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Woes of the Pioneer

Troy’s co-op market isn’t getting the business it hoped it would

by Amy Halloran on July 28, 2011

The Pioneer Market in Troy is struggling to stay afloat, and not hiding it. Last week the Troy Community Food Cooperative sent a notice to its owners detailing some of the financial woes the store faces, such as a June loss of $18,000.

“Unless sales improve dramatically, we will be forced to close the co-op in a matter of months,” read the letter, which was e-mailed to owners and also sent to the press.

The market opened last October, after more than five years of planning. Sales rose through the fall, to $160,000 in the month of December, but the store grossed only $134,000 in June.

“One thing we didn’t figure in was seasonality of our business,” said Steve Muller, who is president of the co-op board. “Starting in May—May, June, July, each month has been weaker than the last month, and we believe a lot of owners are out of town and other customers are out of town.”

Muller joined the board in June, and he and other new board members found the financial situation to be worse than anticipated.

The board’s plans to address the crisis are many. Among them is shifting the product mix to more organic and natural foods, dropping the weekly 10-percent discount days offered to students, seniors and members, and applying for grants. One thing the board does not intend to do is increase its already significant commercial debt, which was incurred during early efforts to get the co-op off the ground.

“In order to make the co-op a reality, the board at the time decided to seek a lot of outside lending and consequently when we opened, we opened with a pretty heavy debt load, all of it pretty much commercial terms,” said Muller, who said debt expenses are about $10,000 a month.

The board is requesting more owner loans in an attempt to raise $60,000 by Sept. 1.

“Owners have agreed to extend these loans at very favorable terms—very low interest rates, fairly long maturity—so we have $174,000 in owner loans raised at various times, both prior to and after the store opened,” said Muller.

The board is also seeking better communication with its owners, including input at a meeting scheduled for Tuesday (Aug. 2) at 7 PM at Christ Church Methodist, 25 State St., Troy.

“I think that there hasn’t been enough two-way communication between the board and the ownership, and we want to try to change that,” said Muller.

The Troy Co-op is also asking its owners to shop. Owner sales make up 43 percent of total sales, and spending averages $110 a month. Only half the owners—which number a little over a thousand people—shopped at Pioneer in June.

Owners are worried. There is a grassroots movement developing to try to build more of the community infrastructure that is necessary to a co-op’s survival. Other owners are shopping more at the market since they got word of the store’s distress.

“I’d hate to see it close,” said one shopper, who is an owner but preferred not to be named. “I’m not sure that shifting back to natural foods is the right thing to do. I joined more as a civic responsibility because I wanted to see a grocery store downtown.”

Linda O’Malley is a member who made labels for the deli department when owner help was solicited in the spring. She is also a member at Honest Weight, and as such, used to work hours at the Albany store.

“I think that being a member worker gives you a different sense of how the store works. Somebody put those cans there, somebody made those signs,” she said.

O’Malley also has seen both co-ops face difficulty in trying to decide what to sell.

“Are we going to be an upscale organic specialty store?” she asked of Pioneer. “Or are we going to be a general downtown store?”

Steve Muller is well aware of this identity crisis, which, he said, was tagged by consultants as a flaw. Correcting it is not simple.

“We only have 4,100 square feet of selling space to find the right product mix to serve our owners, and others who want to find fresh produce downtown, who want to find natural and organic products downtown at a reasonable price, and those members of the community who are looking for a more traditional grocery experience,” he said.

The store is looking into becoming a WIC vendor, which is a challenge because the supplementary feeding program for women, infants and children is tied to specific products. SNAP, or food stamp, sales amount to $8,000 to $9,000 a month. Despite the gravity of the situation, Muller found cause to hope that the changes undertaken will result in good effect once the students return to downtown.

“Our store reset will be partially done,” he said. “I would be optimistic that by the time the end of September comes around we’ll have turned a corner.”