Weaver Street Market moving from Discounts to Dividends

I hope they're making this change soon enough.  How long can they sustain a $65K loss per month?  The change to dividends is much better than having it go out of business, even if they never pay out.In terms of shopping, my family has definitely been going there less.  The problem is simply one of cost:  when I looked at the family food budget, we were spending $1600/month for a family of three, mostly because of high-priced items from Weaver.  Instead, we started a garden, and shop at Costco for some things, and basically are watching food expenditures more, which has cut the food budget in half.  We still shop at Weaver for milk and bagels, but gone are the days when I'd run out and buy everything for dinner from Weaver.   

Scheme or strategy?  Either way, the objective is the same: keep WSM on its feet.  The $65,000 monthly loss is a sign of alarmingly poor management.  One hopes other changes have been made upstairs to close the money drain.  Our loyalty isn't driven by the membership fee we paid 15 years ago; we patronize WSM because of its proximity and quality.  I'd be amazed if the dividend vs. discount scheme pans out.  That's where the ripple in the rug hits the wall. 

WSM must do what it must to remain solvent.  However we are seniors and the senior discount will be a loss to us.  Due to that discount I have shopping WSM for years on Tuesdays.  The senior discount caused WSM to be price competitive on many items that they would not have been otherwise. If the changes keep them in business then it will save jobs. I assume they are not getting stimulous money. For the record, Chatham Market has aslo done away with member and senior discount days a couple of months ago.

I'm afraid too many will find the loss of discount a game end. I'm sure there are patrons who will stick because of loyalty but the discount gives a reward that makes WSM an instant good feeling when buying expensive snacks or lunch. I, too, don't think the dividend scheme will turn the tide. WSM will lose too many customers without discounts. The dividend offensive with meetings, emails, and letters spells desperation...maybe that's appropriate.

Hands up anyone who thinks Obama's got everything right so far? Right. Hands up those who think we should impeach him?Same with Weaver Street. I've stood for the Board twice now, and I'll be doing so again this year. Why? Because I don't think we get everything right.Everyone who has written on this thread so far says that, like me, they don't want WSM to go under. Good. Then the first thing to do is support the stores. Stop shopping at Fresh Market and Trader Joes and Whole Foods.You can't have it both ways. You can't say it would ruin this area to lose the co-op, and then do the one thing that will lead to its ruin - stop its cash flow.But we need more than your money. We need your involvement.All of you who complain about the decisons that were taken, and the way they were taken, how many of you turn up to the Annual Meeting? Or to Board Meetings. Or to vote?A co-op is like a love affair. It has its ups, it has its downs, but most of all it needs work. All the time.Those of you who know me will know that I can be the strongest critic of the Board and senior management of WSM. But I turn up. I care. I get my hands dirty. And I do what I can to make things better. Do you?I will be blunt. I do not think the Board should have made this decision without first consulting the consumer-owners. Co-operative values state: "the primary source of all authority in the co-op is its owners."I do not think the hole in our finances is caused by the consumer-owner discount, but by the over-arching cost of the Food House and the new Hillsborough store.But I do not throw my hands up and run away. I make my point. And I then knuckle down. I work hard to make the money we need. I work hard to make the decisions work. And I will work hard to get elected, so that I can then work hard to make better decisions.Don't sit on the sidelines and carp. Join me in working hard to make our co-op work - for everyone's sake. Please.

So, a customer comes up to me and says, 'what does it all mean about discounts, then...?'

I grab a dollar bill in my left hand, and an owner card in my right, and I say: 'well, dis counts, and dat doesn't...'

Oh come on. I'm joking! You've gotta laugh at life...

