Low sales and high building costs lead to staff cuts at new Tacoma co-op grocery
Central Co-op was a long time in returning to Tacoma, especially after multiple construction delays.
Those delays came at a cost.
The grocer co-op’s CEO, Catherine Willis Cleveland, points to higher than anticipated building costs, some tied to construction delays, and lower-than-expected sales at the new store as reasons behind recent layoffs at the store, 4502 N. Pearl St.
Cleveland told The News Tribune that nine positions were cut in July, most of them part-time. The store opened in June.
“Sales are lower than we anticipated,” she said, “and construction costs went over what we expected due to permit delays, financing delays and unforeseen building upgrades.”
The co-op saw repeat building delays that kept pushing back the opening date.
Cleveland took over leading the merged food co-op representing Seattle and Tacoma in March.
She recalled that the new store remodel was launched “in a boom time in construction, so prices continued to increase with the delays.”
“We spent more than we anticipated to get to the point of opening, and it cut into the funds buffer we had for the post-opening ramp-up,” Cleveland said.
That ramp-up, she said, did win the store positive feedback from members, particularly when compared with its previous smaller-format store.
“This is a huge, beautiful store! Love all the bulk food choices,” wrote a shopper on the store’s Facebook’s page.
The co-op, on its Facebook page in July, noted, “In the short time since our grand opening, over 550 South Sounders have become owners of the co-op! In addition, another 130 have re-activated their membership by shopping in the store.”
The grocer follows a “Solidarity model,” where ownership of Central Co-op is shared 50-50 between members and workers. You do not have to be a member to shop, though the membership with one-time payment of $100 (also payable in increments of $10 a month) comes with various benefits.
Given the combination of low sales and the construction’s ultimate costs, Cleveland said that after a point, “We had to course correct.”
She said the workers received severance pay and qualified for an additional 12 months of health insurance coverage under COBRA.
“It’s hard for a business to nail it on a projected staffing level,” she said, “but we’re going full tilt now on marketing and with (the former workers) knowing we want to hire them back,” once the tide turns.
To that end, the store has added more local vendors to its inventory, boosted its bulk section, and has an expanded “co-op basics” program, offering items at reduced cost.
Cleveland said the Tacoma store has seen some uptick in business.
“We are continuing to add to our inventory and responding to the community, and we’re jazzed to be there,” she said.
The new store, larger than its previous site on Sixth Avenue, is a full-service grocery that also offers dine-in options and made-to-order food from its deli. It sees itself filling an under-served niche that supports smaller, independent food vendors and brands with an emphasis on organics and natural foods.
On its website, Central Co-op defines itself “as a resource for ethically-produced, healthful foods and products, and up-to-the-minute information about personal and environmental health.”
Employees at the Tacoma site also recently signed authorization cards for union representation from UFCW Local 367, which the co-op said it will voluntarily recognize.
Workers at the Seattle co-op site are represented by UFCW Local 21.
The Tacoma store and its business model are an ambitious endeavor in an area with larger chain competitors, such as Fred Meyer, Safeway and Whole Foods, and other smaller area grocers such as Harbor Greens and Metropolitan Market.
Cleveland said she’s mindful that the co-op is still in its introductory phase.
“We’re still getting people coming in and telling us, ‘We didn’t even know you were open!’” she said. “A lot of it is just getting the word out that yes, we’re open.”
More information on the co-op is at https://www.centralcoop.coop/tacoma-store.php
This story was originally published August 3, 2019 at 6:00 AM.
