For food co-ops, if ever there were a

Transcription

1 COVER STORY Survey Shows Strong BY PATRICIA CUMBIE AND THE DATA ANALYSIS TEAM* For food co-ops, if ever there were a good time to put those thinking caps on, this is it. The results from the Common Cooperative Financial Statements (CoCoFiSt) annual summary show that co-ops are still performing well in the maturing organic and natural segment of the grocery industry. However, was not a business as usual year neither for co-ops nor in the food industry generally. There were dramatic circumstances and trends that affected the industry as a whole: inflation was low, the economy stagnant, our country at war. This year s Cooperative Grocer financial report is based on data from 83 co-ops with 98 stores a larger population than in the annual report. In a very challenging period for grocery retailers, co-ops continue to grow strongly. (For more on how the data was collected, see Methodology, page 24.) According to the 71st Annual Report of the Grocery Industry in Progressive Grocer, saw the lowest sales increases in the grocery industry since Food Marketing Institute (FMI) reported that total supermarket sales were up 2.6%, but net profits were down.4%. For food co-ops in compared to, overall sales growth was 10.4%, while net income decreased by.2%. The Natural Foods Merchandiser s (NFM) Market Overview states that natural products sales in all channels grew 8.1% over. In addition, natural products stores averaged 9.9% growth for, with 69% reporting increased sales. Co-ops strong in sales growth Sales for food co-ops show positive growth nearly across the board: 90% of stores report sales increases, yet that growth is slowing. In comparable co-op stores, sales grew an average of 8.6%. Whole Foods also reported comparable store sales growth at 8.6%, and Wild Oats was at 2.4%. That 8.6% rate of growth for co-ops marks a decline from the previous year. Lee Lancaster, * Cooperative Development Services undertook the data analysis with a team from around the country. Many thanks to the following for their generous assistance: Patricia Cumbie, Sean Doyle, John Eichholz, Dave Gutknecht, Lee Lancaster, Peg Nolan, Margo O Brien, Marilyn Scholl, Kate Sumberg, Walden Swanson. 18% 16% 14% 12% 10% 8% 6% 4% 2% 0 Sales Growth Trends, 8.59% 11.21% 10.42% Co-ops 8.60% 17.00% Whole Foods financial manager of Food Front Co-op in Portland, Ore., commented on what this year s numbers suggest: We have been industry leaders for the last several years in sales growth. But as sales growth declines it will be harder to be profitable unless we aptly utilize the tools and networks we have developed for ourselves to cut costs and expand more effectively. Expanding on this point, Walden Swanson, CoCoFiSt consultant with Cooperative Development Services, said, As margins and growth rates decline in the maturing natural food industry, co-ops need to focus even more on controlling operating costs, as well as continually emphasizing the cooperative difference. We have certainly made progress in both areas in recent years, but we have to continue that positive trend. Opportunities and challenges The results from the CoCoFiSt data suggest many opportunities and challenges for food co-ops in 2004 and beyond. Opportunities include: Using our very strong and cash-heavy collective balance sheets to invest in improvements 2.40% 5.40% Wild Oats 9.90% Natural Foods Merchandiser Comparable stores Total chain or sector NCGA Comparable store Sales Growth for co-ops was even with Whole Foods, Inc. (WF) and greater than Wild Oats (WO). The chart also shows the growth rate in total chain sales for co-ops, WO, and WF as well as for NCGA-member co-ops and among private natural foods stores (Natural Foods Merchandiser). for the good of our members and future members Using our significant market share and industry-leading comparable store growth rates to lower cost of goods, achieve economies of scale, and provide additional services to strengthen locally owned cooperatives Effectively using cooperative networks, structures, and tools to support each others efforts Making a difference in the world by accentuating the cooperative advantage, especially being locally and community owned, and bringing inherent trust to market transactions. Challenges include: Surviving this phase of the industry life cycle, characterized by declining gross margins, sharp competition, and continued consolidation Driving down costs in order to maintain net operating margin Figuring out a way to jointly leverage underutilized, individual co-op balance sheets in order to create new stores and undergo expansions Providing a model and the necessary resources that enable co-ops to expand efficiently and 20 COOPERATIVE GROCER JULY/AUGUST 2004

