Thursday, September 27, 2007

Herald's Chicken: Task Force to Save the "Co-op"

The Herald has learned that a community-based Task Force has been formed to preserve the Hyde Park Cooperative Society store at 55th and Lake Park Avenue. Task force co-chair Jack B. Nimby explained "The Co-op represents a unique shopping experience -- spoiled food and surly service -- which is fast disappearing from the American retail landscape. We want to preserve this for future generations."

The task force is in the "organizing stages" according to Mr. Nimby. Secret meetings are planned every Wednesday night at Cosimo's restaurant. The task force will hold a public meeting on the Winter Solstice at 2:15 pm at the Hyde Park Neighborhood Club.

The task force plans to cement community support for their drive to save the Co-op by circulating a petition. Ian A. M. White, Task Force co-chair in charge of propaganda, plans to ask community residents if they agree that "we don't want to lose our neighborhood grocery store." They plan on presenting their petition at the annual Trustee meeting of the University of Chicago and ask the University to establish an endowment to subsidize the operation of the Co-op. Endowment payout would be pegged to the current losses of some $840,000 per year.

"The University can afford to build expensive hotels and swanky housing for their students and visitors. Why can't they throw a little cash our way?" wonders Mr. Nimby.

Mr. White has also worked out a complete schedule of coverage for publication in the Herald. "We are putting the finishing touches on some really strong editorials that we are ghost writing for the Herald Editor."

The task force also plans to consolidate the Co-op's near monopoly position. "We realize that as long as even weak competitive forces are at play, the Co-op cannot decline to complete mediocrity," detailed Mr. Nimby. The task force plans on working with Congressman Jesse Jackson Jr to obtain exemption from the Sherman Anti-Trust Act for the Co-op. According to Task Force plans, University Police will search cars entering Hyde Park for Whole Foods, Dominick's and Trader Joes bags. "We want to eliminate the meddling of outsiders," said Mr. Nimby.

The Task Force is particularly disturbed by the Peapod Conspiracy Company's inroads. "This is unfair competition. With a few clicks, Hyde Parkers can order high quality groceries at lower prices than the Co-op. We want to level the playing field, " said Task Force spokesman Greg Trotsky. "The maddening thing is there is no legal recourse to exclude them from our turf." The Herald has learned that an affiliated organization is considering placing potatoes and bananas in the exhaust pipes of Peapod trucks but this rumor cannot be confirmed at press time.

Mirroring the "Save the Point" bumper sticker campaign, the Task Force plans to blanket Hyde Park with "Spoiled Rotten by the Co-op" bumper stickers. An earlier proposal of "I Shop the Co-op" was rejected as requiring too much commitment of supporters.

The Task Force has already attracted international attention to the Co-op. The Museum of the Burma Road has been searching for years for samples of fly-blown meat for their exhibit on the horrendous conditions endured by British and Australian POWs. "We have, at last, found a source for this important exhibit," the museum director was heard to say.

Mr Nimby is expecting great things to come. "We are just picking up steam and coming into full stride. We are looking forward to holding our first meeting sometime this fall. Aldermen Leslie Hairston and Toni Preckwinkle will be invited to grovel before the assembled task force."

EDITOR'S NOTE: This article bears as much resemblance to the truth as many Herald stories.

19 comments:

Patrick M. Klemz said...

Lord, save us all from the free market. Where do I sign?

Peter Rossi said...

The Co-op is saving us from the free market.

I don't want to be saved.

Unfortunately, those who seek refuge from the free market were once able to emigrate to the Soviet block where they could stand in line for poor quality food.

That alternative is gone so I imagine you want to make HP into a museum for Soviet produce!

James said...

C'mon, now. You could give credit where credit is due. The Co-op is down to one very profitable store now, not the monopolistic three. We even sold the 53rd St. lease to one of our competitors. The current board is part of the solution.

If you want competition in the grocery retail sector in HP, tell the Univ. They own most of the land in HP. And don't just tell them you want another grocery store because that can be taken as a request for a replacement for the Co-op, which might be an improvement in the short run but would still leave us with a near-monopoly grocer. If you want, tell them you want two new grocers.

