Dr. Anthony Goodwin Is Thinking Big

Dr Anthony Goodwin is the CEO of the Development Cooperative (DC). The DC is a subsidiary of National Cooperative Grocers (NCG) and was started in 2008 to house the store development services, which were transferred to NCG in 2020.

Since 2020 the DC has shifted to research and development with a focus on supporting startups, in particular stores that are in low income, low access areas.

 Jeremy DeChario (JD): Can you just give some background on what the DC is? I know, it changed in recent years. So just a little what you're focused on now, what you're working on.

Anthony Goodwin (AG): For the last five years we've been getting out there, seeing what's already existing in that space where folks are organizing, where are the co-ops that are in low-income, low access (LILA) neighborhoods that we could learn from. We’re just trying to identify what works and where some of the gaps were. We quickly realized that if NCG was going to support startups, we needed to do it further upstream, rather than the historic approach, which was near opening and applying for NCG membership.

One of our primary focuses is to develop resources and programs to support startups further upstream. We’ve added a Resource Manager position to focus on startups and engaging earlier. As folks kind of transition from establishing the co-op and working with Food Coop Initiative (FCI) to start into work on their business plan, that's where we'll be able to get plugged in and prepare them and put them on the path towards membership in NCG.

JD: Can you share a bit about your research and how you came to be interested in the co-op system?

AG: Yeah, so my research was focused on the effects of historic, discriminatory policy, specifically redlining, on food access and obesity rates in Ohio. There were 13 cities that were previously redlined in Ohio, and I looked at those cities in a map, and compared the neighborhoods that were redlined versus those that were identified as best areas and compared that with food access and obesity rates today. There was significant correlation between the two.

And then several other socio-economic factors: SNAP utilization, vehicle ownership homeownership and just two to three times difference between those areas that were redlined versus those that were not. It’s hard to think that that happens by chance, and just kind of points to the effects of some of these historic policies and even current policies and their effects on the built environment, food access and health outcomes.

Part of the correlation is really related to grocery access and kind of offset of the housing. Redlining was supermarket redlining. We’ve seen a lot of grocers take the same approach and either avoid or abandon communities of color and low income communities.

That’s where the food co-op comes in. We really see cooperatives as a solution to addressing food access challenges where we continue to see the big box grocers avoid these areas. In this more recent wave of food co-op development we're starting to see communities leverage the cooperative model to solve their food access needs through community ownership.

JD: There have already been some successes within the DC, too. Can you talk a bit about your work with the inclusive trade program and with Milestone Cooperative?

AG: We have also been looking at cooperative development, broadly and this, the Agri Foods co-op development. And so, we were working with Milestone Cooperative Association, which is a historic black farmers cooperative, trying to improve market access for them, business capacity, and provide access to NCG Co-ops. We were able to work with Milestone, get them approved as a vendor into UNFI. We'll be now offering our third year of watermelons and sweet potatoes.

We were able to be successful, helping Milestone increase business capacity to become a vendor of UNFI, which is no small feat, and then increase access and provide that access to NCG Co-ops. With the added benefit of their ability to sell outside of the NCG system. There is a conventional SUPERVALU warehouse 15 minutes down the road from Milestone that they've never had access to before.

JD: I’d also love to hear about Community Cooperative Markets (CCM) and the DC’s work on the what a co-op retail chain could look like. The potential impacts on the NCG system and what you see as a broader framework of that moving forward.

AG: CCM was a cooperative that was established in 2020. It was an existing co-op called New Leaf Market that the DC took an ownership stake of and so it is now a hybrid co-op: two-thirds consumer owned, one-third owned by the DC. The vision was to be able to create national retail cooperative, similar to REI, but for groceries to help accelerate cooperative development and recognize the efficiencies in the advantages of centralized shared services rather than the difficulty in operating a single store. The conversion happened during the pandemic, in 2020, so it’s taking longer to really get the model stable enough to think about expansion but we're at that point now.

We’re starting to think about what is our target strategy, there’s a couple of different paths we could take: One would be around acquiring and converting independent grocery stores. There are a lot of aging independent operators that are looking for an exit or retirement, and, to get the scale with CCM, we would target these independents, acquire one and convert them to cooperative ownership. There is also co-op consolidation, there's a lot of single store or small existing co-ops that could benefit from some scale and shared services, so, are there existing co-ops that we could consolidate under one banner as a path. And a third strategy could just be kind of more organic, identify high potential target markets and more of a new build approach.

We have expansion committee, that's in the lab and are working on a business strategy and the hope is within the next six months or so that we'll have a business plan on the idea is to go out and fundraise, building this and a national cooperative. If you look at other countries, it's pretty common in Italy, Mondragon(Spain), Finland. You know, they have these national banners and at least within the US. Most cooperative growth is focused local and regional. We think there's an advantage to have a national banner that has a hundred stores and 20 million members. What kind of power could that bring as we try to accelerate the growth of the cooperative ecosystem? It’s a big idea right now, but hopefully in the next six months we've got some clarity, and a pretty clear vision and would go out and fundraise.

JD: Yeah, I do have some places in mind where you'd like to seek funding to start or like, where is your focus on raising the capital to start this process.

AG: Yeah, we've talked to NCBA a bit. There is quite a bit of food access and food as medicine grant dollars out there. UC Davis is also launching an initiative for civic and cooperative innovation with the goal to link social impact capital to cooperative projects. We will see what partnerships would look like but we think probably tapping into some philanthropic or social impact funding this is a way we would go.