2 Growth, New Challenges 40% 35% 30% 25% 20% 15% 10% 5% Gross Margin Personnel Margin Minus Labor make it possible for potential members to start new co-ops in their communities Reinvesting in fixed assets to buff up physical facilities to better service our customers and members. For food cooperators, one response to these opportunities and challenges is to continue to be watchful of trends and continue to ask questions, seek data, and draw conclusions with one another to facilitate good decision making on a store, regional, and national level. The areas to be especially mindful of include trends in gross margin, sales growth, and labor (both wages and benefits). One trend appears to be a certainty: health insurance costs continue to rise, often by double digits. According to a recent report in the New York Times, health insurance is expected to rise 10% this year, following on the heels of annual increases of 14 18% over the last few years. Overall costs for personnel increased at co-ops in and are expected to increase in the grocery industry as a whole. Labor and benefits will continue to be challenging issues. And finally, food co-op collaboration through a newly reorganized National Cooperative Grocers Association (NCGA) has Gross Margin, Personnel Cost and Margin Minus Labor, 1999 Gross Margin for food co-ops stayed strong in, but increased Personnel costs reduced Margin Minus Labor (a standardized key indicator of how well a store is managing two controllable factors). WF, WO, and independents (as reported in the NFM) showed Gross Margin decline in created more opportunities for co-ops to further efforts to decrease costs. National buying programs that reduce cost of goods sold (COGS), and other programs that reduce operating costs and increase operating efficiencies, are only the beginning of what we will need in the future. Looking at the data, the analysis team focused on the following areas: Gross margins Competition and growth Store department trends Labor Cash Expansions Gross margins Co-ops fared well compared to the rest of the industry. While Whole Foods, Wild Oats, and NFM all reported that gross margins declined in, co-op gross margin levels remained relatively static in comparison with. Small stores took a slight decrease, others managed a slight increase. On the department level, meat margins grew 5.5% and deli margins went up 1.6% in, and these margins accompanied strong sales growth in those two departments. Meat sales grew 20%, and deli sales rose 11% over the previous year. Margins slipped slightly in produce, grocery, and health and body care, and the rate of sales growth, while positive, was also down in those departments. Could it be that the competition natural food chains, mainstream organic sales, and Wal-Mart is affecting food co-op margins? What we re looking at could be normal variation, but it does seem that competition is putting pressure on margins, said Walden Swanson. Lower margins may not be a problem if coupled with higher sales. For example, the NCGA s Co-op Advantage Program (CAP) may actually decrease overall margins for the store but increase the amount of gross profit dollars earned because of sales increases associated with the program. Increasing competition means that co-ops need to have a thoughtful strategy in this phase of the industry lifecycle in order to emerge as one of the survivors. Almost all of the food co-ops represented in this report are also participating in CAP (Co-op Advantage Program), a buying program that brings more value to retailers by adding sales volume, using lower price points on selected products. According to NCGA national promotions manager Annie Hunt, volume in CAP has nearly doubled in the last year, and the CAP program is very successful at gaining efficiencies by organizing promotions on products that are common to a group of stores. It has also been successful at catching the attention of vendors who recognize the value of teaming with stores that connect directly with their shoppers as members. Hunt thinks the current challenge to margin might be answered by strategic category management and merchandising support and offthe-shelf merchandising plans. We have a commitment to local identity and individuality that we have to balance with our commitment to finding efficiencies in those things we all do the same, Hunt said. We have the opportunity to create national and regional merchandising efficiencies that add value for our members and allow co-op stores to focus on developing local connections. Stronger category management will allow us to support the similarities from store to store and could free up co-op staff to focus more on developing and promoting local vendors and products, Hunt said. JULY/AUGUST 2004 COOPERATIVE GROCER 21

