1. The Goldilocks Solution Finding 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 Retail square feet 1,000 Year open 2007 First year sales $400,000 Current sales $912,000 Employees None until 2008 Volunteers Yes Hours of OperationMon -Sat 9 am - 7 pm Sun 10 am - 5:30 pm

11. Spiral Natural Foods First Store(s) (3 downtown locations) New Store 19792011 3,150 ft 2 retail1,855 ft 2 retail $400,000$765,000 $1M projected this year

12. Common Ground First StoreNew storeExpansion Opened in 198420082012 900 ft 2 retail2150 ft 2 retail5700 ft 2 retail $650,000 (in 2008)$1.9 million (yr. 1)$7.2 million (projected) $3.9 million (yr.4)

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

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

18. Questions?