Letter from the GM and board
Letter From the GM
Dear Co-op Owner,
Our Co-op has a deep seat in the community. For more than 40 years we have grown together, and our owners and shoppers have entrusted the staff and Board to act as stewards of the organization. In that time, the Co-op’s employees have read the needs of our community and maintained a true marketplace where local vendors can build their own businesses and shoppers can glean the wealth of Butte County.
As the success of the organic food industry continues to grow, the Co-op faces an ever-deepening force of competition from large chains like Costco, Safeway, Target, Trader Joe’s, Grocery Outlet and Raley’s. The expansive power of online sales channels and smaller, newer competitors like New Earth Market have also applied significant pressure on our own growth. As a result of this increased competition, our sales have been in double digit decline for most of 2017 and 2018. The sales decline is primarily driven by loss of transactions – that is, more of our shoppers are using other stores for more of their grocery needs.
Despite our team’s great efforts to win back shoppers by offering attractive promotions, creating a beautiful shopping experience, and delighting customers with delicious food, our sales have continued to decline to the point where we have had to resort to drastic measures. With a loss of $2 million in sales since 2016, our profitability has also begun to erode. We cut expenses wherever possible, but ultimately our labor costs were too high for our new sales volume and some staff positions had to be eliminated. Layoffs are painful for every organization. They affect the lives of our employees, our customers and vendors. Our Human Resources Director, Holly, and I spent many hours trying to figure out the most careful, protective and compassionate way to reduce the impact to staff while meeting our business health objectives.
As GM, my leadership focus is to provide stability and continued forward momentum for our Co-op. I am supported by our Management Team and retail experts from the National Cooperative Grocers. We are working to implement strategies to mitigate competitive pressure and provide a delightful shopping experience for our shoppers. The Board and I are methodically bringing our work back to our Co-op’s bylaws, global ends, policies and cooperative values while also cultivating our systems of open and direct communication and Board and GM accountability. Co-op-wide we are working to facilitate the same systems of open and direct communication and accountability by establishing a goal-oriented culture where we are making positive changes, trying new things, and tracking our successes.
We greet the challenges raised by declining sales like the staff, owners, and Board Members of the co-op have done for years: with grit, pride and love for our co-op. We are committed to the growth of this organization and to meeting the needs of our owners through exciting promotions, well-curated product selection, and support for local producers. We are committed to meeting these objectives for as long as we are in our current location and as we continue look forward toward our future location
I want to take this opportunity to offer my sincere appreciation of the entire CNFC staff for their resiliency, commitment, and hard work as they have navigated these challenges in the last two years all while providing the best service to you, our owners and customers.
We are also appreciative all of our shoppers and owners. We know you make a choice each time you fill your basket at the Co-op. You have many options, and we’re honored you return to us again and again. Hopefully not just for the made-from-scratch deli dishes or the local, organic produce, but because you’ve found in us a like-minded community, where you feel welcomed, heard and fully nourished.
Yours in Cooperation,
Letter From the Board President
As Board President for Chico Natural Foods Co-op I welcome the opportunity to share how the Board works to support our Co-op during challenging times. With declining sales for several years, we have witnessed our Co-op make many changes to stay competitive and provide our community with incredible food. However, with our tiny retail footprint, successfully competing in our market has proven to be increasingly difficult.
The Co-op Board has three primary goals: 1) Act as trustees on behalf of the owners, 2) Ensure sound management of the Co-op, & 3) Set long-range objectives and plan for the future of the Co-op.
The BOD ensures sound management of the Co-op by governing through policies. Each month the GM provides a report to the Board of Directors on a policy. The format of the report is: 1) interpretation, 2) operational definition & 3) the data supporting the operational interpretation of the policy.
As is common practice in the grocery industry the Board of Directors receives reporting of the Financial Condition (known as the B1 Policy) on a quarterly schedule. The B1 Policy reads, in part, “With respect to the actual, ongoing financial conditions and activities, the General Manager must not cause or allow the Cooperative to be unprepared for future opportunities, the development of fiscal jeopardy, or key operational indicators to be below average for our industry.”
The Board of Directors has been informed of the non-compliance aspects of the Financial Condition of the Co-op since it first was out of compliance. In today’s competitive retail-market it has not been uncommon to see sales decline, and the Board of Directors has accepted the partial-compliance report for four quarters. During this time frame, CNFC continued to have a strong cash flow. Our GM is supported & advised by the National Cooperative Grocers financial staff as well as other co-op general managers. Positive cash flow and knowledge of the additional support our GM receives supported our acceptance of "no compliance" for those parts of the B1 Financial Policy that have been out of compliance.
In the first quarter of 2018 the Board of Directors asked the General Manager for a plan which would have a positive effect on the Co-op’s financial condition. The Financial Condition “Recovery Plan” was presented to the Board of Directors at the May 2018 Board meeting.
Liza has described components of that plan to you in her letter attached to this document. Please note, the plan calls for a change in policy from a quarterly Financial Condition (B1) reporting schedule to a monthly reporting schedule. The Board of Directors are supportive of our General Manager and staff as the Co-op adjusts to the changes the Recovery Plan brings: layoffs, reduced, and adjusted hours. We believe it is vital for the Co-op to transition from a store existing for your occasional shopping experience to the store you regularly shop at.
Laurie Niles Board President