Ruby, this is the example that disproves your point on the WSM Board not listening.  The board bailed on this change 3 years ago b/c of squeaky wheel opposition. If WSM had not listened to members three years ago and had made this switch, we might not be in this hole.  But they had to do it now and I'm glad the board did.  It simply makes no sense for any business to give away at the register when they don't know what the finances are gonna look like at the end of the year.  It's like paying employees their bonus in their regular paycheck.  Geoff, Just b/c we're WSM members doen't mean we can't shop elsewhere.  WSM IS expensive in a lot of ways.  I paid like $4 for a head of brocolli the other day. And I like Trader Joes.  I shop at WSM less now also, somewhat out of boredom.  But knowing of this situation I'll probably pick it back up again. What I would like to see instituted is some sort of continued discount for low-income families.  For instance, if you're kids are on free and reduced lunch.  That could be done privately and would ensure those that are really in need get  help. I've long thought WSM's greatest shortcoming is that it hasn't succeeded in attracting more low-income folks w/i walking distance. Also, I wish WSM would increase the size of it's board.  Perhaps in proportion to the growth in membership.  I think the board has 7 people right now?  That's not big enough in my view for a coop of this size. David Beck

I agree that the redevelopment or resale of the old bank should be considered though this is not a seller's market so probably bad timing. Also, I wish OP - and indeed all online sites - would stop allowing anonymous posters and the anonymous would have the courage to use their names... There are certain things all of us can't or won't say b/c of our positions in life but that doesn't justify anonynimity in public postings, moderated or not, in my view.  David Beck

It's seems too facile to find that eliminating the discount basically closes the gap on the shortfall.  Just too easy.  The letter says "sales are down, and we are losing $65,000 a month."  It does not say that sales are down by $65,000 a month, and it's hard to imagine that paying the mortgage/rent on the very expensive totally new facility in Hillsborough is not a major contributor to the deficit, however the deficit is calculated.The letter from the board starts out saying, "Like many businesses, Weaver Street Market is going through....."  It is indeed ironic, because they (or at least the management) have been treating WSM like a business, trying to grow it in the failed paradigm that "growth is progress."  A coop ought not be considered a business first....it is a cooperative first, and a business second (or third).  Why grow so much, so fast?  The approach seems to not be working out.  Ought there not be a store by store analysis, and a full accounting here, with decisions analyzed objectively?  This is getting to be serious, and we need to have as much information as possible. Here's one major kicker:  salaries are usually a large part (at least half) of running any institution, and yet WSM has eliminated the volunteer program!  What's up with that?  An alternative approach to eliminating the discount would be to not fill empty positions as they arise, and replace them with a cadre of volunteers.  I am positive that the membership would rise to the occasion, but that option has been eliminated.  Things just don't feel right.

The Hillsborough WSM has been a great and positive thing for central Orange County.  Few business ventures are profitable in the first couple of years and this is especially true in this kind of economy.  WSM's timing for opening a new store may have been poor, but few people foresaw what has happened in the global economy in the last 9 months.  I think it is a mistake to be negative about the Hillsborough store.  In the long term, the Hillsborough WSM will be an asset to both Hillsborough and the members of the co-op.

