What is a cooperative (or co-op)?
A co-op is an association of people who voluntarily cooperate for their mutual social, economic, and cultural benefit.
In plain language, this means that a co-op is a community-owned and community-managed business.
Cooperatives include community organizations and businesses that are owned and managed by the people who use their services (a consumer cooperative) or by the people who work there (a worker cooperative). A food co-op is popular form of cooperative.
All cooperatives worldwide share this same set of principles:
- Voluntary and open membership
- Democratic member control
- Member economic participation
- Autonomy and independence
- Education, training, and information
- Cooperation among cooperatives
- Concern for community
What is involved in creating a Co-op?
There are roughly three phases required to create a Co-op:
Phase 1: Establishing the organization, building a strong membership and financial base, and creating mutually supportive links to the community. This phase may take several years.
Phase 2: Locating, securing, and planning for an appropriate retail location; while continuing to build and secure the membership base.
Phase 3: Raise capital through member-owners and other financial sources; complete construction, hire General Manager and staff; and, open the store!
Why a Co-op grocery store? How is it different than other grocery stores?
Market studies have indicated that we don’t have the demographics to attract a big national grocery chain. The Co-op model is a perfect fit for our area. And….
Co-op business models, when well-planned and executed, are more likely to succeed than private businesses are! Community support is built into the cooperative model. Feasibility studies have told us that we have this support in Lovettsville, Brunswick, and surrounding communities.
More than 300 food co-ops around the country serve communities and support local producers where the big chains have failed to do so. The co-op movement, on a national level, can support our local effort by providing information, education, technical assistance, and even financial assistance. The Lovettsville Co-op Market has already benefited from this type of support when we were awarded a $10,000 matching grant from the Food Co-op Initiative (FCI), a 501(c)3 non-profit, which assists retail grocery co-ops by enabling a faster and more efficient start-up process. Additionally, by structuring the store as a co-op, member-owners control the store’s development, management, finances, and food policies in ways they would not be able to within a conventional grocery store model.
A co-op is more than a grocery store. It is a community owned business that provides convenient access to local, fresh, organic, healthy food and products focused on the needs of our local area, while providing opportunities for education and continued learning as a community hub emphasizing food, health and wellness topics. Furthermore, the economic benefits are direct to the community, including our local farmers and producers, versus those financial benefits going out of our community to a large corporate headquarters. The Co-op will become the largest private employer in Lovettsville. We will have a professional, experienced general manager and paid staff to support store operations. Anyone in the community will be welcomed to apply for employment at the Co-op. Market studies indicate that our Co-op will return over $1,000,000 into our local economy through purchases from local farmers and producers, salaries and taxes.
Can the Co-op be financially successful? Can it compete with other area grocery stores?
In the 2019 market study, conducted after the Weis store opened in Brunswick, the sales projections for the new stores are very strong. Based on these sales forecasts, the financial pro forma that was completed with assistance of industry experts, forecast that our Co-op can be successful.
The 2019 market study indicated that the population in our 60 square mile trade area has a very high propensity to buy natural and organic products, and that there are no other full service grocery stores in our trade area. The market study considered all potential competition from the surrounding areas, including Brunswick. The study found that by focusing on natural and organic products sourced locally, whenever possible, our Co-op should be able to capture a significant share of that market. Note that the Co-op will not try to compete with Weis or Giant on price, but will focus on quality healthy products and services that address the needs of our local community.
Also, by being a locally owned grocery store, our Co-op will be an economic engine for the community, becoming the number one private employer in Lovettsville and projected to return over $1,000,000 annually to the local economy!
Why do co-ops have member-owners and what is their role?
Co-ops are built on member-owners. Like most corporations, co-ops have owners who invest to earn a return on their financial investment. Unlike most corporate investors, however, co-op owners invest both for the financial benefits and for the social benefits. Another compelling argument for structuring our community grocery store as a co-op is that the member-owners are the core patrons of the co-op and have a vested interest in shopping at their own co-op, helping to insure its future success.
Two roles of a co-op member are governance and leadership via the ability to elect (and to serve as) Board members and vote on co-op policies and practices. Member-owners also help capitalize the Co-op through their memberships/equity share and through member loans.
What are the benefits of joining the Co-op?
Membership conveys many benefits! In addition to having a voice in decisions related to the store by selecting Board members, joining the Board or committees, there are both pre-and post-opening benefits. Prior to the store opening, member-owners may participate in educational programs and workshops, receive member discounts or special benefits through local businesses, and attend benefit events either for free or at a reduced member rate. Once the store has opened for business, member-owners may receive annual rebates, based on their purchases, in profitable years. But, most importantly, member-owners make possible a community-owned grocery store that supports our local, rural economy.
