Better Together?

The idea of using cooperatively owned groceries to solve neighborhood problems is picking up steam in Cincinnati. But will they work?

Jul 15, 2015 at 9:03 am
click to enlarge Clifton Market supporters gather at a meeting for the co-op in May.
Clifton Market supporters gather at a meeting for the co-op in May.

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ust two blocks from the bustling strip of Hamilton Avenue that runs through Northside’s business district, an empty white building, once a Save-A-Lot discount market, stands boarded up and dark. 

Until it closed in 2013, Northside resident DeBorah Reed frequented that store at 4145 Apple St. She says she depended on it for her groceries and has struggled since it closed — now she has to take a bus to the nearest Kroger, nearly two miles away, instead of walking the six blocks between her house and the store. 

“I don’t have a car right now, haven’t had one for a number of years,” Reed says. “And there are a lot of people in my neighborhood like me. I have to take the 17 bus down to the corner of Knowlton and Hamilton, and then take the 16 to the Kroger on Kenard.”

She says the trip can take half an hour each way. “In bad weather, you’re standing out on corners with bags of groceries, and that’s very ugly.”

Getting groceries can be difficult in Northside and other neighborhoods struggling as so-called food-deserts, or places with limited access to healthy foods like fresh produce. But about a year ago, Reed joined other people in the neighborhood who have bought shares or volunteered in an effort to open the Apple Street store again, this time as a worker- and consumer-owned cooperative.

The vacant Save-A-Lot building in Northside as it stands now - Photo: Nick Swartsell

Meanwhile, another effort with a similar business model two miles up the road in Clifton, called Clifton Market, is moving toward its goal of opening this spring. Though that market is designed for a different neighborhood with different problems to solve, the basic idea is the same.

The co-op model is uncommon in Cincinnati, but food cooperatives have existed elsewhere for years. The first in the U.S. were founded in the mid-1800s, and the model has experienced ups and downs in popularity since then. A large surge in cooperative grocers and other businesses came during the economic difficulties of the 1930s, and another big spike in popularity came in the 1970s.

Co-ops have seen a big revival in interest in the last decade as well, specifically as an alternative to big-box chain stores like Walmart. Unlike chains, supporters say, co-ops keep their profits in the community and allow for local input.

The grocery industry is a tough business, especially for co-ops. But while some have come and gone, others have thrived.

A 2008 study by the University of Wisconsin found that the estimated 290 consumer-owned grocery cooperatives around the U.S. accounted for more than $2 billion in sales revenue and $252 million in wages and benefits paid to workers the previous year. Many of the most successful of those co-ops are found in university towns like Austin, Texas. Austin’s Wheatsville co-op has been in business since 1976 and counts 17,000 consumer-owners, including employees, and $24 million in annual revenues.

Over the past few years, the concept — a business owned and controlled by the people who work and shop there, instead of a large chain or local corporation — has started to gain steam here. The increasing interest in this alternate model comes partly from necessity — neighborhoods like Clifton and Northside are popular places underserved by grocery stores, and the industry is only getting more difficult for those with more traditional business models in mind.

But the uptick in enthusiasm might also have its roots in groups like the Cincinnati Union Co-op Initiative. The group works closely with one of the world’s largest co-ops, the 74,000-employee Mondragon Cooperative in Spain, and has been starting co-op businesses in the city since 2011. Its successes include Our Harvest, a worker-owned produce production and distribution business in North College Hill aimed at eliminating Cincinnati’s food deserts.

CUCI has a big role in the plans for Apple Street Market and a vision for similar stores in other neighborhoods where groceries are hard to come by.

But even with the big efforts and big visions of Apple Street and Clifton Market, questions linger. The excitement for an alternative grocery model has reached a high point, but there are also a number of voices questioning if co-ops will work in a challenging grocery market.

Among the skeptics are some inside City Hall, which has balked at kicking in funding help for co-op groceries so far. But boosters say public demand will bring success.

“In Cincinnati and around the country, we’re seeing people wanting to have more control over their lives, to not just sit back and wait for the government or big business to swoop in and save them,” says CUCI’s Ellen Vera, who also works for the United Food and Commercial Workers union. “It’s about taking that power back and saying, ‘We’re going to be doing this ourselves.’ ”

Northside: the market as melting pot

In Northside, organizers say the focus is on making sure the community’s diverse population is represented and involved in the nascent market.