...and does it work?First, welcome back WeaverGuy! Now that I know who you are...David [Beck], thank you for your comments. Of course, you can shop where you like [makes mental note: come the revolution, David's on dishwashing detail...]Mind you, David, "If WSM had not listened to members.." Ouch! Where's the primacy of owner authority in that statement...? But your point about the size of the Board underlines what this whole maneuver should really be about - namely, changing the nature of the relationship between the co-op and its owners, so as to encourage loyalty (on both sides).This is a concept that's been doing the rounds of the national co-op movement for a few years now. It's known either as "Economic Linkage" or "Ownership Culture."The idea is that, since the rest of the world is beginning to catch up with what used to be a co-op preserve (locally-grown, organic food), co-ops need to find a way to develop owner loyalty.The premise is simple. Take all those co-ops that introduced discounts in the Seventies and the Eighties (so that they could compete with the likes of Costco and Sam's Club), and replace the discounts with a dividend system, that makes reward dependent on the co-op's performance.But there is a second important element to this concept - which, bless our eternal hearts, was notably missing from all our pronouncements this week. Namely that, in return for telling our owners their return will now be dependent on our performance, owners will be given more say in judging and monitoring our performance.But how? Well, the funny thing is that we don't have to look too far for the answers. Just a year ago, another Task Force met. It was called the Elections Task Force, and it was charged with finding ways to improve turn-out in WSM Board Elections.I was one of its members. And we quickly took the view that the best way of getting more owners to vote was to give them good reason to believe that voting would make a difference.So, we widened our remit to include looking at ways of making the governance of WSM more accessible to and more meaningful for its owners.I have a personal interest in WSM governance, being a worker-owner. My pet governance change, arising out of the Task Force, would be to allow all workers (not just worker-owners) to vote for their two representatives on the Board.Workers have sacrificed much this past year to keep WSM afloat. We have taken cuts in our wages. We have worked harder for less. We are the folks on the cutting edge of keeping you folks (the customers) happy.For all these reasons, I think that all workers should have meaningful input into the big decisions that are changing the face of our co-op.Frankly, I think that some of those decisions would have been quite different (and better) if our in-house experts had been fully involved in their making.I also believe that no worker should have to pay ($500 for a worker-owner share) to vote for their representatives in a worker-consumer co-operative.We came up with a number of other ideas to introduce more democracy into decision-making in WSM.From term limits for Board members, and more of them, to the not-so-radical notion that the Board would be more representative of the views of its owners, if all of its voting members were elected - at present, three out of seven are appointed.In addition, some of us felt that accessibility would be enhanced if there were active consumer-owner and worker-owner discussion groups, and an online forum, not dissimilar to OrangePolitics.In fact, one of your consumer-owners has already created the forum. It exists, just waiting for the Board to adopt it, and attach it to the WSM web-site.The bottom line is this: what's done is done. The discounts are gone. Now, let's focus on letting the other shoe drop, and agitate as best we can to encourage our co-op's Board to introduce the other half of the concept of "Ownership Culture": mechanisms, systems and procedures that allow for more meaningful owner involvement.I have already asked the Board (more than once) to set up a new Task Force, to make recommendations for changes to WSM Governance.Fill in those little slips of paper in the stores asking for the same thing, why not? Or write to the Board. Or turn up at the next Annual Meeting.Better still, make it a condition of voting for a candidate in this year's Board Elections. Don't leave it to the person standing next to you in line. Why don't you be the one to take the initiative on this? Oh, a P.S. To Mark [Chilton]. I agree with you about the Hillsborough store. And forecasting the economy.The thing is, the world has now changed. That is why, at the last Annual Meeting, I proposed a motion that an Owners' Committee be established to review the entire financial picture at WSM, and to make recommendations on the sustainability of our now some $11m in debt.The motion was passed. The Board then, in its infinite wisdom, took the view that it knew best, and decided not to create the Committee.Funny thing. Do you know how many votes were cast for the winning consumer-owner candidate in the 2008 Board Elections? About 70.People. It really doesn't take much to change the way WSM functions - if you really want it...Anyway, back to Mark's two points. I wonder if the time has not come now to take the view that we will best save that which we have created (a Hillsborough store and a central food processing facility in Orange County) by inviting the residents of Hillsborough to take over the financing of their own store, and to set the Food House free, to become a stand alone unit, able also to attract investment from sources other than just WSM owners in Chapel Hill and Carrboro?

I have no objections to having a WSM at SV or in Hillsborough, but I
believe that they should be separate coops and/or stand alone
businesses. If one succeeds, good for those owners. If it fails, it
doesn't take the entire cooperative down with it. At this point, I
don't see much difference between WSM and other chain businesses,
except that there doesn't seem to be any economies of scale associated
with the WSM expansion.