JD: The DC also just got a grant from the NCBA, right?  I think that's another really exciting victory.

AG: It is to support CCM expansion strategy. We've got a $50,000 grant as part of their historically underserved grant program and we're able to conduct landscape analysis and hire a consultant to develop a community engagement and governance strategy. This was particularly focused on if the DC/CCM acquire an independent store or chain. So we had a national landscape analysis done to find out how many independents are out there. We have some preliminary criteria that we would want to for acquisition targets and so they did a scan of how many are out there to give a big picture market opportunity snapshot.

Then we also had a community engagement strategy developed. If we're moving into a community, we're acquiring this independent, it isn’t your typical grassroots developing cooperative. How do we make sure there is still that community ownership and buy in? If we're going in and kind of, you know, Giving a community a co-op? How do we make sure we maintain that community engagement?

And then from a governance standpoint today, CCM is just one location. And so as we look to expand, you know, what kind of things we need to think about governance standpoint, like the board, as it goes from a single store to a multi-store and then, you know, you have national representation national enterprise but then kind of local needs.

JD: I know it is still early, but how do you consider balancing local control in these stores with national/DC ownership?

AG: If there's a store somewhere, those local members could join pretty similar to an REI where, you know the local membership own it. But it's one membership base one, one Board of Directors. The idea is that it would continue to at least be majority consumer owned and that could grow over time.

We’ve thought about local advisory committees to help in making sure we're maintaining that local input while still having the one Board. It gave us some good food for thought that will inform the business plan and the overall strategy and I look forward to continuing to build that relationship with NCBA.

JD: Can you tell me a bit about your CCMA session: it’s a participatory session about food co-op startups. How do you see the growth in startups opening co-ops in LILA areas or how all this is contributing to the broader success of co-ops nationally?

AG: I think the more that we diversify the cooperative system the more that we're able to provide benefits and resources that can serve LILA communities. When you look at the majority of food co-ops in the country, most are natural/organic in your traditional affluent college town. So a lot of the resources and purchasing programs have been developed to help to support and grow that.

When we think of co-ops that are more hybrid or offering conventional the scale isn't there yet. And the experience isn't there yet to generate a lot of benefit and so the only way we're going to be able to do that is to grow the system and get more experience and get more co-ops that are beyond just the natural/organic so we can develop resources to better serve the cooperative ecosystem as a whole.

JD: How do you think, like how would you measure success in in some of these co-ops? It's not, especially early on, the straightforward business success of “We're gonna be profitable.” How do you envision success for these co-ops and how do we get there?

AG: Profitability is important I guess, you know if we're able to develop alternative funding models that allow them a little bit more runway and so, Maybe they're able to access philanthropic funding, or they're able to have, you know, more cap but more patient capital that gives them a little bit more runway.

That goes back to having the resources and the benefits from kind of a virtual chain standpoint that give them a better opportunity to succeed. Particularly if they're going to be offering primarily a conventional product line until we get the scale to so that they can compete, you know, from a price standpoint that will help them to be able to be more competitive and hopefully become, you know, more profitable sooner.

I don't necessarily think there's anything inherently like 'you're doomed to not be successful or profitable because you're in a LILA community'. It's just, it's hard and, you know, retail is hard. Maybe you're operating in a little bit more of a price conscious environment, where you're competing against Walmart or the dollar stores and so price really matters. But I do think that the more that we're able to build that that volume in the system that we can be more competitive and then, theoretically, have a better chance towards profitability.

I think that's been some of the challenge of some of the prior LILA co-ops that haven't been successful is that they really have had no advantage from a price standpoint. It wasn't anything inherently wrong with their operation, it was just the ability to compete in a tough market.

JD: Or even have access to the distribution, right?

AG: Or even yeah, right. Right.

JD: I know this is going to be some of the work of the Session. But do you see any easy opportunities for the co-op system as it currently exists to support this sort of development in a major way?

AG: Yeah, there seemed to be a gap between where groups would start kind of step one and go to FCI. That's the front door. They're really great at that early foundational and organizational structure and bylaws. And then there was kind of this gap and until a co-op is prepared for a feasibility. In that period of time, that's where we see some of a lot of the time span go by: it's averaging 10 to 12 years to start a co-op.

A well-intended community of people but they’re not grocery experts and maybe made some decisions out of passion or not data informed. We hope having an upstream approach and having this DC technical assistance program that we're able to link as groups transition from the vision and values and work focusing on business plan that we're able to help and provide that core education to help. Boards strengthen from just understanding the retail business helps with their retail strategy, then we're talking to funders to say to get clarity on “What is a fundable project? What do you want to see from a lending criteria standpoint?”

So that as were developing the business model it meets lender criteria and hopefully have more of a clear path to funding. So they feel good about us getting involved earlier and, you know, the being able to create more viable projects, and if we're clear and what they're looking for, hopefully, we can make that link a little better at least from a capital perspective. The goal is to shorten the development time by at least in half, five years or under. Everything part of that is just in just having a very clear process and then also, you know, making sure that that funding is available.

JD: Yes, you guys can kind of like bridge the gap between early formation and opening the doors when they can get that NCG sort of support.

AG: As we develop and we’re our putting together these suite of services for the DC, we really want to understand what's working. Where's the gap? Where's challenges? Where are there opportunities for partnerships?

The idea was rather than, you know, doing a traditional presentation and talking at the participants we will get to hear from those who are doing the work. From Board, GMs,  co-operates practitioners, and technical assistance providers so that we can hear from them and help inform the program at the DC is developing.