3 COVER STORY Competition and growth Competition on nearly every front continues to intensify in the grocery industry. Wal-Mart remains the largestvolume retailer of groceries in the country. In, Wal-Mart opened 200 supercenters; by 2007 it plans to have 2,000 supercenters nationwide and expects to capture 35% of all grocery sales. The Progressive Grocer annual report predicts that supercenters and dollar store formats that offer better values are most likely to see the strongest growth in 2004, followed by upscale and specialty food stores. According to an ACNielsen survey, the lure of supercenter convenience and low price now attracts 54% of the population. As suggested in Progressive Grocer, for many grocery retailers, the search for growth has been transformed into a struggle for survival. And while food co-op growth rate is one of the highest in the industry, note that our market share has steadily decreased as traditional supermarket channels sell more and more of the products we sell. Organic food sales grew 20.4% during to reach $10.38 billion, according to the Organic Trade Association s 2004 manufacturer survey. U.S. organic food sales have grown between 17% and 21% Labor expense is increasing faster than gross margin, not only for co-ops but also for natural product retailers. each year since 1997, OTA said, while total U.S. food sales over this time period have grown in the range of 2% to 4% each year. Organic and natural foods chain competitor Whole Foods enjoyed healthy sales growth in, according to the Whole Foods Annual Report. Their expansion strategy included opening 12 new stores and acquiring 29 existing stores in, a direction they will continue in 2004 through global expansion. WF also states that 66% of their sales can be attributed to perishable departments, which ACNielsen calls the sleeping giant of retail meat and deli departments top the list in growth as well as in consumer purchasing frequencies. Consumers who buy a combination of organic and conventional foods represent a huge opportunity for growth in the organic category, according to panelists who spoke at the All Things Organic trade show this year. Marketers were advised to target these mid-level or moderate organic consumers. As mainstream grocers put more emphasis on perishables and organics, co-ops will need to distinguish themselves more clearly within the marketplace. Store department trends Co-op sales growth slowed significantly in produce from 11.3% in to 7.5% in, while sales rose 20% in meat and 11.04% in deli. Bakery sales growth rate also slowed. Progressive Grocer reports that the low-carb trend may have affected sales, depressing bakery, fruit juices, Cooperative Grocer Ret STATISTICAL SUMMARY OF RATIOS, Small Medium Large Extra Large All Sales Growth Upper Quartile 14.82% 15.03% 10.84% 13.35% 13.85% Median 10.49% 8.03% 7.59% 8.79% 8.43% Lower Quartile 5.69% 3.59% 6.22% 6.94% 4.86% Sales to Total Assets Upper Quartile Median Lower Quartile Sales to Fixed Assets Upper Quartile Median Lower Quartile Inventory Turnover (annualized) Upper Quartile Median Lower Quartile Accounts Payable Turns Upper Quartile Median Lower Quartile Current Ratio Upper Quartile Median Lower Quartile Debt to Equity Upper Quartile Median Lower Quartile Return on Equity Upper Quartile 9.35% 7.25% 8.02% 4.68% 6.64% Median 2.41% -0.09% 2.87% 2.37% 2.45% Lower Quartile -1.72% -5.72% -1.34% 0.75% -1.93% Return on Assets Upper Quartile 3.49% 1.50% 3.50% 2.67% 3.00% Median 1.34% -0.78% 1.75% 1.27% 1.21% Lower Quartile -1.79% -4.34% -0.53% 0.42% -0.96% Gross Margin Upper Quartile 36.39% 37.46% 37.94% 38.55% 37.63% Median 34.73% 36.40% 36.98% 37.17% 36.45% Lower Quartile 33.40% 35.37% 36.04% 35.83% 34.83% Total Labor Expense Upper Quartile 24.59% 25.35% 24.21% 25.68% 25.22% Median 23.64% 24.22% 22.32% 24.52% 23.71% Lower Quartile 22.15% 22.14% 20.65% 23.08% 22.02% Total Operating Expenses % Upper Quartile 37.63% 38.89% 36.69% 37.02% 37.55% Median 35.86% 36.91% 34.70% 34.86% 35.44% Lower Quartile 32.70% 35.15% 32.93% 33.59% 33.27% Operating Margin Upper Quartile 1.74% 1.49% 4.23% 2.59% 2.53% Median 0.25% -0.33% 2.49% 1.89% 1.29% Lower Quartile -1.72% -1.70% 1.26% 1.22% -0.49% Net Margin Upper Quartile 2.14% 1.55% 3.16% 2.09% 2.32% Median 1.13% 1.02% 2.28% 0.93% 1.40% Lower Quartile 0.10% -0.79% 1.26% 0.65% 0.43% Turns X Earns Upper Quartile Median Lower Quartile EBITDA Percent Upper Quartile 4.40% 4.50% 6.43% 4.56% 4.61% Median 3.18% 2.86% 4.30% 3.69% 3.65% Lower Quartile 1.16% 0.98% 3.06% 2.42% 2.27% 22 COOPERATIVE GROCER JULY/AUGUST 2004