And the 55th St. store makes about a million a year. The Co-op is in financial straits only because of the 47th St. debacle.

And we have a new General Manager who started off by improving Produce and Pricing.

chicago pop said...

James -- or, as I may start calling you (affectionately), Mr. Hooper: the Co-op makes about a million a year. Which is about what it owes in back rent. On top of that, you're paying rent to an empty store on 47th St that you're locked into for the foreseeable future.

Meanwhile, as you are perhaps aware, Peapod has more than doubled its deliveries to Hyde Park since 2002, and is growing 3X as fast in Hyde Park as in Chicago as a whole.

Looking to the area north of us, between 51st and 37th, from LSD to the DRE, a 2004 market research study states that $450,000,000 of spending goes outside the area, with groceries being the 2nd largest component of that figure.

In Hyde Park, anywhere from 25-50% of retail spending goes outside the area, which using the above 2004 number would mean roughly 150 to 300 million in retail spending leaves Hyde Park. Since I don't know how much of that leakage goes to food shopping, let's say 50%. That means anywhere from $75,000,000 to $150,000,000 is spent on food by people in Hyde Park *outside* of Hyde Park.

In that light, a gross *revenue* (unless you mean net profit) of $1,000,000 -- in a business that depends vitally on volume -- together with the balance sheet liabilities detailed above, the rapid loss of market share to a competitor (Peapod), and a failure to capture an enormous flow of grocery spending going outside the neighborhood, offers legitimate basis upon which to doubt that any change in board composition, or of General Manager, can fix this business model.

If the Co-op were a publicly traded stock, and I saw debt, erosion of market share, hungry competitors, a history of poor management decisions, one of which involved taking on massive fixed costs (47th St.), I have to say I don't think I would expect to hear Warren Buffet talking this one up.

Right now the Co-op is like the airlines or Amtrak. It is a chronically unprofitable operation when taken as a whole, even though some lines or branches do well enough. But, as the US Gov. would never let the airlines or Amtrak go under for strategic reasons, the U of C will never let the Co-op go under. So until we get competition nearby (hell, even 71st St & Stony would be great -- are you listening, Leslie Hairston??) the drama will continue.

*Figures on Peapod are from 2004 MetroEdge report, presented in Delivery is oasis in food 'desert'
Online services see boom in areas with few grocery stores
[Chicagoland Final Edition]
[] []
Chicago Tribune - Chicago, Ill.
Author: Johnathon E Briggs
Date: Apr 1, 2007

*Figures on retail leakage are discussed here: http://hydeparkprogress.blogspot.com/2007/08/leakage.html

Peter Rossi said...

the only people who shop at the Co-op are those who have to -- the aged and students who don't have transportation.

Shame on you for exploiting the poor!

As chicago pop says, it is easy to make a profit when you don't pay your rent!

Everytime I go into the Co-op I find more mismanagement and spoiled food. The Produce department, once the best in Chicago (in the 1960s -- yes I used to go the Co-op then) is a disgrace. The fish department smells.

Thank God for Roosevelt Road and Peapod.

Peapod has done more to extend quality goods and service to the South Side in one year than the Co-op has done in 10.

The Co-op is the last dinosaur. I can't wait for the meteor.

Peter Rossi said...

see Beth Fama's pictures of the Co-op Produce department and a well-known store on Roosevelt Road. These pictures were taken two weeks ago.

Where is the improvement in produce this new manager is supposed to bring?

Why is a "profitable" store on a cash basis with its suppliers? The Co-op bounces it's checks.

What are you doing about the employees who can't lower theirselves to help the customers and check them out quickly? Go into Whole Foods-- you have to fight off the employees asking you to help. You don't have to go the service window to suggest something -- they ask!

The Coop has gone down in quality and service for 10 to 15 years. I do want a replacement as soon as humanly possible. So does everyone else.

Go into the Coop on Saturday am -- it is a ghost town.

James said...

You guys really need to think about this a little more.

