farmers_market_web.jpgBOISE, Idaho —The Boise Co-op eliminated thousands of slow-selling items, sweeping away the claustrophobic effect that accompanied too many offerings. The Wheatsville Food Co-op in Texas is opening its second store after 40 years. And in California, the Davis Food Co-op turned to a designer to revamp its look.


It’s no coincidence that food cooperatives across the U.S. are making big changes. Many are preparing for the arrival of a Whole Foods or Trader Joe’s, two organic- and specialty-food industry giants that are opening new stores nationwide.

Some co-ops are even dispatching camera-toting, intelligence-gathering crews to poach ideas from the big guys.

With demand for organic, natural and specialty food continuing to outpace other segments in the grocery industry, co-ops say they must improve their stores, identify trends and appeal to a changing audience as the competition moves in.

Whole Foods Market Inc. aims to triple stores to 1,000, including in Boise and Davis, Calif.; German-owned Trader Joe’s is expanding, too, with a 19 city “coming-soon” list.

“Co-ops had it easy for years” when customers had few other places to go, said Robynn Shrader, head of the 125-member, 164-store National Cooperative Grocer's Association. “It’s more complicated being a retailer today.”


The modern co-op movement dates back to the 1970s, when customer-owned food stores — including in Boise, Davis, Calif., and Austin, Texas — were organized to provide an alternative to national grocery chains. Despite typically higher prices, shoppers often feel as if they’re buying more than groceries, that they are supporting a lifestyle.

They emphasize community roots and, though they’ve evolved from when nearly everything came in big bulk bins, they still stock an average of 20 percent local products, compared to 6 percent at conventional stores, according to a study released in August by Shrader’s group. About 80 percent of co-ops’ produce is organic, compared to 12 percent for conventional grocers.

Over the years, demand for natural, organic foods has only grown. The Organic Trade Association reports 2011 sales rose 9 percent to $31.4 billion.

Even so, some co-ops have been hurt. In West Des Moines, Iowa, for instance, the Tall Grass Grocery Co-op closed in August, a year after opening and a month after Whole Foods’ arrival.

At the 40-year-old Davis Food Co-Op in Davis, sales slipped 7 percent after Trader Joe’s October 2010 opening, forcing wage freezes and retirement-plan cuts, manager Eric Stromberg said.

Though revenue has recovered, Whole Foods opens in October in this university town near Sacramento, so additional austerity measures are planned to navigate another dip.

“Honestly, the emotion I felt was anger,” he said. “I worked really hard to give our employees good benefits. And I hate to see that nibbled away.”


The Davis co-op is going on the offensive, too, enlisting a store designer who also works with Whole Foods to spiff up the place. Stromberg isn’t bashful about “shoplifting” ideas from his bigger rivals.

“The goal is you walk away with at least one good idea we can use in our store,” he said, describing how one crew was politely asked to leave a San Francisco Bay-area Whole Foods.

Whole Foods, which boosted second-quarter profit a third to $117 million and whose stock is valued at $18 billion, won't say when it hopes to crest the 1,000-store mark.

But Joe Rogoff, Whole Foods’ Seattle-based manager for Northwest stores, insisted the Austin-based retailer isn’t trying to muscle out smaller rivals. Rather, he hoped it turns on a whole new audience to natural, organic food.

One indicator for a new market’s potential is a successful co-op, said Rogoff, a co-op volunteer in Sonoma, Calif., in the 1970s. “I hope they stay vital,” Rogoff said. “They represent … the foundations of where we come from.”

Trader Joe’s didn't return phone calls and emails seeking comment.

In Boise, Ben Kuzma hired on as the local co-op's general manager in 2011, just as the store in the capital city's oldest neighborhood was about to be drenched by a wave of competition.

Two regional chains, Spokane, Wash.-based Huckleberry's and Denver's Natural Grocers arrived this year, while Whole Foods opens its 35,000-square-foot store a mile away in November.

So far, Kuzma said 2012 revenue growth has been cut in half, to about 3 percent, for a store that last year grossed $26 million. The impact could be even more significant when Whole Foods opens and lures curious shoppers away.


A veteran of California, Maine, and Arizona co-ops, Kuzma said looming competition forced him to cram a three-year store transformation into just one.

He joined the National Cooperative Grocers Association in February, to take advantage of the group’s national buying power. The company has also adopted new accounting standards and boosted employee training.