4 ail Operations Survey STATISTICAL SUMMARY OF INCOME STATEMENTS, GROSS PROFIT Small Medium Large Extra Large All Sales, Surcharges, and Returns % % % % % Cost of Goods 64.87% 63.38% 63.12% 62.18% 62.64% Gross Profit Total 35.13% 36.62% 36.88% 37.82% 37.36% OPERATING EXPENSES Personnel 23.61% 24.32% 22.36% 25.05% 24.29% Occupancy 4.13% 4.32% 4.44% 4.08% 4.19% Depreciation and Amortization 1.26% 1.40% 1.51% 1.57% 1.52% Operating 2.65% 2.53% 2.39% 2.32% 2.37% Administration 1.26% 1.39% 1.00% 0.65% 0.82% Governance 0.49% 0.53% 0.66% 0.41% 0.48% Member Discounts 1.00% 1.35% 0.81% 0.42% 0.62% Marketing 1.11% 1.62% 1.54% 1.49% 1.49% Operating Expenses Total 35.51% 37.47% 34.71% 35.99% 35.79% Operating Income -0.38% -0.84% 2.17% 1.83% 1.58% OTHER INCOME, EXPENSES, AND TAXES Other Income Total 1.84% 1.70% 1.07% 1.16% 1.22% Other Expenses Interest Expense % % % % % Taxes % % % % % Misc. Other Expense % % % % % Other Expenses Total -0.88% -0.93% -1.28% -1.83% -1.58% Total Other Income, Exp., Taxes 0.95% 0.77% -0.21% -0.68% -0.36% Net Income 0.59% 0.07% 1.96% 1.15% 1.21% EBITDA 1.36% 1.31% 4.60% 4.25% 3.95% STATISTICAL SUMMARY OF BALANCE SHEETS, * ASSETS Current Assets Cash Small 22.6% Medium 12.5% Large 29.5% Extra Large 17.9% All 20.5% Inventory 24.8% 17.4% 16.9% 13.7% 15.5% Other Current Assets 3.0% 1.6% 3.6% 4.0% 3.6% Current Assets Total 50.4% 31.5% 50.0% 35.6% 39.6% Fixed Assets 46.0% 57.4% 45.8% 55.4% 52.7% Other Assets 3.5% 11.1% 4.1% 9.0% 7.7% Assets Total % % % % % LIABILITIES AND EQUITY Liabilities Current Liabilities Accounts Payable 11.1% 12.5% 8.6% 7.8% 8.6% Other Current Liabilities 6.3% 7.4% 12.1% 12.1% 11.3% Current Liabilities Total 17.4% 19.9% 20.7% 19.9% 19.9% Long-Term Liabilities 38.6% 40.5% 27.4% 24.8% 27.6% Liabilities Total 56.0% 60.5% 48.1% 44.6% 47.6% Equity Paid in Member Equity 28.8% 28.9% 23.1% 29.0% 27.5% Retained Earnings 15.2% 10.6% 28.8% 26.3% 24.9% Equity Total 44.0% 39.5% 51.9% 55.4% 52.4% Liabilities and Equity Total % % % % % * Totals based on rounded figures pastas, potatoes and cookies and crackers, while meat experienced a significant boost in sales. Although some retailers report the lowcarb craze as over, others say it is still going strong. Margo O Brien, general manager of St. Peter Food Co-op in St. Peter, Minnesota reports that she thinks the low carb trend has had an effect on her produce department. People have stopped buying potatoes, which is normally one of our top 10 best-sellers. Conventional grocers in my area are experiencing the same thing. Co-op retailers may find the dip in produce sales a concern, given the emphasis on produce as a primary factor in attracting consumers. When choosing where to shop, most important to consumers are a clean, neat store (88%), high-quality fruits and vegetables (85%), high-quality meats (80%), low prices (79%) and courteous, friendly employees (74%), according to the FMI. Produce departments often set the tone for the store, and they are struggling to be the draw that they have been in the past, said O Brien. The decline in produce sales growth is troubling. said Lee Lancaster. It s a trend that we need to understand. He postulated that while co-ops are good at innovating, bringing new products and concepts to the marketplace in the organic and natural category, co-ops have more difficulty when they have to face look-alike competitors. Labor Labor expense is increasing faster than gross margin, not only for co-ops but also for natural products retailers as reported in NFM. In co-ops, total labor expense increased across all store size categories. Co-op store sales per labor hour (SPLH) increased slightly, while FMI reported that productivity by this measure decreased during in the grocery industry. (See chart, page 25.) Lee Lancaster noted that when margins are falling and sales growth slows, it is necessary to monitor productivity measures more closely. Employee benefits are a rising concern for both employers and employees. Progressive Grocer cited benefits costs as the anticipated number one operational problem for grocers in 2004, competition was number two, and wage costs came in third. Carolee Colter, a personnel consultant with Community Consulting Group said, We know benefits are going up because of the increasing cost of health insurance. Larger co-ops have some leverage, but small co-ops, like all small businesses, have seen double digit increases in insurance premiums. She also noted that she hears from more and more employees who JULY/AUGUST 2004 COOPERATIVE GROCER 23

5 COVER STORY Average Turns Times Earns, 1999 Small Medium say they can t afford health insurance. Many co-ops, when faced with the need to address rising costs, are exploring options with their employees to adjust group plans in ways that meet staff needs and also curb benefit costs. Such options might include lowering premium costs by going with a higher deductible or modifying other benefits coverage. Some co-ops have supplemented their insurance coverage with a selfinsurance plan. However, Colter is not convinced that paying people more will necessarily translate into higher productivity. Cooperators want to see employees making more, but all systems have to support that decision. She believes this includes putting