Why is it important to build membership before the store opens?
First, it indicates confidence in our future success and a level of community support that is important to our lenders and potential investors. In other words, membership equity is the basic building block of our capital foundation and is the key to bringing other investment resources on board. Second, the larger our Virginia membership, in particular, the greater the base from which we can expect a larger pool of member-owners who will be willing and able to invest in the Co-op through member loans.
Who are the member-owners of the Lovettsville Cooperative Market?
Our member-owners are food consumers (and some local producers) who live in Lovettsville, Brunswick, and surrounding communities, such as Waterford, Hamilton, and Lucketts, Virginia, as well as Knoxville and Jefferson, Maryland, and even nearby parts of West Virginia. Members share a common desire to bring a community-scale, high-quality food store to Lovettsville in order to serve our market area and support our community.
Will only members be allowed to shop at the Lovettsville Co-op?
Anyone, members and non-members alike, will be able to shop at the Lovettsville Cooperative Market.
And, you ask, if everyone can shop at the Co-op, why become a member-owner? Owners provide community support for the Co-op. Their investment in buying a share and their involvement in the Capital Campaign make the Co-op possible. Without a strong owner base, a co-op cannot exist. Also, owners receive specific benefits – they vote for members of the Board of Directors, can run for the Board, and vote on other matters brought before the ownership. Owners will receive patronage refunds when the Co-op becomes profitable. They will receive owner-only discounts in the store and for special activities and events, and receive owner-only newsletters to keep you up to date on your co-op.
Has a location for the store been identified?
As of October, 2020, we have a definite location located on the southside of the Lovettsville Town Square. The definitive lease was signed in January 2021 between the Co-op and Lovettsville Square South, LLC. This is a legally binding contract, so we can go full speed ahead now on the next phase which is our Capital Campaign. We will lease a 7,000 sq. ft. facility built to our specs, incorporating sustainable and green building practices. The local developer, Eco Developers, is working on the detailed design, engineering, and permitting for the overall site with construction scheduled to begin in the second half of 2021. The goal is to have all construction completed and the store opening in the third quarter of 2022.
Eco Developers is committed to incorporating sustainable building practices from extra insulation to high efficiency HVAC systems, solar panels, grey water harvesting, permeable surfaces outside, and native plantings. We will have the most sustainable facility possible–which, also reduces operating costs. In fact, the developer is using this project to demonstrate the economic viability of building green!
Will the Co-op support or compete with local farmers’ markets?
Experience around the country indicates that food Co-ops and farmers’ markets not only co-exist successfully, but also strengthen each other. Both Co-ops and farmers’ markets promote fresh, local products and a healthy food culture. Whereas, farmers’ markets are often seasonal operations (such as the Lovettsville Co-op Seasonal Market that serves our community from June to September), Co-ops provide a consistent outlet for farmers to sell their produce and products year-round.
How do I join the Co-op? What are some details?
The easiest way to become a member-owner is to click the “Join Us!” link on the homepage of our website. A single membership is a one-time investment of only $200, which may be paid all at once or in four quarterly $50 payments. If you prefer to pay by check, send your $200 check to LCM at P.O. Box 216, Lovettsville, VA 20180.
The $200 purchases one voting share of the Co-op. It is not a subscription nor a recurring fee. The membership is in one person’s name, but the entire household can benefit from shopping at the co-op and participating in events and activities. The key difference is that only the member (shareholder) may vote in Co-op Board elections or run for a Board position. Membership is generally not transferable.
A household is defined as people living at the same address. They do not have to be related.
Minimum age requirement to become a member is 18 years of age.
That $200 investment makes you a member-owner with an equity share in the company!
What is the member loan program-the Capital Campaign?
Economic participation by member-owners is a key principle of co-ops. This means members have a unique opportunity to invest further in the co-op by providing a member loan and receive a reasonable return on investment. The member loan program, Capital Campaign, will be launched in February 2021.
We need to raise $1.6 million by May 1, 2021 through member loans. These funds will be used to: hire an experienced General Manager before opening; Design and construct our store; purchase equipment; and, provide working capital to position our co-op for success.
Other funding sources include a bank loan; however, we prefer to pay interest to our member-owners as much as possible. The more members who provide loans for our store, the less money goes out of our community to a bank. Time is of the essence!
Construction is scheduled to begin later this year, 2021! Store opening target is summer of 2022.
See our Capital Campaign page for details.
How do I keep up on the latest news from the Co-op?
Updated: February 2021