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The Goldilocks Solution Finding a Just Right Store Size

The Goldilocks Solution Finding a Just Right Store Size. Agenda. Fairy Tales & Co-ops: What should you believe? Once Upon a Time Goldilocks (& the Three B ears) The Three Little Pigs The Moral of the Story Happily Ever After. Myths & Misconceptions.

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The Goldilocks Solution Finding a Just Right Store Size

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  1. The Goldilocks SolutionFinding a Just Right Store Size

  2. Agenda Fairy Tales & Co-ops: What should you believe? • Once Upon a Time • Goldilocks (& the Three Bears) • The Three Little Pigs • The Moral of the Story • Happily Ever After

  3. Myths & Misconceptions • Co-ops can start small and grow– haven’t they always? • People will support us because we are a co-op • Small stores don’t require as much organizing and planning to be successful. • Bigger store = bigger risk • If we don’t do something soon, our members will abandon us.

  4. Updating a few fairy tales Grocery stores: • Have very low profit margins– WHEN SUCCESSFUL • Your competitors invest in state of the art equipment, information systems, merchandising and promotion. • Economies of scale matter • You can buy Silk ® at Walmart ® cheaper than through your distributor

  5. Goldilocks as Mentor • Review the Options • Test the Fit • (Avoid Angry Bears)

  6. Too Small • Revenues are low, expenses are disproportionately high • Unlikely to qualify for NCGA membership • Limited ability to meet the community’s needs and expectations • Perishables (local food) require lots of space and high turnover • Susceptible to competition • Even if profitable, capital will accrue verrrrrrry slowly. • Future expansion will look a lot like starting over.

  7. Too Big • Overhead costs not covered by sales volume • Empty space/empty feel • Rare

  8. Just Right • Inventory mix and selection matches market needs • Enough space to operate efficiently and shop comfortably • Room to grow into mature sales projections • Sales revenue and margins can cover expenses and generate surplus Store size should be a business decision, based on hard numbers, analysis, and vision.

  9. Porridge • Yelm Food Co-op, Yelm, WA population 7,000 • Spiral Natural Foods Co-op & Grocery, Hastings, MN population 23,000 • Common Ground Food Cooperative, Champaign-Urbana, IL population. 82,000/41,500

  10. Yelm Food Co-op

  11. Spiral Natural Foods

  12. Common Ground

  13. Goldilocks Revisited Finding “Just Right” • Vision • Market Study • Feasibility Research • Community Survey • Site Selection

  14. 3 Little Pigs • House of Straw • Quick & Easy! • Immediate gratification • Huff and puff… • House of Sticks • Recognition of need for more structure… • … but inadequate execution • Huff and puff… • House of Stone • Extra care and investment • Built to last • Wolf Kabobs

  15. What if Small is the Only Option? • Careful business planning is critical • Are there potential reductions to operating expenses? • How long will they exist? • Is the competitive environment stable? • Do you have the best possible site? • Is a buying club a better option?

  16. The Moral of the Story Use good business plans, Get professional advice, Build the right sized co-op, And…

  17. Questions?

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