”
Contact Alicia Lebens at email@example.com