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Archive for Sunday, October 31, 1999

FOOD COOPERATIVE MAKING CHANGES TO STAY ALIVE

October 31, 1999

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Still alive after 25 years, the Community Mercantile is making changes to survive -- and thrive -- as giant supermarkets push their way into the natural foods market.

Chuck Magerl lived in a communal home at 12th Street and Oread Avenue, sported long braided hair and -- with a handful of friends -- joined a cooperative food club 25 years ago.

Their motto, worn like a badge of honor: "Food for people, not for profit."

"We wanted to develop a system that put the basic needs of life ahead of profit demands -- the sense that housing, food and things of that nature should be available to people without having to satisfy the whims of stockholders on Wall Street," said Magerl, now a shorter-haired business owner in downtown Lawrence. "That was one of the foundations for development of the Mercantile."

This month, as it celebrates its 25-year anniversary, the Community Mercantile Co-op, 901 Miss., is leaning more than ever on mainstream business principles to survive in an increasingly competitive market.

What started as a self-styled hippie grocery today is a Lawrence institution boasting anticipated revenues this year of $4 million. Under new management, the store is pushing for more growth by streamlining operations, expanding shelf space, broadening product lines and emphasizing knowledgeable service in the booming natural foods industry.

New equipment, new brands

The Merc, as it's affectionately known, recently bought new freezers, doubled its supplements section and started stocking corporate brands -- including Grant's Farm bread -- that its members would have considered "selling out" even a couple of years ago.

An ATM machine even is on the way, the latest in a string of corporate-like moves to accommodate customers' needs.

"We've had to grow up a lot," said Jeanie Wells, who has worked at the Merc for three years, including the past three months as general manager. "We used to be just our own little culture, but anymore it's mainstream only because we're everybody's neighborhood grocery."

The stakes are high.

Just five years ago the Merc was on the brink of folding as Wild Oats Market -- the country's second-largest natural food grocery chain -- operated its own store downtown. The Merc managed to survive only after laying off employees and cutting pay for those who remained, counting on loyal customers to pull them through.

It wasn't easy. The Merc went through six general managers during Wild Oats' three years in town, and accepted loans from more than a dozen longtime members to help make up for dwindling sales. Other members increased their shopping at the Merc while boycotting Wild Oats, which they considered to be the Wal-Mart of natural foods.

From trouble to double

While the Merc's sales have doubled since Wild Oats left town in 1996, the potential for even stiffer competition looms. Dillons, Hy-Vee and other supermarket chains now stock everything from whole-grain breads to St. John's Wort, forcing the grassroots Merc once again to brace for tough times.

Last month Hy-Vee opened its natural foods "store within a store," run by -- who else? -- someone who worked at the Merc for 15 years.

"We're in a society now where people want to go into one place and do everything they want to do," said Cheryl Powers, who became Hy-Vee's natural foods manager this summer. "Hy-Vee noticed the (natual foods) trend, had a lot of customers asking about it and they hired me to do it.

"Hy-Vee's not in the market to wipe anybody out. " We're just here to do what our customers ask for. People will make their choices."

The Merc's 1,400 members, through their elected board of directors, are making plenty of changes to stay ahead in the game.

Amazing Grains to move

One of the biggest changes will come early next year, when one of the Merc's earliest business partners leaves the nest. Amazing Grains Society, a collective bakery formed alongside the Merc in 1974, plans to move out of its 700-square-foot shop inside the co-op in the spring.

The Merc needs the back-room space for more expansion.

"I'm really proud of the Merc, that they've been able to sustain themselves with all the mainstream grocery stores buying products like they have here," said Marin Massa, an Amazing Grains partner.

Another major change will be an expansion of the financial services offered by the Free State Credit Union, also a Merc partner since the early days.

The credit union -- whose members include co-op members and employees at Free State Brewery and Reuter Organ -- is working on a merger with Kansas City Metropolitan Credit Union, a financial umbrella that would cover all residents of Douglas County.

'A natural evolution'

No longer would Free State Credit Union, with $1 million in assets, be limited to making small loans to members looking to buy appliances or cars. New services would include checking accounts, debit cards, online account information and home mortgages.

"It's a situation where the appearance of Lawrence has changed in 25 years, and the makeup of our community has certainly broadened in that time as well," said Magerl, who helped found the credit union in 1975 and remains on its board. "It's a matter of saying, 'Here's a specialty market,' and our desire to satisfy the need is what drives us."

All of the changes -- from widening aisles to expanding services -- are designed to keep the co-op alive, and the basic principles behind its inception remain as strong as ever, said Nancy O'Connor, nutrition educator at the Merc and a member of its senior management team.

Open membership, democratic control and cooperation among cooperatives remain among the Merc's keys to success, even as its 75 employees face a changing environment.

"This is all a natural evolution," she said. "We're not satisfied with doubling our sales during the past three years. We want to provide more products, better service, a better product mix and increase sales again by another 50 percent.

"We want to keep one step ahead of what our community's wants and needs, and that's a tall order for independents these days."

-- Mark Fagan's phone message number is 832-7188. His e-mail address is mfagan@ljworld.com.

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