As I've been reading the materials describing the changes and reviewing the mission statement, I'm a little puzzled.  When we joined the co-op many years ago--whether it was written or not--we viewed the co-op as a way to provide good, sustainable food to people in the community.  I don't see any reference to this aspect of the co-op mission in either the discussion of the changes or, for that matter, in the mission statement.  You might argue that we just made that up and I guess that's true.  But it seems to me to be self-evident and I'm surprised by its omission.So, I'm interested in others views of the WSM mission; but I'll continue this comment with the assumption that there's at least some support for what seems obvious to me.Like many businesses, it appears that the co-op board took some risks over the years in its various expansions (I would argue, mission creep) that made some assumptions about the long-term sustainability of the business.  And, it appears--though there's isn't enough data supplied in the public materials to confirm this--that these expansions may be part of the problem.  For example, the data made available says that Hillsborough sales are roughly at budget but the combined Hillsborough store and Food House account for 30% of the shortfall...so the Food House accounts for roughly 30% of the shortfall, no?  Now, in the long-term the food house may be a wonderful way to improve availability of good, sustainable food but I took the tour when it opened and it's pretty elaborate and we now truck goods to three locations around the county.  Again, I lack data here to come to any supportable conclusions but the expansion to 3 stores and a central preparation facility seem to me to be an area to examine to understand the  shortfall.  And there's no discussion about ancillary businesses like Panzanella.Here's why I think this is relevant--though, perhaps, water under the bridge: increasing prices reduces the availability of good, sustainable food.  And the co-op isn't the only one feeling the economic pinch, the consumer-owners are as well.  I support the broader mission and I understand the argument in favor of dividends, but I don't have dividend reimburements in my food budget and I suspect no one else does either.  As others have said, we will probably have to consider our WSM purchases much more carefully.  (I should add that I have been receiving the senior discount and it is, by far, the most significant part of the savings and, for us, what makes it possible for us to shop at WSM as our primary source of groceries.)  And, if I can't shop at WSM as much as we have in the past, then we will be reducing our support for the broader mission.I certainly hope that the "other benefits" make it possible for us to maintain our spending level at WSM but from what I've seen thus far, unfortunately, I'm beginning to think about how to adjust our spending. And, a final note on risk and why dividends don't appear in anyone's food budget. The institution of dividends instead of discounts shifts the risks from the  co-op to individual consumers who, in general, are less able to assume those risks..and, therefore, are more likely to shift shopping behavior. (This is much like the shift in our corporate pension system from deferred compensation managed by professional investors (traditional pension) to 401Ks managed by small investors who are less able to manage the risks.) No one wants to manage risk, but who's better able to do so? cc: board@weaverstreetmarket.coop

We've been members for 11 years.  Back in the day, joining the co-op seemed worthwhile for two reasons:1. We were helping build a small, local business that needed members to succeed.2. The counter-discounts would return our investment over a relatively short period of time.In larger part, both goals have been realized.But now, neither are real lures for new members.  The co-op has largely turned into a self-sustaining retail business.  The discount is gone.So, why join?  What is the lure for new members?  It seems to me that a potential annual dividend is not a strong enough incentive.  What will the impact be on new membership development? And if new membership declines, will this be seen as a critical decision that pushed WSM away from a co-op model towards straight investor-supported retail.

Back 2 to 3 decades ago when we lived next to Woodstock, NY we joined a food coop.   The coop was not a retail store.  Once a week each member family filled out a form with their choices for the week.  The following week the member picked up and paid for their order which was already bagged and boxed at the coop location.  Pickup day also turned into a social gathering. There were no shelves or even cash registers.  You had to be an owner.  There were no discounts, but you saved money through bulk purchasing power.  Quality wa high.  All staff were volunteers.  There were no paid positions and membership required a certain number of volunteer hours each month.In other words it was a "Cooperative" in the real sense of the word. Both WSM and Chatham Market Place (We belong to both) resemble privately owned retail businesses more than the above description of a coop and have similar problems that any retail business may have.  The expansion of WSM into Southern Village and Hillsborough might have been thought to bring economies of scale but have been caught like other businesses in the economic downturn.  For me, the movement of food prep and meat/fish packaging from Weaver Street to Hillsborough has resulted in some loss of quality.  Since the first order of business of any business is survival I am not going to criticize the change in owner compensation model. The $65000 dollar a month loss was not sustainable.  However, it might mean that I end up spending less at WSM.   Like any individual I have a fiscal responsibility to my family. Only time will tell if the recent decisions were the right ones.

