Case Study: “Green” Store Realized with Equity Investment

peoples_portPeople’s Food Co-op
Portland, Oregon
Founded: 1970
Number of members: 1,750
Equity investment: $180
one-time stock purchase or payment plan
Years in current location: 33
Retail square footage: 2,400
Total square footage: 5,400
Number of staff: 20
Annual sales: $1.9 million

When People’s Food Co-op members began dreaming about what their expanded store could be like they envisioned an environmentally-friendly building that would be a reflection of the co-op’s desire to truly support sustainability and community. The store was expanded and renovated in 2002, and was made with recycled building materials, uses ground-source heat and solar energy, and was painted with nontoxic paints. Their new store also has a community room for meetings and classes as well as expanded office space.

The building is an outstanding example of green retailing in the Portland community. According to Miles Uchida, financial manager, none of these goals could have been realized without the co-op taking the important step of switching from a membership fee structure to an equity investment.

“To start, our financial position was not where it should be. There was what we wanted versus the reality,” Uchida said. “There’s no way we could have done it without the equity structure. It was a big stepping stone.” He said that they couldn’t have done an environmentally-sound building if they had to scale back on costs. They needed the financial support of their members, and one way to get it was “having people be really invested” Uchida said. Before the co-op officially switched to the equity structure in May 2000, members paid $36 a year in annual fees. The current equity investment is now $180.

Like many co-ops that go through the equity process, People’s Food Co-op also needed to change their bylaws and officially incorporate as a cooperative as well as educate staff and membership about the benefits of the change. For those yet contemplating switching to equity, Uchida said, “I’d definitely do it. It was a great process for us, but you need to take the time to do it, and do it right. You have to take things a step at a time.” The co-op spent a year on the change, working with consultants and lawyers, talking with other cooperators, and educating staff and members.

Apart from wanting an expanded and “green” store, those in the co-op’s leadership believed that equity would help solidify the concept of ownership as well as contribute to a sound financial strategy. “We had not thought about that kind of capital before,” Uchida said. “We were afraid people would be scared away. I’m glad we went for a higher equity amount, $180 instead of $100. In retrospect it was a crucial step.”

But above all, Uchida noted, the education process was eye-opening for the co-op’s staff, board and members. “In general we educated about the basic co-op principles. In our co-op the collective

[management] structure is what people latch on to as being co-op…we learned more about the ownership structure and were able to explain to people the difference. It was powerful.”

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By |July 1st, 2003|Categories: Case Studies, Solutions|Tags: , |

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