On Tuesday July 5, Chicago Market hosted a Coffee & Conversation session at Sulzer Library, to talk with Owners and supporters about our site selection criteria, process and progress toward the goal of opening our co-op store doors.
We announced the session via June newsletter and social media – out of 44 RSVPs about 25 folks were able to join several members of our Board of Directors and Site Selection team. We also invited two partners of our newly-hired architectural firm, Wrap Architecture (see upcoming July newsletter for this exciting announcement!) to observe and learn about our co-operative community by seeing us in action.
Here's a report for those who were unable to join us. It was a terrific chance to talk transparently about our team’s progress and what we’ve learned, but also a great opportunity for the Board and Site teams to hear directly from other Owners. We came away with shared community energy, some new volunteers, and some great input about how to continue to share information during this phase of our co-op’s development, when so much is happening and everyone’s engagement and patience are needed for us to co-operate our way to success!
-- Karen Jacobs, Chicago Market Owner #43, board member
We began by grounding ourselves in some key numbers:
We moved into a discussion of the factors that influenced our Site team’s development of criteria, including our defined trade area, size and vision:
Where? We’ve looked at sites throughout our trade area.
An Owner question came up: “Will we take into account the density of where current Owners already are?” Yes, and if all other factors were equal, this would be a tie-breaker between two locations. We talked about an ideal “donut-hole” in the center of this map, and Site team noted that there have been some sites that we decided were simply too far along one edge of the map to be viable.
At the same time, the team emphasized that what we’ve found already is that all factors are almost never equal. For example, size, cost per square foot, physical readiness of a space to accommodate a grocery, availability of parking, nearness to transit, and zoning (e.g., can we sell beer?) are all factors that have already ruled certain sites out.
How Big? One key criteria that many available spaces have not met is Size. A typical Chicago storefront is about 1,000 sq. feet; for perspective, a typical traditional grocery store can be as much as 75,000 sq. feet. Chicago Market has defined a range of 10,000 to 15,000 sq. feet for our site.
“Why not smaller?” We researched other co-ops’ experience. We considered Owner inputs, collected across various venues, that have framed our vision. We need enough space to enable real community-building; to conveniently include all the traditional grocery categories; and to allow for the efficient delivery and stocking of a great breadth and depth of local products. Finally, we want our sales volume to give us the negotiating power to keep prices as low as we can and to succeed in Chicago’s competitive grocery market.
“What happens if sales volume doesn’t financially support the store’s size?” We are working with experienced grocery consultants to provide financial projections for each location we’re considering, to minimize this risk. And, maximizing sales volume per sq. foot is a primary responsibility of the store’s General Manager; proven experience in this area will be a key qualification in our search for this critical hire.
“Can we strategically plan for flexibility in the store design, should we need to make changes to it for financial or other reasons?” Our new architects, sitting in the room when this question came up, offered their own response, which is that adaptability is one of their key design values. In their words, “we look at what clients need and want today, but also what they’ll want in the future.” Our Site team noted that this was one of the reasons we chose to work with Wrap: they are very creative, and sustainability-conscious. We are also bringing up flexibility as a negotiating factor with locations where it’s available, i.e. setting up options to increase space over time as our co-op grows.
The full list of site criteria and considerations includes:
“We’ve been part of other co-ops, but never a start-up. Is Chicago Market unique in trying to open a new co-op of this size, in a market of this size?” As part of a larger co-op community, we subscribe to the shared value that’s nicknamed “P6” - co-operation among co-operatives. What this means is that all co-ops work to help other co-ops succeed, and we’ve been counseled and encouraged all along the way by national organizations and experienced partners, including those who help start and grow stores across the country. In short, they tell us: Yes, what Chicago Market is doing is unique in this time. And we will need to be committed, patient and persistent to get it done. But there is also great evidence in other midwestern cities that co-ops can open, succeed and make positive change in the food system for shoppers and for the farmers and producers who surround them. And there is great excitement in the co-op community to see us open our doors.
Our discussion then moved to process. The Site team shared that we’ve evaluated over 50 sites since January, after our holiday Ownership drive helped fund a critical Market Study from Dakota Worldwide (this provides key data for criteria above, such as demographic analysis and sales projections). As every home buyer knows, we’ve found there will always be trade-offs of some sort: it’s unlikely that we’ll find a perfect location that fits all of our wish-list, and also with perfect timing and a perfect budget.