I agree with Geoff Gilson that WSM may have started derailing when
it "supersized" the Carrboro store.  To those who don't remember it
before, a whole lot of lawn was lost in the expansion, which was
outward toward the road.  (Sorry, Geoff, but you have no clue as to my identity, and sometimes neither do I.) But I'm back to the volunteer nature of
a coop.  Davepr has described one end of the spectrum, with all members
being volunteers, sharing work to enjoy economies of bulk purchasing. 
In this vein, is very certain that WSM could look to its members
to help take up the economic slack.Note
also that WSM is more than a grocery, but in its Carrboro location it
is a true commons, where many people meet, begin new friendships, talk
business, study many different things, flirt, and so on.  The place
could be reduced to a coffee shop and bar, with a bit of food, and
people would still come.  It would be a big loss if it were turned into
condos or something.   Hence, I suggest the following: WSM
and its board bring back the volunteer program in a really big way. 
Don't fire staff, but don't fill positions that come open when people
move on.  It would be hard to believe that it can't be done and that
the management could not manage it.  This ain't rocket science.  More
volunteers would help bring WSM back to its coop roots, building
community all the more.  With the downturn, it's certain there are a
lot of people now with the time to volunteer, especially with the
discount incentive for so doing.If people want this approach or others to be taken up by the board, I recommend a petition drive.  There's no more effective way to get the points across to them.

In the early 1990s, when Wellspring (Whole Foods) first opened, WSM responded by increasing its focus on member/owner-ship. I don't recall the details, but there was a lot of focus on building a culture of ownership with tangible rewards. The result was that, after an initial 15% decline, sales quickly rebounded. I was very impressed by the approach at that time. Two years later, the store initiated the major expansion that led to the subsequent era of growth.With that history in mind, it is disappointing that the current financial challenge was answered not by asking member-owners to do more for the store but by the  store deciding to do less for them.More troubling perhaps is how it was done: a decision was made with after-the-fact member meetings to discuss. The common notion of a cooperative would suggest that this is backwards. A member meeting to lay out the financial challenges and engage our creative thinking on solutions might have led to the same result... or perhaps to a better one. BTW, I have served on the board of a coop with the patronage dividend system as well as that of WSM. I've always felt that if the goal is to create that culture of ownership discussed above the dividend with its regular reinforcement is far superior. 

We should be clear about the functions of boards.  The board members are usually busy, active people without much real knowledge of the workings of the organization they serve.  They are dependent upon the staff for the information they receive, and usually have little time to digest it.  A smart management already knows what a board is going to decide before it meets, from having talked with them in the right way(s) (with persuasion of various types), and usually boards take their decisions from the recommendations of the management.  WSM is not going to be any different, and the members should keep this factor in mind as they focus, if indeed they do, on the decisions made to date and what to do next.  Focus on the management and the information and means of persuasion they have used to ensure the outcome that they decided in advance.  Forget the board, in other words, and don't let management hide behind what they will claim is a group decision...it is not, and it is the management that needs to do the explaining, even if the board has the right talking points.  We need to dig deeper to learn the whats, whens and whys and in particular why important alternatives have been discarded, such as upping use of volunteers in a time of crisis, rather than the opposite. Maybe it really is time for new managment, some new blood.  Have you ever seen the highest level managers of WSM working the floor or a cash register, if only once in a while?  Good managers do that, to keep the pulse of the organization.  I'm not saying fire them, just move them over to make room for some new people with ideas representative of the membership.

WeaverGuy you have described our local governing elected Boards and managerment as well. Maybe you should run for office.

Dan, you seem to categorically state that discounts are better than dividends. On what evidence?  If that's so why have coops almost unanimously moved away from them?  My personal view is the opposite. In my view the nickel and dime discounting screws up planning and doesn't really seem like significant money.  As I think I said above, it's like paying bonuses on every paycheck before you know what the end of year financials look like.  It's just bad budgeting in my view.  And I believe there are other and better ways to reward membership.  Also, sometimes the fact that lots of people aren't commenting isn't a reflection of apathy, it's a reflection of relative satisfaction.  I've thought that in years when the BoA runs unopposed.  It's not necessarily a bad thing that people are happy enough with their leaders that they don't really think they need to be replaced. David Beck