The National Cooperative Grocers Association (NCGA) has put forward a rescue plan to preserve the co-operative structure of a local grocery store in New Haven.
Elm City Market was opened in 2011 by a group of residents who felt the need for a full-service grocery store in the area. The store is also New Haven’s first consumer-owned co-operative grocery shop. It provides natural, organic and conventional products and groceries for its members and the local community.
Elm City finds itself in a difficult position due to not having enough start up capital. The store, which employs over 80 people, has been unable to pay rent for month and the landlord has initiated a foreclosure process in May. Should the store’s assets be sold like a bankruptcy, the 2,200 members would lose their $200 investment.
To avoid this, the NCGA is willing to grant the co-op an immediate $700,000 through its Development Cooperative Assistance Fund. The plan also includes the infusion of an additional $300,000 in capital from local sources and a management contract with NCGA’s Development Cooperative, a subsidiary that was created in 2008 for the specific purpose of providing development support to retail food co-ops.
Robynn Shrader, chief executive of NCGA, explained: “I would say that Elm City’s financial troubles are no different than any other start up business – co-operative or not – start-ups are inherently risky which is why many find themselves in trouble and either work through it or don’t make it. We believe Elm City Market can be successful with the proper experienced management of operations.”
The NCGA would take over the management and the store would continue to be a co-operative owned by its members.
“Although just recently brought in, we have confidence in our ability to assist Elm City Market in returning to a strong and thriving community-owned business,” added Ms Shrader. “The NCGA DC has many years’ experience in start-ups and business improvement and turnaround situations, as well as access to co-operative resources and talent across the country.”
NCGA comprises of 142 member and associate co-ops that operate 190 storefronts in 38 states with combined annual sales over $1.6 billion. The association works towards unifying these co-ops to optimise operational and marketing resources and strengthen their purchasing power.
The future of Elm City Market will be decided by Webster Bank, which granted the store a $4m loan in 2008 to get it started. The bank is also evaluating a competing plan that could see RISC Foundation (Responsible Investment for Social Change), a New Haven non-profit, buy out the grocery. In this scenario, the store would no longer be run as a co-operative. The sale would be completed by the bank under Article 9, which means that all debts would be wiped out.
The co-operative’s board of directors unanimously voted in favour of NCGA’s plan. “We do not know when the bank will make a decision,” said Robynn Shrader. She added that while NCDA has worked with many co-operatives, this was the first time that one of their members or associate co-operatives was in the specific situation of a proposed Article 9 sale.