We are working with commercial real estate experts Sperry Van Ness, although we have also searched for properties through every available channel, including aldermen, Owner and community leader recommendations, and even sending our Site team out to drive/bike/walk our trade area!
Earlier this spring, we identified five high-potential sites and began deep analysis:
At this time the Site team, with Board approval, has narrowed our interest to four qualified locations (including one that just came to our attention within the last few weeks…we remain open to continued new possibilities, up until the time we have a fully-negotiated and Board-approved agreement).
We’ve begun the negotiation process with building owners. We continue to evaluate against our financial pro forma and our criteria as negotiations can impact each site’s standing versus the others. Our new architects are touring the sites.
“Will Owners get to vote on the location/site that’s chosen for our store? Can you tell us what locations you are considering?” are both questions that come up from many, and we discussed at length in our meeting. It’s natural for every Owner to hope that the store will be located most conveniently for them. And, Chicago Market’s board takes very seriously the co-operative values of transparency and democracy; we are committed to sharing as much information and inviting as much Owner input into the process as we can.
But we also have a counterbalancing fiduciary responsibility, and that is to negotiate a deal that gives Owners the greatest value and the best chance of long-term viability. In an intensely competitive market such as ours, that means jealously guarding every potential negotiation advantage, and being able to move quickly and decisively. We are advised by real estate partners, co-op consultants, other co-ops’ experience and our own common sense that to announce any site location before we have a secure agreement, or to put any negotiation up to a group vote, would be unwise.
“How do I have a voice?” Co-ops don’t survive without the active voices, and working hands, of their Owners. Consider running for election for our Board of Directors. Become a volunteer (several folks at the session have already done so)! Share what’s important to you with our Site and Architecture/Store Design teams. Post it here (below), or here, or here. Email us. Join us for a monthly Board meeting or an upcoming event. Bring it with you to our Annual Owners Meeting (August 28).
There was one question raised which we frankly struggled with:
“Our website and FAQ timeline still say we expect the store to open in early 2017. Is that accurate? When do we really think the store will open?” As the group discussed at length, it’s extremely difficult right now to put any kind of a firm estimate on when Chicago Market will open its doors: along with the question of whether we’ll be able to get to the right deal on any of these sites, each comes with different construction timing factors.
What’s more, any deal we do negotiate will be contingent upon significant additional Owner growth — this is critical, because co-op funding happens substantially through Owner loan campaigns. We would expect to launch such a campaign in coordination with a site announcement. However, co-op financial experts tell us that our best chance of success at hitting our fundraising targets is to have at least 1,500 Owners by the time we launch the campaign. We’re currently at 830 Owners. We continue to grow, we expect a significant “bump” in growth once we announce a site, but we cannot count on that to get us all the way to our goals.
Market analysis tells us that there are plenty more households in our area who will embrace our vision and will become Owners; but we have to both reach them with our message and engage them enough times with our community that they are persuaded to join. An active team of board & other volunteers is focused on strategies to recruit more Owners, now — but we need help. The most important thing every Owner can do right now to get us to our store opening sooner is to bring more Owners to the co-op. You can join our volunteer efforts by emailing [email protected], or you can start sharing your own Chicago Market “why I’m an Owner” story with friends, family, neighbors, associates and across your social networks and ask them to check us out. See our June newsletter to learn how one Owner got these kinds of conversations started! Or ask us if you need help.
Meanwhile, it was impressed upon us by those who attended this session that, even if we cannot offer a firm estimate, we need to find a way to revise our “best guess” to reflect a timing range, and share it transparently and consistently across all our communications. As an example, one Owner there suggested that what she was hearing, in summary, sounded like “it could be anytime between mid-2017 to end of 2018.”
The board leadership in the room was hesitant to align on whether this statement is accurate, or on what our revision should look like. Our hesitance was in part because other critical team members were not present, and we know that new information and developments can come in quickly and change assumptions. That said, we clearly understood from the conversation that we need to improve communications on this front. We have added a discussion on it to our upcoming board meeting and will be sure to follow up. We’re grateful for the open, honest and — yes — co-operative discussion.
We hope to see every Owner on August 28 at our Annual Owners Meeting. In the meantime, stay tuned for updates. Please continue to share your voices with our community and email us anytime at [email protected] with questions or ideas.