“This has been almost a two-year process since that Save-a-Lot closed,” says Mary Jo Minerich, an Apple Street board member. “That’s been something that’s been terrible for a certain segment of the population. It’s a really significant impact on peoples’ lives, just figuring out the day-to-day stuff.”

A rendering of the proposed Apple Street Market - Photo: Provided

Minerich says a big priority has been making sure the process of planning and establishing the market is inclusive. The group, with the help of CUCI, took extensive surveys of the community, speaking to a quarter of all Northside residents. Apple Street is also offering two price points for shares in the market: a $100 share for those who can afford it, and a $10 share for low-income residents. The discounted shares have been subsidized by Northside Bank.

“We’re really trying to maintain an ownership ratio that reflects the economic diversity of the neighborhood,” Minerich says. “We’re trying to make sure that who owns the market and who has a voice in the market, that it’s not just the people who can afford the hundred-dollar share.”

So far, the group has sold 900 shares, just shy of the 1,000 it needs to begin construction on the former Save-A-Lot. The group is close to securing major financing for the project from the Cincinnati Development Fund. Vince Tafolla, an Apple Street organizer and Minerich’s husband, says the group could begin construction as soon as September and be open by next spring.

According to the group, 20 percent of Apple Street Market shareholders are low-income residents eligible for food stamps or other government assistance, close to the 22 percent of Northside residents as a whole in that demographic.

Community shareholders will elect a member to the market’s board. Worker-owners will elect three other members, and CUCI, which is helping connect the market with grocery expertise, will have another seat. That board will be responsible for hiring a manager for the store as well as making sure it is meeting the community’s needs.

The design and offerings of the store will mirror those needs, organizers say. The focus is mostly on making the space community-friendly, a place people want to gather, Minerich says. The store’s stock will range from standard budget items priced competitively with Kroger to higher-end goods. Minerich and Taffola say the store will conduct more surveys to find out what people in the community want.

“What’s great about this is we’re not trying to be something super-special in terms of what we carry,” Minerich says. “Just tell us what you want and we’ll carry what you want.”

Minerich and Taffola, along with the other dozen or so people who come to the group’s open meetings, envision an outdoor community meeting area for events and programming as a way to build community in Northside.

Meanwhile, the push to establish the store has already started that process, shareholder Reed says. She bought a $10 share last year. As a contractor, her income is unpredictable, and sometimes she’s laid off for months at a time. She says that $10 investment has given her more than just the hopes for a place to get affordable food. Reed moved to Northside after getting “priced out” of downtown about five years ago, she says. At first, she didn’t like the neighborhood and felt disconnected.

“Getting involved in the market, with my neighbors, working for something I feel is a need in the neighborhood, that helped a lot. I feel extremely connected now.”

She expects those connections to grow once the market is open, she says.

“This is basically a ‘we are the world’ neighborhood. We have high-income and low-income people all mixing together. I have a strange feeling that once the grocery store opens, you’ll start seeing your neighbors who you didn’t used to see.”

Apple Street supporters - Photo: Nick Swartsell

Clifton: old tradition, new model

Meanwhile, on the other side of I-75 in Clifton, another group of would-be co-op founders is working on the Clifton Market. In contrast to Apple Street’s low-key populism, Clifton Market organizers envision a high-tech, “uptrend” store that will stock a variety of organic food and local favorites at a location long associated with grocery stores.

For more than 70 years, residents in Clifton enjoyed a full-scale neighborhood grocery near the corner of Clifton and Ludlow avenues. That grocery, Keller’s IGA, closed four years ago after former owners John Vierling and Charlie Dugger failed to pay taxes. They owed $190,000 in state taxes, $80,000 in fees to the state and another $38,000 to Hamilton County for property taxes. They blamed the recession and looming maintenance needed for the aging building.

Clifton Market has been working for more than a year to reopen the 22,000-square-foot building as a consumer-owned cooperative grocery. In April, with the help of the nearly $1 million the group raised in part by selling 1,000 shares to community members, Clifton Market bought the building.

A produce display stands next to a virtual-reality walkthrough of the proposed Clifton Market at a May event celebrating the building’s purchase by the co-op. - Photo: Nick Swartsell

Ownership in Clifton Market is open to anyone who buys a $200 share. In addition to money from those shares, the market is closing in on major financing deals with banks that lend to co-ops. Board members hope to begin build-out on the building and open as early as next spring.

The market’s plan to form a cooperative has met with a mix of both strong support and skepticism. The group has enlisted experienced grocery industry professionals, it says, to win over doubters and make sure everything is done correctly.