And for crying out loud, learn a little about finance, would you? The Co-op at 55th St. runs a profit of about $1 million per year on sales revenues of $25 million per year. Unpaid rent is not counted as profit, my learned opponents; it's a liability on the books.

You have no proof in your argument that the 55th St. store has lost market share. I'm sure it has, but your figures don't prove it. In fact, for the last ten years, sales at the 55th St. store have been flat at $25 million per year. You could argue that more HP dollars spent on grocery retail, in total, mean that 55th St has lost market share, but even that figure would be meaningless without comparisons for, say, a single Jewel or Dominick's in the city.

Both on a sales/square foot and profit margins basis, 55th St. is in line with other grocers. I admit that there have been enormous problems with service, Produce and prices over the last ten years. However, the vast majority of those problems, in my judgment, can be laid at the feet of the 47th St. decision. That debacle may end up costing about $10 million when all is said and done.

But even worse than the financial impact, again in my judgment, has been the lack of focus this has brought on for management and the impact of a monopolization strategy for the neighborhood. All I'm asking is that you give the current board a little credit for trying to undue the wrongs of the past and hiring an excellent General Manager. Strategy and GM-hiring are our two largest responsibilities.

The Co-op is not "chronically unprofitable". Rather, it's a profitable business with a huge debt load and diminished goodwill. Get it right. would you?

chicago pop said...

James: "You have no proof in your argument that the 55th St. store has lost market share. I'm sure it has, but your figures don't prove it."

*Not proof, but suggestive given the data available. It would be interesting to get the data you mention on comparative sales.

"All I'm asking is that you give the current board a little credit for trying to undue the wrongs of the past and hiring an excellent General Manager."

*Fair enough.

"Rather, it's [the Co-op] a profitable business with a huge debt load and diminished goodwill."

*Perhaps I wasn't taking a long enough time-span into account in calling it chronically unprofitable. The above description seems accurate enough, and conveys the magnitude of the problem.

James said...

As for Peter Rossi's posts, it's hard to know where to start. I've already acknowledged that the Co-op made a lot of mistakes in the last ten years. I'm only saying two things, really. One is that the board has done its job over the last three years by hiring an excellent GM and changing the strategy for the Co-op-- as well as spending countless hours on these real estate matters. The second is that the lack of a second large grocer is the long-term problem in HP, whether or not the Co-op occupies the Lake Park Shopping Center.

Rossi: "The only people who shop at the Co-op are those who have to -- the aged and students who don't have transportation. Shame on you for exploiting the poor!"

Well, I'm neither aged nor a student nor poor and I shop at the Co-op. These kinds of blanket statements of yours end up harming an argument more than helping. I'd agree that those who lack a car form a large portion of our customer base and that those who have a car are more likely to shop in other neighborhoods. But that would be true of any densely populated neighborhood.

This finger-pointing about "taking advantage of the poor" is hypocritical. Make up your mind. Should the Co-op act like any other privately-owned capitalist enterprise and take advantage of its near-monopoly position? (The Jewels on the south side are no day at the beach, you know.) Or should it have a less capitalistic mission, which, of course, folks on this blog decry as some shade of Sovietism?

The "shame on you" is particularly ugly. I've spent countless hours this year trying to make the Co-op a better store. All you do is shake your finger at people. What are you doing to help the downtrodden masses of HP? Oh, don't look away, Peter Rossi, their hungry faces look to you for leadership!

Rossi:"Everytime I go into the Co-op I find more mismanagement and spoiled food. The Produce department, once the best in Chicago (in the 1960s -- yes I used to go the Co-op then) is a disgrace. The fish department smells."

Don't you wish you had a second choice for groceries in HP? Boy, that Village Foods is doing a great job making you happy, aren't they?

Rossi:"Thank God for Roosevelt Road and Peapod. Peapod has done more to extend quality goods and service to the South Side in one year than the Co-op has done in 10."

I agree. Choice is good. I haven't used Peapod, but I know people who love it.

Rossi:"The Co-op is the last dinosaur. I can't wait for the meteor."

Well, a literal meteor would probably take out a lot of innocent bystanders so I would think you'd hope for something else. Were the dinosaurs killed off by a meteor or by more flexible competition? Probably the latter.