more organizational attention into training, management role modeling, and developing a productive pace in the workplace. Colter offers two approaches for making those structural changes that support paying a livable wage: reduce turnover and get better at supervision. It s important to track turnover constantly hiring and training is expensive. Find out if turnover is specific to certain departments, and if it is happening within the first 90 days or after the first year. Turnover has been down because of the economy, but human resource personnel must be proactive and prepared for the time when the economy picks up, so they can still attract the best people. If turnover is low, but labor costs still rise, Colter suggests looking at supervision issues. People want to do good work, but if expectations are unclear or there are no role models or training, it is possible to fall into problems. Extra Large Turns Times Earns declined for all store size categories except Extra Large, which remained virtually the same. Computed this year by multiplying annualized Inventory turns and Margin Minus Labor (instead of just Margin), this number tells a co-op how many times a year it earns its Margin. Large 1999 Cash Cash rose again in for food co-ops, and the challenge of effectively leveraging food coop balance sheets continues in Compared to our primary competitors our debt to equity is lower and our current ratio is higher, indicating that we are not working our owner s equity as hard as our competition works its equity. Therefore, return on members equity for co-ops is quite low. The effect of the Northeast Cooperatives and Methodology for the CoCoFiSt Annual Report on Retail Operations For the past several years Cooperative Grocer has contracted with Cooperative Development Services (CDS) to conduct an annual food co-op financial review, compile and analyze Common Cooperative Financial Statements (CoCoFiSt) data, and write a report. Financial data was taken from the Common Cooperative Financial Statements (CoCoFiSt) program, compiled from data submitted by participating co-ops. This year the data collected through the CoCoFiSt program included 83 co-ops. Since more stores now consistently participate in CoCoFiSt, the analysis team was able to compare financial results from with results from nearly the same set of co-ops. Therefore, year-to-year variances are real and cannot be attributed to a different group of co-ops reporting. The survey data from 83 co-ops with 98 total stores was grouped in the following store size categories: SMALL: Sales under $2 Million: co-ops stores MEDIUM: Sales $2-4 Million: co-ops stores LARGE: Sales $4-7 Million: co-ops stores EXTRA LARGE:.... Sales over $7 Million: co-ops stores In the statistical tables (pp ) of the income statement and balance sheet we present composite ratios using weighted averages for these averaged percentiles, large co-ops weigh more than small co-ops. In the ratios section, we provide median and quartile results, which are frequently more balanced measures than the average. Quartile results are calculated on each variable: for example, the sales trend upper quartile contains the 25% of stores that have the highest growth rates, while the upper quartile on gross margin could represent a different set of co-ops. Comparable store sales figures exclude co-ops that had a fixed asset growth rate greater than 20% in removing distorting data from stores that had major expansions. Overall, the reporting and analysis of the data has been made much more consistent and less labor intensive. Store size categories went from five to four after combining the Small and Medium Small categories into the Small category, thereby more evenly distributing the reporting co-ops. (Some additional charts not appearing in Cooperative Grocer will be found at We also used Progressive Grocer s 71st Annual Report of the Grocery Industry, Natural Foods Merchandiser s Market Overview, Whole Foods Inc. and Wild Oats Inc. annual reports and 10K reports, ACNielsen, New York Times, Food Marketing Institute data, and Organic Trade Association s 2004 manufacturer survey. 24 COOPERATIVE GROCER JULY/AUGUST 2004

