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Business

Community Mercantile outlasts competition and changing marketplace

August 5, 2013

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Around town, it's known simply as "the Merc," a friendly source for natural and organic foods whose local roots and membership model attracts customers who consider themselves socially aware and environmentally conscious.

Katy Willson, produce assistant at the Community Mercantile Coop stocks the fresh produce section Saturday, August 3, 2013. For almost 40 years, the Merc has weathered the storms in a volatile market.

Katy Willson, produce assistant at the Community Mercantile Coop stocks the fresh produce section Saturday, August 3, 2013. For almost 40 years, the Merc has weathered the storms in a volatile market.

“What attracts me to the Community Mercantile is that I can find out where the produce and the meats are from,” Jen Humphrey, one longtime shopper, said recently. “And that they support local agriculture and local producers.”

But behind the success of Community Mercantile Co-op, as it's more formally known, is a business operation that has succeeded for nearly 40 years in a fiercely competitive and often rapidly changing marketplace where many other stores like it around the nation have failed.

Brian Phillips, who manages the Merc, attributes that success to one thing.

“It has everything to do with the support of the community,” Phillips said. “We have really loyal customers.”

Humble beginnings

The Merc began operations in 1974 as a more traditional, investor-owned specialty foods store on the Kansas University campus, according to Harry Kroeger, one of its founders. He said the original owners sold it to a group who restarted it under what was then a new kind of business model: a membership-based cooperative owned by its customers.

It has operated at several different locations since those early days, including on Massachusetts Street downtown. In 2001, the Merc moved into its current location at Ninth and Iowa, in a building that had previously been Rusty's IGA grocery story.

In the early days, people could join the co-op either by paying a fee or by volunteering to work there a few hours a week. Members paid slightly lower prices on most store items than the regular retail price.

But Phillips said state labor laws no longer allow the co-op to use free, or bartered labor. So now, he said, for a one-time $75 fee, members receive store discounts and are part-owners of the business, allowing them to vote for seats on the board of directors, or even run for those positions.

According to a recent University of Wisconsin research project, customer-owned food co-ops like the Merc have been around in the United States since the 1850s, but their popularity really began to rise in the late 1960s and early 1970s, around the time the Merc was getting started in Lawrence.

Researchers have suggested that their popularity tended to rise during periods of social and political unrest. Many of them eventually failed, however, due to dwindling member participation, poor management, lack of capital or competition from other retailers.

Changing marketplace

Competition is something the Merc has dealt with for many years.

“We had some rough times in late 90s when Wild Oats was in town,” Phillips said, referring to a national natural foods chain that later merged with Whole Foods. “At one point, we were within one month of closing, but the community rallied around us.”

Wild Oats closed its Lawrence store 1996. But in the years since, the popularity of natural and organic foods has grown so much that mainstream grocery stores such as Dillons and Hy-Vee now offer their own wider selections of them.

“We used to be the only place in town where you could buy an organic carrot,” Phillips said. “We were kind of an early adopter.”

Sheila Lowrie, spokeswoman for the Hutchinson-based Dillons Stores chain, which operates four stores in Lawrence, said the organic foods market is now much more than just a fad.

“From our perspective, we're seeing a long-term change,” Lowrie said. “Many of our customers who purchase traditional items in our stores are now exploring organics. More and more, we're seeing customers choose the option of natural or organic products, if it's priced comparably.”

According to the Organic Trade Association, total retail sales of organic food and beverages in the U.S. reached $26 billion in 2010, up from a mere $1 billion in 1990. Organics now account for about 4 percent of all food and beverage sales, including 11 percent of U.S. fruit and vegetable sales.

Loyal customers

Despite the growing competition, however, the Merc continues to survive, and today boasts about 6,700 members and annual sales of about $13.5 million.

Meanwhile, many of the Merc's loyal customers have found ways to embrace both kinds of grocery store models

Rashaad Spicer, a Lawrence native who has been going to the Merc, “ever since I was a little dude,” said he appreciates the local feeling of the Merc and goes there to buy most of his organic foods.

But to buy other items, he said, "I'll go to Dillon's or Hy-Vee, whichever is closer."

Comments

melott 8 months, 2 weeks ago

Well, I just went into a natural food store to see how things had evolved. Mostly unimpressed. The place was half pills and magical ointments. In the food, one of the employees had to park her cart across the aisle while she restocked--it literally didn't occur to her that she was blocking it. Everything was very expensive--although possibly comparable to the Merc, I don't know. They didn't have any of the Panda licorice in plain licorice. On the plus side, they didn't have a lot of those Roswell/Odor Therapy magazines the Merc likes to push.