Which brings us to the fact you always overlook. The Co-op survived a host of grocery competitors in HP. The chains left, you know. 75 years old, with a very profitable store-- well, that sounds like a pretty good business model to me.

Rossi:"see Beth Fama's pictures of the Co-op Produce department and a well-known store on Roosevelt Road. These pictures were taken two weeks ago. Where is the improvement in produce this new manager is supposed to bring?"

I'm not going to claim that our Produce section is the equal of Whole Foods. Jeez. The new GM has only been there a month and he's mostly concentrated on the Produce section. If you haven't noticed improvements, you're just not paying attention.

Rossi:"Why is a 'profitable' store on a cash basis with its suppliers? The Co-op bounces it's checks."

How many times does this have to be explained? A previous board made a huge mistake, loading up the Co-op with debt. GMs have had the choice of either juggling our accounts with smaller vendors, not paying our rent to the Univ or not paying our rent on 47th St (and our landlord there is our big supplier).

Even though 55th St continues to make a profit, debt and continuing 47th St expenses eat up that profit.

Rossi:"What are you doing about the employees who can't lower theirselves to help the customers and check them out quickly? Go into Whole Foods-- you have to fight off the employees asking you to help. You don't have to go the service window to suggest something -- they ask!"

Customer Service in retail is one of the things I know the most about, since I've worked for one of the very best stores in this regard. I can only tell you that it's a difficult thing to change overnight. My own experience at the Co-op has been a fairly steady improvement over the last few years. I hated the customer service there when I first came to HP. More than anything, it seems very inconsistent with some excellent cashiers and other sales personnel, but then some who really don't convey much in the way of interest in customer service.

Changing a corporate culture like that is the toughest nut to crack. I have a suggestion that I think would help, but it's nearly impossible to get grocery people who haven't seen what I've seen to believe me.

Rossi:"The Coop has gone down in quality and service for 10 to 15 years. I do want a replacement as soon as humanly possible. So does everyone else."

Well, no, that's demonstrably false. We have board elections every year at the Co-op and AFAIK only one nominee-- Scott-- has ever run on the platform that we should vacate 55th St. He got slaughtered in that election.

At the HPKCC-hosted forum on the Co-op last year, the attendees voted on whether they thought the Co-op should be replaced, make changes or get better management. About a third voted each way. Another option given was basically leave it the way it is and even that got a handful of votes, which I find unbelievable.

No, not everyone wants the Co-op to be replaced. We all want a better store at that location, but there are also about a dozen definitions of "better", many of which conflict with each other.

Rossi:"Go into the Coop on Saturday am -- it is a ghost town."

Then why's the parking lot full? These people who drive out of HP for their groceries, where are all these hoards going to park, if only the Co-op could be all things to all people?

Elizabeth Fama said...

James,

You've mentioned before that grocery chains have left Hyde Park, while the Co-Op has survived; can you provide more details for those of us who don't know? The only chain I know of is the old A&P that sat on the edge of what is now Nichols Park, and I thought it was forced out during urban renewal.

I know nothing about managing grocery stores, so I'll say purely from the customer's point of view that it's not clear WHY customer service is a tough nut to crack, so you can see how frustrated we might be. Of all the changes that a manager could make, it seems to a non-expert that changing the energy and helpfulness of the personnel would be the cheapest fix of all -- a lot less money than the new scanning and cash register equipment that you mentioned are languishing in a basement somewhere.

You don't mention your specific suggestion regarding customer service that the Co-Op hasn't taken, but I'm interested to know what it is.

E.F.

James said...

Shoot! I should have guessed that Elizabeth would ask for specifics. I knew about the A&P and I thought we had another grocer who was part of a chain, but I guess I need to nail that one down.

Customer Service is complicated. It's hard to quantify and, historically, non-commissioned positions have been held by women, so there's a lingering instinct by retailers to get by on the cheap and an inclination to believe that anyone can do it. Plus, the best character trait for customer service is the need to be liked, which is a crappy trait for a manager to have, so very few successful managers were also successful customer service people.