6 60% 50% 40% Average Balance Sheet Ratio Trends, % 20% 10% 0% Cash Fixed Assets Liabilities Equity Cash and Total Equity increased while Fixed Assets and Total Liabilities decreased in ; half of co-ops collective assets were financed by equity. $80.00 $70.00 $60.00 Average Sales Per Labor Hour, $50.00 $40.00 $30.00 $20.00 $ Small Medium Large Extra Large All In, Sales per Labor Hour, a productivity measure, increased for Small and Medium stores and declined for Large and Extra Large stores. FMI store statistics for reported a decline in Sales per Labor Hour within the grocery industry. Blooming Prairie warehouse changeovers caused other income lines to go up for co-ops in those regions. Some of the windfall money may have been spent on improvements. Having the money makes you want to invest it in your co-op, John Eichholz said about the cash increases for Green Fields Market from the merger of Northeast Cooperatives, especially if you have been deferring maintenance or other improvements. Yet net income went down and payroll costs increased faster than gross margin in. John added, A lot of those improvements may have been classified as expenses, not capital expenditures, which could help to explain why net income went down. There have been some great examples of cash being used to benefit the co-op movement. As noted in previous issues of Cooperative Grocer, co-ops have invested their money individually and as regional associations into NCGA and have also invested in the National Co-op Bank (NCB) to collateralize loans for NCGA and its members. Food co-ops are well positioned, with strong balance sheets. Our collective balance sheet has a lot of capacity to support improvements, expansions, and new stores. The challenge is in learning how to effectively leverage the balance sheets of individual co-ops to meet the needs of co-op members and the broader cooperative mission. Expansions According to NCGA, 45 co-ops are engaged in expansion or are planning expansions in this year and the next a good indication of potential growth. However, achieving profitability continues to be a concern for expanded stores. Past analysis of CoCoFiSt data has shown that co-ops on average do not experience profitability until the sixth quarter after an expansion. The question may be, are co-ops expanding capacity before or after their physical expansions? asked Kate Sumberg, CoCoFiSt consultant. She noted that it might take fewer quarters to reestablish profitability if the bottom line is good and operations are showing some efficiency before an expansion. Sumberg JULY/AUGUST 2004 COOPERATIVE GROCER 25

7 suggests that a stronger co-op expansion strategy may help stores that are poised to expand. At Valley Natural Foods in Burnsville, Minnesota, the co-op relocated to a larger store in and has performed very well. In, Valley Natural Foods was the only co-op in the CoCoFiSt database that showed up in the top ten co-ops in each of three categories: Operating Income (4.3%), Turns X Earns (3.3), and Sales Growth (25%). (See charts for more on these measures.) Susan McGaughey, Valley Natural s general manager, said, The main contributing factors to our success have been the systems we had in place before we moved and were able to count on in our new location. She credits the implementation of an integrated store data program as one of those critical pre-expansion systems. They started using the system integrated with their accounting in 1997, and it was already developed and functioning well prior to the expansion. Because of this system, they are able to get immediate feedback on inventory, labor, and margin in a very timely manner, taking the guesswork out of whether operations are efficient. McGaughey said, We moved into our new location June 6, and by July 15 I had operating data, including June financial statements. I feel that s been the backbone contributing to our success. Using an automated system set up the flow of operations and allowed us to follow a more efficient direction. We welcome out of the box thinking, and using an automated system has freed up our time to utilize the creative thinking process. McGaughey noted that the co-op also worked on creating other functional systems. The board worked on policy governance, the store staff used CoCoFiSt to help with benchmarking, and the expansion offered them the opportunity to amp up their marketing and store branding within their new facilities. If you do not already operate efficiently and have good systems in place, the expansion efforts may fail, McGaughey said. NCGA reorganization With the reorganization of the cooperative grocers associations into one national organization, the NCGA can positively affect co-ops abilities to compete, especially in the areas of purchasing, labor benefits, marketing, and expansions. NCGA is poised to assist co-ops with identifying and responding to trends as well as increasing other opportunities nationally, regionally, and at the individual store level. Robynn Shrader, CEO of NCGA, pointed out that with members collaborating, overall operational efficiencies could be gained, with the benefit ultimately going to co-op members and consumers. Said Shrader, The future of the NCGA system depends on our ability to deliver products and services to our member stores that enhance their ability to compete locally. As we organize around our similar needs, we can promote the things that make co-ops unique in their individual communities. 26 COOPERATIVE GROCER JULY/AUGUST 2004