Keith Wicks, a 30-year veteran of the grocery industry who runs a business consultancy based in Minnesota, has provided market research as the store gears up. He sees more than 15,000 people a week coming to the store once it is up and running.

“This store has a great chance of coming out with the type of performance that works right from the get-go,” Wicks says. “The next step is to roll up our sleeves and get it done right.”

Modern marketing and technology are also big parts of the Clifton Market vision, boosters say. At a May 6 event celebrating purchase of the building, Richard Schramm of IT solutions company Ascendum gave demos of the store’s potential setup to the 100 or so who gathered in the cavernous Keller’s building. Digital signage at the store will tailor displays to individual customers via a smartphone app that communicates with sensors and computers in the store to bring up ads relevant to each customer, for example.

Roadblocks ahead

But it may take more than high tech to convince doubters, who came out in force in June after Clifton Market lobbied for a financial helping hand from the city.

During June’s dramatic budget fight, Cincinnati City Council voted 5-4 to give the Clifton Market funding in the form of a $400,000 grant. But Mayor John Cranley vetoed the move, citing advice given to City Manager Harry Black by the city administration and outside experts.

As outlined in a June 9 memo from Black, experts expressed reservations about the lack of third-party data on the local market, including competition posed by two Kroger stores near Clifton Market. In addition, the memo pointed out the fact that two board members — Marilyn Hyland and her son, Adam Hyland, who is chair of the Clifton Market board — were part of the same family, and that none of the board members had grocery experience should their hired manager leave.

The city’s outside expert also said there weren’t any “fatal flaws” in the group’s business plan, however. City administration advised against a loan or grant, but did suggest tax abatements for the market.

Other critics question whether Keller’s closure four years ago means an independent grocery is simply not viable at the location, though boosters say their model and current economic conditions are so different from Keller’s that the former store’s failure says nothing about Clifton Market’s prospects.

Around the same time council was debating a grant for the store, skepticism about Clifton Market took another form: An article in The Cincinnati Enquirer detailing board member Marilyn Hyland’s personal finances, including past debts and near-bankruptcies. That, Hyland says, was a step too far.

“It really is irrelevant, even from a practical point of view,” she says. “I feel like it was a crass attempt to undermine the market. I’m working on this because I love Clifton. I’m so proud to be working on a project with our oldest son who, yes, is the chair of the board, who asked me to help out.”

Apple Street Market boosters have their own challenges ahead. “I’m confident that if they can get open, the community will support it,” says Northside Community Council President Ollie Kroner of the market. Kroner has invested in Apple Street as well as advocated for it. He points out that the Save-A-Lot at that location closed to move to a larger location closer to the highway, not because it was unprofitable. But he says he’s realistic about the pitfalls.

An architectural rendering of the proposed Apple Street Market at Northside’s former Save-A-Lot location - Photo: Provided

“This isn’t going to be easy,” he says. “There are a number of challenges. Financing is the most pressing challenge right now. This is a full-fledged operation, and I know everyone means well, but it’s going to take some business savvy to really make it work.”

Kroner says explaining what co-ops are remains a roadblock to garnering more community support as well.

Another Northside co-op, called Twin Pines, went belly-up in the 1990s, leaving bad memories for some longtime Northsiders involved in the neighborhood’s civic and business communities. But that cooperative wasn’t the same as the full-service grocery planned for Apple Street Market, Kroner says, requiring volunteer hours to shop at the store and offering more of a buyer’s club vibe.

“It was a place where you could buy, like, 30 pounds of beans at a time,” Kroner says. “It’s a far step away from the more conventional model here.”

Apple Street Market organizers realize they have more work to do in explaining how a co-op works, they say. If it doesn’t work, and the store doesn’t open, money from shares gets paid back to shareholders, they say. But if they convince enough people to buy in, and keep buying, it could be the start of a big shift in the way many communities get their food.

Apple Street Market is a kind of “proof of concept,” CUCI’s Vera says, a model the co-op group hopes to replicate in other neighborhoods. Residents in College Hill have already requested — and received — feasibility studies from CUCI about a similar co-op grocery there. Other neighborhoods might be close behind as well.

The big battle is one of perception, Vera says.

“A lot of times people think of co-ops as completely horizontal, a big kumbaya kind of thing,” she says. “It’s not. It’s really about being efficient and creating the most successful business possible. “And that happens by having people really tied in and having a sense of ownership. That’s not necessarily something we’re used to in this society, this sense of being an owner.” ©