Imagine having to be nice to strangers for 8 hours a day. Now, consider what it must be like to have to be nice to strangers in a store where very little works the way it's supposed to. It was the hardest job I've ever had even in a store that worked well; I'll take janitorial work any day. As a front end manager, I found that my best cashiers tended to be people who were-- frankly speaking-- nuts. It was hard to find someone who could charm strangers while also keeping a till balanced and also showing up on time, with the last two skills easy to quantify and therefore more likely to be a basis for discipline.

The front end has the highest turnover in the store and that's true in almost every store. Now, you'd think that people who are competing in the market and have capitalist values would say, "Hey, maybe we ought to pay cashiers more than our other entry level people, because we're having trouble keeping them." Or, "hey, our customers are our greatest asset, so maybe we ought to pay the people who have the most contact with our customers the most money." That rarely happens.

So, I'd try to make somewhere else in the store my point of entry for new employees and pay cashiers and deli clerks and other high-customer-contact employees more money so that they enjoy a higher status in the store. I'd try to promote into those positions instead of promoting out of them.

However, that's not my big secret for improving customer service. The thing you can never convince grocery professionals to do is: Get rid of the baggers. Well, keep one or two for price checks and carryouts for people who need help out. But move the labor hours into the cashier pool. Instead of having 5 baggers and 7 cashiers, you have 10 cashiers and 2 baggers.

Grocery professionals think that baggers make their checkstands more efficient. That's true. If there's a shortage of checkstands, either chronically or during Holidays, baggers make sense. But baggers are not efficient on labor hours. Next time you're in a grocery store, notice how much time is wasted by baggers standing around or cashiers waiting for a bagger to finish. Even considering that cashiers tend to make slightly more, you're just about as well-off from a labor-hours efficiency standard to go heavy on cashiers.

The reason this helps with customer service is that, without baggers, cashiers have full responsibility for the order. They smile, they ring up the order, they chat up the customer and they bag the order. If something's wrong-- like merchandise being left behind-- there's only one person to hold responsible.

Also, if there's a cashier and a bagger and a customer at the register at the same time, who's doing the chatting? The cashier and the bagger. If it's just the cashier, there's only the customer to talk to.

And, the perception customers have of how long it takes to check out doesn't so much include the time the cashier is attending to them. It's the time between wheeling into line and waiting to be able to put your groceries on the belt that counts the most. If there are more registers open because you've got the baggers on the checkstands, then that initial wait time is less.

If you stop worrying about efficiency and let cashiers take a little extra time to talk to customers, the cashiers are happier. Bagging the groceries allows even more time for chatting with customers. The labor costs are pretty similar this way and customer service is much better.

I'd also raise cashier wages and improve the furniture at their work stations, if it were up to me-- which it isn't.

SR said...

FWIW, I think customer service is a neighborhood-wide problem, not just the Coop's. The number of stores in Hyde Park where you don't get much worse service than anywhere else in the city can be counted on hand, probably (and I'm including restaurants. Maybe especially restaurants). The exceptions seem to be places that are too new to know they can get away with much less, or small family-run places with a devoted clientele.

I've always assumed it was because of some general "fu where else you gonna go" attitude that prevails because of the relatively low rate of car ownership, the small number of competing businesses in the neighborhood, and the long distance to other retail. I really can't vote with my feet as much as I would if I had a car, so there's not as much market punishment for bad customer service as there is out in the burbs (or on the North Side, where there are actually multiple stores serving most retail niches).

I also wonder if there may be a problem with not enough people who do service jobs being able to afford to live in the neighborhood (this is probably gradually getting worse as apartment buildings keep going condo), so managers can't just fire people left and right, they have to consider whether they're going to be able to replace that person easily. In Hyde Park the answer is probably "No." And maybe employees pick up on that and figure out how to get by with as little effort as possible.

J/tati said...

SR said...