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jhawk1998 8 months, 2 weeks ago

This community has done its best to ensure that the Merc has no legitimate competition That is unfortunate because all would be better served by healthy competition. Just buying from a locally owned store because it is locally owned is rarely in the consumer's best interest. I have been treated similarly as described at the Merc. Really wanted a Whole Foods to land here. The upside is almost every grocery in town now has a health market so now we do have options.

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Ken Lassman 8 months, 2 weeks ago

It is very interesting to read thru these comments and listen to folks complaining about the Merc as if having a bad experience with an employee was either due to the policies and operating philosophy of the Merc or an experience unique to the Merc. I've shopped there since the early 70s and while the Merc has had its share of "interesting" employees, they have been one of the big reasons Lawrence has as diverse, accepting community as it has, and has helped many local producers off the ground as well as been a real nexus for building community in many other ways. The Merc has not ever been just about food, and hopefully it never will be, and while it's never acceptable to be rude and, as others have already stated, should be confronted whenever and wherever it happens, the Merc has had a much more tolerant attitude toward a wide range of personalities, beliefs and ways of life than just about any other place in town. And I'm not just talking about hippies--I'm including different cultures, different religious beliefs, different abilities, different ages, etc. May the Merc continue to be a reflection of its members, who are incredibly diverse and on the average, quite interesting and dynamic.

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blindrabbit 8 months, 2 weeks ago

bad_dog: Know about both KC Trader Joe's, we shop at both. The issue about wine sales might not be a big deal in the KCK area with a wide selection available and the Missouri store just a few miles away, but in Lawrence, I'm sure Joe's has made the determination that wine is an important issue to their success here. Regardless, if I was to take a vote of people who had had shopping experiences at The Merc and Trader Joe's there is no doubt in my mind who would be the favorite. Joe's is FUN, The Merc not at all, and I'm not even talking about pricing and quality

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farmgal 8 months, 2 weeks ago

grisgris, I agree. Shopping at N.Grocers is a very pleasant experience. We've gotten some of the best tasting produce there, over and over. Their produce dept. is not very big, but the quality makes up the difference.

For years, we shopped at the Merc and most of the employees have always been respectful and polite to us. I wish that people would not dismiss the ones here who have not been treated respectfully by the Merc employees. Just because it did not happen to you, doesn't mean it didn't happen! Their employee who was extremely rude to me was the rotten apple that spoiled the barrel for me. I have NEVER in my life been treated so rudely by any other sales clerk at anytime, anywhere. Given my age, that's a lot of positive shopping experiences. I probably should have complained to management, but I didn't. I don't think it would have made any difference.

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bearlyhip 8 months, 2 weeks ago

I agree with the comments above regarding the rather haphazard customer service afforded to patrons of the Merc I landed in Lawrence in 1977 and had shopped at the Merc at its last 3-4 locations. Been a long time and can't quite recall. Later, I became an organic producer in the Lawrence area and experienced the same haphazard treatment as well. After selling heirloom products to the Merc for a few months my family decided to opt out of supplying the Merc with our products. The motivation for the Merc seems to be who you are rather than the quality of food you produce. Also, experienced the strong arm tactics to pay less for the produce we grew to a point that we couldn't afford to "give it away" to the Merc. My family now lives in Berkeley, California, but visit regularly. When in Lawrence we have visited the Merc a few times but shop at Natural Grocers which is a much more positive experience for us. Also, keep in mind that NOT ALL profits are donated to local charities etc as implied by many. Stakeholders are paid their "profit sharing" and then what is deemed donate-able is done so for tax purposes.

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Dazzlevines 8 months, 2 weeks ago

What Merc are you folks going to?

I've been going to the Merc almost every day for the past five years, and I have gotten great service. Even when they are very busy at the coffee counter, I get my drink with a smile. The meat counter boys know their stuff (and they're nice!), and the cashier has never given me a disdainful look when I ask for a bag. I'm very confused by these "rude, arrogant, smug" comments. Is there a Merc somewhere else the complete opposite of the one I've been going to?

If you feel like someone is being rude to you, you should talk to their supervisor right then, not wait til there's an article on them in the paper and then comment on it...This goes for any store. Perhaps people are expecting miracles, and then get disappointed when they receive above-average service instead? That's what I always receive there, above-average service. Go anywhere else in town, and I would expect comments like this, but the Merc? I'm seriously confused.

And for the record, I am not a pot-smoker, a hippie, or a hipster!

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hildirid 8 months, 2 weeks ago

The problem with the staff goes way back. The rudest comment I ever had from a Merc clerk happened at 7th and Indiana.

I long ago realized I was never going to meet the high standards of Merc workers. That's their problem not mine. It doesn't keep me from buying what I want, where I want: some items at the Merc and some elsewhere.

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chicago95 8 months, 2 weeks ago

The tone of these comments is revealing, as will be the Merc's response.

