Case Study: Co-op Identity Critical in Competitive Market

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Outpost Natural Foods
Milwaukee, Wisc.
Founded: 1970
Number of members:13,500
Equity investment: $200 per household
Number of staff: 320
Retail square feet (three locations): Bay View 8,500; Capitol Dr. 10,000; Wauwatosa 9,400

When Outpost Natural Foods was created, it was named “outpost” by its founders because they believed they were bringing health food to what they called “a vast wasteland of depleted and processed foods.” (Also known as Milwaukee in the 1970’s.)

Fast forward 30 years. The vast wasteland is now overrun by chain grocers selling the same products, including the formidable Whole Foods and Trader Joe’s. No longer the lone voice in the wilderness, the co-op clamors for market share along with everyone else. All three of Outpost’s locations face intense competition. As the market has matured, Outpost is opening up new conversations about enhancing the cooperative advantage as their overall competitive advantage.

“In a competitive market, people are motivated by needs. As a grocery store, we still have to answer the question ‘what’s for dinner,’” said Lisa Malmarowski, director of brand and store development. “But we also have a built in way to interact with our customers. Membership in the co-op is more than a loyalty program.”

Malmarowski said the research the National Cooperative Grocers Association (NCGA) did with the Hartman model and the wellness consumer really helped them understand how to open the door to consumers and “meet them where they’re at.” Outpost is now taking that one step further and looking at how they can help people feel a part of the co-op and be more receptive to joining. “For co-ops, it can’t be just about the products,” she said. She admits getting people to understand the co-op is challenging, and Outpost needs to take every opportunity to “talk one on one about co-ops and what we’re about.”

They’ve also started to do this through owner appreciation days and hosting wine tasting events for the board to meet members. “The idea is to have a good time, but also to talk with owners to find out what’s important to them,” Malmarowski said. “We want people to understand we’re not business as usual.”

In addition, they’ve begun to promote cooperation on the sales floor via the concepts of local ownership and concern for community. By changing their recruitment rap, they took the focus off discounts or “what you get,” to putting out a message about the benefits of having a food co-op in your neighborhood. Malmarowski thinks this is something people respond to, especially in a competitive market. “People hunger for meaning, and co-ops can really provide access to something that matters, and people can be as involved as they want to be.”

As challenging as functioning in a competitive market can be, Malmarowski sees a lot of opportunity for food co-ops. As the competition grows and gets less flexible by making decisions from afar, neighborhood businesses can ramp up their ability to respond to unmet needs and deliver the benefits of local ownership to the community. “The challenge for co-ops is to see how cooperation really differentiates us,” she said.

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By |March 30th, 2007|Categories: Case Studies, Solutions|Tags: |

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