Many of the folks I know who live in Burlington, Vermont have a mixed perception of our co-operative grocery store, City Market. Though they appreciate the convenience of the downtown location, it’s often perceived as an overpriced natural foods store which might be nice for specialty items, but would break the bank if you did the bulk of your grocery shopping there. The attitude can ultimately be summed up by the epithet that some Burlingtonians apply to the store: “Shitty Mark-up.” Recent events, however, have revealed the utter falsehood of that impression; in fact, it has gotten to the point where anyone who lives in Burlington and doesn’t do the bulk of their shopping at City Market is clearly acting against their own economic self-interest.
There are several reasons that this is so, but they all derive from the fact that City Market, unlike all of the other grocery stores in the Burlington area, is not a joint stock corporation, a partnership, or a sole proprietorship, but a consumer co-operative. When many people think of food co-ops, what often comes to mind is organic, fair-trade, expensive but high-quality food. While it is true that City Market stocks a wide variety of such items, so does Healthy Living and Fresh Market, which are not co-ops. Instead of being defined by what it sells, the core of a co-op’s identity lies in its ownership structure.
A traditional corporation is owned by shareholders, who are entitled to a share of the profits commensurate to the amount of stock they own. A consumer co-op, by contrast, is owned by its customers (or, in co-op parlance, members). Each member may only own one “share” of “stock,” referred to as equity, and that share entitles him or her to a refund of the profits that were generated by that member’s patronage. As a result, the co-op operates on a non-profit basis in relation to its member-owners.
In concrete terms, this is what that looks like:
http://asftr.files.wordpress.c…
Sweet City Market Dough
The above is a picture is the patronage refund check that I received in the mail today from City Market, which refunds the profits the co-op made on my purchases between July 1, 2009 and June 30, 2010. It breaks down as follows. Over the course of that time period, I spent $2105.60 at City Market, and the co-op returned about 7.3% of that sum back to me. Half of that took the form of cash (hence the check is for $76.80), and an equal amount was retained in reserve to make sure the co-op has operating cash, money to pay for capital improvements, etc. However, I retain a claim to that sum: it (along with the retained money from previous years) is in an account under my name, and if I ever leave Burlington and close out my membership, I’ll receive that a check for the total amount.
Now, someone might object that such benefits come at the cost of a $15 per year membership fee; even if that were true, membership would still be worth it. However, the $15 yearly required payment is not a membership fee, but the payment for a piece of your share of “stock.” Each share has a value of $200, but the co-op doesn’t require new members to pay the full lump sum right away. Instead, one only has to fork over a minimum of $15 per year until the total reaches $200, after which no further payments are necessary. And, as in the case of the retained patronage refund (but unlike the fee paid to a company such as Costco), if you ever leave the co-op, you get that money back.
As such, I believe that it’s financially irresponsible for anyone living in Burlington to buy their groceries anywhere but City Market. Not only do you get a portion of money you spent there back in cash and build a bit of a nest egg in the form of your retained patronage account, but the prices for staple grocery items (even excluding the dividend) are, according to the Burlington Free Press, roughly on par with other area grocery stores. Add in the financial benefits of cooperative membership, and shopping anywhere else is literally throwing your money away. So, next time you need a gallon of milk, head over to the Customer Service counter at City Market and become a member; your credit union account will thank you!
P.S. Credit unions are also organized as consumer co-ops; why put your money in a bank someone else owns when you can own your own bank and keep the profits! A list of Vermont credit unions can be found here (http://www.vermontcreditunions.com/Consumer/JOIN/vtcusearch.htm) if you want to make the smart switch!
This is a nice explanation, but it omits a couple of things. IIRC, members got a discount (or conversely, if you didn’t show your membership card or weren’t a member, you paid a premium). That nice little sum subsidized operations and the dividend pay-out. Then for awhile, City Market issued $3 quarterly coupons as a discount, which had no relation to the amount you spent.
Being an out-of-town household (my spouse is a member, I’m not), we shop there rarely and primarily for ‘exotic’ foods and spices unavailable closer to home. Our refund/rebate/dividend check came to $14.07, which wouldn’t quite cover the cost of the yearly membership share/fee. Fortunately my spouse has been a member so long, she’s fully paid. At $15 per year, it would take 14 years to be paid up (and you would have overpaid by $10).
I’m not a member because the Co-op, upon re-incarnation as “City Market,” broke faith with people like me. I had been a member since 1977 and its early days as a bulk-buying pre-order group mostly made up of vegetarians who didn’t have a lot of options in Burlington. When it moved to bigger, cleaner digs on North Winooski Ave., we were offered a “lifetime membership” deal, a buy-in for $70. I paid, and I did work shifts throughout my time as a member (at first a requirement, then an option, finally dispensed with during the “professionalization” phase in transition to “City Market”). After a few years the downtown option came up, and suddenly “lifetime membership” was no longer “lifetime” – it meant “only until we need more money.”
Once upon a time, the Co-op was membership driven, and we had a say in decisions. No longer. The business is board-driven (and yes, they are elected by the membership, for all that means). They broke the terms of the contract, and I resigned my membership rather than feed the corporate board.
As for that “nest egg?” Are you getting interest on your retained dividend? How about on the $200 membership fee? Do you receive statements annually with the amount in your “account”? Do you actually know your total accumulated over several years? If not, that’s no nest egg – that’s a slush fund where the interest on those retained amounts goes directly to subsidize the business. And some part of the business model likely counts on a certain percentage of “members” who move forgetting all about their “accounts” at City Market.
There’s no longer a community at City Market, it’s not local to me, and their financial dealings with me as a member were faithless.
NanuqFC
In a Time of Universal Deceit, TELLING the TRUTH Is a Revolutionary Act. ~ George Orwell
…can’t deal with success, can’t deal with the fact that their co-op is not a club but a successful business with lots of members and lots of customers that actually has a huge and tangible impact on the local food economy.
Same syndrome among some at Hunger Mountain Co-op where I’m a member.
I think you would like this link I’m about to post. Its the online discussion of member-owners of a co-op grocery store in Portland, OR that just recently voted to start using a collective management structure… workers self-management for the win!
http://groups.google.com/group…
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