!) It seems that the Merc needs to do a much better job of explaining its pricing policies and structure. Do higher prices on the shelves reflect truly higher payments to local growers and suppliers? Does the Merc strong-arm its suppliers or fairly compensate them for restrictions it may impose? Do customers receive truly premium products for premium prices?

2) Customer service seems to be, shall we say, uneven. This may reflect the way the Merc treats its employees, the way it trains them, and the culture that it does or does not instill.

The Merc's relationships with its suppliers, its customers and its employees might bear reexamination. This is basic business process improvement / Balanced Scorecard / Baldrige Performance Excellence stuff. If management circles the wagons and resists opportunities identified by this kind of feedback, they will, sadly, lose market share.

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orbiter 8 months, 3 weeks ago

Snobby? Are you people out sniffing for slights, or high? Going to Merc always seems exactly like going to a small grocery store to me. What is it you imagine people are thinking about you? Need to lay off the weed, y'paranoid weirdos.

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Patricia Davis 8 months, 3 weeks ago

I have been a Merc member for decades and I agree with what others have said. Natural Grocers is closer to me and with the road repair this summer, I've tended to shop closer to home. I've noticed that Natural Grocers has a better selection and better prices for it supplements. However, Natural Grocers' vegetable selection is pathetic. Natural Grocers doesn't seem to have a network of local suppliers such as Bauman eggs. The Merc has a much better selection of local meats. I prefer to use the Merc's bags that can be easily recycled than cloth bags that can be carriers for bugs and bacteria. I do get Merc cashier's put upon look when I ask for paper. I don't want a kumbaya moment when I shop for groceries. I simply want organic and local as possible and I will go where that is.

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grisgris 8 months, 3 weeks ago

I used to go to the Merc all the time on my way home from work. I don't know if it was the business attire I wore or the fact that I never remembered to bring in my own paper bag from home, but I never found any of the staff to be friendly or helpful. They treated me with disdain and smugness until one day I changed my route and went to Natural Grocers. They were nice, friendly and much less expensive and much more clean! I haven't been back to the Merc since and don't plan to ever again. I would love to support a local business, but I don't think I should have to tolerate bad service for more money just to do so.

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jafs 8 months, 3 weeks ago

The Merc is an odd combination of things for me.

The bulk section is great, with a wide variety of excellent goods at reasonable prices, but most of the rest of the store seems pretty pricey to me.

Also, the deli has a nice selection of Merc made food at pretty reasonable prices.

NG definitely has cut into our Merc shopping, since they offer a lot of the same, or similar stuff, at lower prices and it's a lot closer to our house.

In my experience, staff at both stores is friendly.

My main complaint about the Merc is cleanliness - I often have to search through a pile of plates to find a clean one, and the soup counters and microwave can get quite filthy.

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blindrabbit 8 months, 3 weeks ago

Been a customer of the Merc since we returned to Lawrence in 1983, then the Merc was at 7th and Indiana. The store has good merchandise and is now in a nice location. The problem as I see is a couple fold, prices are way too high for a family to reasonable shop there, it is more than apparent to me that the store caters to an elitist crowd. Additionally, the help is not the friendliest, folks seem kinda aloof.

Wild Oats was a good substitute, but the real test will come if Trader Joe's comes to town. I can imagine with Joe's pricing and customer relations, the Merc will have a tough time competing. The saving grace right now from that happening or not is the issue of wine sales.

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Peter Hancock 8 months, 3 weeks ago

The Merc did indeed move into its present location in 2001. The story above has been corrected accordingly.

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tomatogrower 8 months, 3 weeks ago

There seems to be a change at the Merc. I'm a loyal member, but they really treated Iwig badly. It's hardly a major competitor, and they just couldn't make enough money with only what the Merc was going to share with them. Do they support locals or not? Do their local produce providers have to promise not to sell at farmer's markets? It seemed kind of petty to stop using their milk in the coffee drinks.

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Noweigh 8 months, 3 weeks ago

I remember when anything west of Iowa Street was considered evil by the Merc crowd. Hey, there's money in them thar' neighborhoods. Snobby, arrogant at the Merc? Ya,think?

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EJ Mulligan 8 months, 3 weeks ago

The Merc has been in the 9th and Iowa location a lot longer than 2008. Need to correct that.

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farmgal 8 months, 3 weeks ago

When Wild Oats come to town, the Merc waged a “be loyal to the Merc” campaign, instead of a more fair approach of lowering prices and making positive changes to keep customers. I was loyal to the Merc for many years, until a long time employee in the Merc supplement/lotions department was extremely rude to me w/o cause nor justification. Then, I switched to Natural Grocers where ALL the employees are genuinely friendly and helpful.

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kernal 8 months, 3 weeks ago

The original co-op actually started sometime between 1970 and 1972 when it was operated out someone's garage.

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chicago95 8 months, 3 weeks ago

The Merc has been at 9th & Iowa since 2001 -- not 2008.

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