Keystone Co-Op #6: The Co-Operative Spirit in Action

posted by chicago pop

Rogue Faction Disrupts Co-Op Community Meeting

This Sunday's community meeting of the Co-Op membership to decide the fate of the institution promises to be great spectator sport, and we hope they'll be selling popcorn. We're expecting a model display of cooperative sentiment, as die-hards and dead-enders make their last stand against a Board and a frustrated majority of the membership dedicated to guiding the Co-Op gently to the junkyard.

If we're lucky, we may even see some blood on the floor as a few lone Board members attempt to seize control of the insolvent colossus and are beaten down by enraged grocery shoppers who are tired of the ceaseless propagandizing.

We'll begin this installment of Keystone Co-Op by giving credit where credit is due, and quoting directly from the recent to-the-point Maroon editorial collectively authored by that paper's editorial board (the only one in Chicago, we'll point out, that we usually agree with):

It has become increasingly clear that the Co-Op has no sustainable operating plan, and this time it has dug itself a hole too deep to climb out of. The University and the community must learn from the Co-Op debacle and invite outside competition into Hyde Park. Be it Trader Joe’s, Dominick’s, or some other chain store, this neighborhood deserves an affordable, financially stable supermarket. (November 13, 2007)

It should also be noted that today's sepia-tinted story on the front page of the Tribune's "Metro" section captured two of its most supportive quotes from individuals over 90 years old. If there ever was a neighborhood minority, this age cohort is one of them.

"I love this store, it's a neighborhood institution," said Campbell, 92. "I admire its goals."

Leon Despres, former 5th Ward alderman, was there at the start. One cold day in December 1932, a young man was on his doorstep selling memberships in a food cooperative.

With all the isolationist talk about how much will be lost if profit-oriented chain grocers are "allowed" into the Special Economic Protection Zone known as Hyde Park (special mention here should be given to one Diane Schirf, who loves the Co-Op, hates chains except when they are in Ann Arbor, and doesn't like being called "stupid"), a few things should be pointed out.

A towering irony in this drama is the fact that one of the principle protagonists in the Co-Op's decline into insolvency is a cooperative that is acting like a rent-seeking monopolist. Certified Grocers, the Co-Op's landlord at 47th Street, is itself a cooperative which acts as a distributor to smaller and independent grocery stores. Certified's mission statement declares the wholesaler to be "a conscientious corporate citizen and ethical partner with our suppliers, customers, and employees."

As everyone concedes, Certified's position vis-a-vis the probable debt workout, or "Sorry Charlie" Option B outlined in Keystone Co-Op #5, remains a mystery. What is known and verifiable is that, unlike the Co-Op's landlord the University of Chicago, Certified has displayed very little of the "cooperative spirit" in its unwillingness to cut the Co-Op slack in its rent obligations over the last several years, and in its caginess regarding its participation in any debt buyout.

Certified has made money off an empty store for years now, and hasn't budged on the stranglehold lease at the 47th Street location, despite being approached several times since 2004. The U of C, during the same period, has lost money.

From Certified's perspective -- derived purely from the Rochdale Principles of 1844, no doubt -- it's not such a bad deal letting the rent checks come in from a drowning operation on the South Side, without lifting a finger to help solve the problem. Why should they? They have a sweetheart deal on the lease at 47th Street, and have every incentive to get the University -- the other non-profit in the equation -- to shoulder the problem so Certified can keep the rent checks coming until 2023.

If that's the spirit of cooperatives, then I'll take profit-seeking. At least the customer gets something out of it.

As the Herald sees it, and reminds us fairly often (Editorial of November 14, 2007), "We cannot assume a for-profit business will provide the sort of community support we have enjoyed with the Co-Op."

What kind of support might that be? Certified certainly doesn't seem to care about the Hyde Park community. So why would a Dominick's, or any other grocer, be worse?

Competent management and reliable operations are the most basic services that a business can provide a community. You can be altruistic with what's left over after you've paid your bills and don't owe anybody else -- including your shareholders -- money. But if you don't take care of those essentials, you can't do anything for anybody.

The propagandists at the Herald see it a different way -- that "support for the community" means support for managerial ineptitude and bad strategic decisions, and a tolerance for chronic and worsening indebtedness, declining quality, and poor service. That, and the delivery of some other magical combination of altruistic services besides what customers want, which is a competitively priced, well-stocked, and reliably run grocery store.

I can take or leave the full-time home economist or the sad variety of potato salads at the current deli counter. What I'd much rather have is a supermarket that doesn't lose the deli cook it hired from Whole Foods after a few months due to inadequate kitchen facilities.

Real community support should theoretically include allowing the membership to access the financials in a timely manner. Instead, complete and audited financials for fiscal 2007 were still not available as of November 10. Nor has any public explanation been given of how a legitimate vote can and will be taken based on out-of-date and corrupted membership data.

Support for the community should also include making Hyde Park a desirable place to live for newcomers to the community, including working people with families, not just the folks who were around when the Co-Op was founded during the Great Depression or have the time to run a major commercial institution.

The economy itself has changed in the intervening 8 decades, as well as the organizational structure of businesses and non-profit institutions alike. In the retail foods sector, the changes have been especially dramatic, weighing heavily against smaller-scale operations. This strikes directly at the core of the cooperative's initial competitive advantage, which was to buy and sell in bulk at a discount. While it may be possible for that model to function adequately in other sectors, in retail foods where volume is the name of the game, it's an uphill battle where even a small mistake can lead to disaster.

The surest way for Hyde Park to get over the malaise it has endured for nearly half a century is to become the hub of a rejuvenated South Side, a place where new people want to live and new business wants to locate. Not because it is sticking to institutions invented to solve the problems of the Great Depression or Urban Renewal over half a century ago, but because it is making the neighborhood the place where the best there is to offer from everywhere else wants to be.