FWIW, I think customer service is a neighborhood-wide problem,


I work at a bicycle shop in Hyde Park. I'd rate the customer service to be adequate, but not great. The strange thing is that most customers seem so conditioned to expect terrible service that they're shocked when I'm nothing more than civil and honest. Whenever I provide an estimate it's funny to watch folks physically brace themselves to be screwed (my clients being geographically limited, especially when it's their primary mode of transport that requires maintenance)... and when I provide a reasonable number, there's either a sigh of relief -- or sometimes, a look of disbelief, as if there must be some kind of catch or misdirection.

I have never experienced this phenomenon in over twenty years in the business. At first I thought it was a function of my immediate competition, but now after talking with folks, it's pretty clear that this is a kind of universal approach to retail transactions for many in the neighborhood, which is a little sad.

Peter Rossi said...

If you treat your customers like criminals, the only customers you will have will be criminals. This is the philosophy taken by many businesses in HP including but not restricted to the Co-op.

Peter Rossi said...

James- there has been steady improvement in customer service over the past few years.

Are you forgetting that ridiculous episode in which the Co-op when more than a month without proper check-out equipment, forcing customers to wait while prices were entered by hand? Wasn't that in 06?

You didn't answer my comments about the rotten/badly stocked/poor variety produce department.

Would you buy fish from a fish department that stinks?

We aren't talking WF level of service or even Jewel!

I'm sure you are well-intentioned but somewhat out of touch with reality. The Co-op only stays in business because of the University's charity. If they demanded that back rent, you'd be gone in a flash.

You are right about one thing- WF could probably make a lot more than 1 million per year and deliver better service/product/variety at the Co-op location! They have the smarts and the scale economies that the Co-op can never achieve, however well-intentioned the Board is.

James said...

Rossi: "Are you forgetting that ridiculous episode in which the Co-op when more than a month without proper check-out equipment, forcing customers to wait while prices were entered by hand."

That was unforgivable. It's true that that should be considered part of customer service, but it's not what most shoppers mean when they use the term. Usually they're referring to rudeness or indifference, sometimes ignorance, on the part of front line service personnel. But the scanning problem is fixed and the Co-op should be ok on that for the forseeable future.

Rossi: "You didn't answer my comments about the rotten/badly stocked/poor variety produce department. Would you buy fish from a fish department that stinks?"

I think I talked a lot about the Produce Dep't being one of the things the new GM wants to focus on. There are already some nice improvements in Produce and I think you'll see more, gradually.

I'll look at the fish counter more often, but I just don't hear complaints about it. Produce, Service, out of stocks-- those are what I hear about.

Rossi: "I'm sure you are well-intentioned but somewhat out of touch with reality. The Co-op only stays in business because of the University's charity. If they demanded that back rent, you'd be gone in a flash."

That's pretty funny that you start off the paragraph by saying I'm out of touch and then follow it up with two completely ridiculous assertions. You simply have no idea what you're talking about. Wrong yet again, Rossi!

So, are you saying that you'd replace the Co-op, if you could, with Whole Foods? You just talk to a small circle of people in HP, don't you?

Elizabeth Fama said...

I believe the discussion about Whole Foods ever occupying the 55th Street space might be moot, because it isn't the right size, doesn't have the right size parking lot, etc.

But I think James may be wrong in assuming that if it wanted to be in that space, Whole Foods would not be able to satisfy the needs of this community -- poor and wealthy alike: Each WF store is tailored to its neighborhood, including what's stocked and pricing; there are economies of scale in their national operation; their administration seems to be top notch.

Regarding customer service, my daughter's friend worked at the North Ave. Whole Foods, and the requirements for employee training were rigorous and continuous, with frequent mandatory meetings. She lost her job because she failed to show up to one.

SR said...

FWIW, the Coop produce department has started looking mighty good to me since I've started shopping at Village Foods more often in the past year. It's still not as good as Hyde Park Produce, but it does have a bigger selection, and there are some things you can only get at the Coop.

Richard Gill said...

Good grief! Just look at all of that agitated word-processing with regard to the Co-op. That's enough evidence that the Co-op is a flop. If we had a good supermarket, we wouldn't be fighting about it.

Note to Task Force to Save the Co-op: The store is supposed to serve the community, not vice versa.