Co-Op in Berkeley Going Way of Love Beads, Bell-Bottoms
Changing times, indecisive management and increased competition have dealt a death blow to the Consumers Cooperative of Berkeley, one of the oldest and largest consumer-owned cooperatives in the country and a quintessential Berkeley institution.
The co-op’s board of directors announced last week that they are seeking to sell or lease the three surviving co-op grocery stores.
“We have three great locations and a very loyal membership, but it’s not enough for us,” said board President Bruce Miller at an emergency meeting of co-op members Thursday night. “The economic factors don’t work for us any more.”
The immediate reasons for the co-op’s demise were the May 10 collapse of an agreement with employees to buy into an employee stock ownership plan and the refusal of the organization’s largest wholesale supplier, Los Angeles-based Certified Grocers, to extend further credit to the co-op until it paid off a $1-million loan that came due on March 31.
But the roots of the organization’s problems go far deeper, according to co-op members, employees and members of the board of directors.
The co-op began in 1937, at a time when worker- and consumer-controlled cooperatives attracted many Americans who had survived the Great Depression. The organization’s stated purpose was simple: to provide quality food at low prices to members, who invested in the organization at $5 per share, a price that has never changed. Decisions were to be made by a board of directors elected by the membership, with each member, regardless of the number of shares owned, having one vote.
The co-op grew steadily through the 1940s and ‘50s, and flourished and expanded as Berkeley embraced the social activism of the 1960s. The Berkeley stores became community centers, with fund-raisers for all manner of political causes setting up tables in the parking lots. The co-op in those years refused to carry “politically incorrect” items such as table grapes not picked by union members.
But by the early 1970s, longtime co-op members say, the organization had overextended itself. At its peak, the co-op controlled 13 stores, most in suburban areas outside Berkeley. Shoppers there were less interested in the social causes promoted by the co-op, and the stores had to struggle to keep afloat. A debate began among the members over how far the co-op should compromise its political ideals to compete more effectively as a grocery store.
For several years, the thriving Berkeley stores subsidized those in outlying areas, resulting in the delay of much needed maintenance and technological improvements in Berkeley, co-op officials say. Gradually, as the fervor of the 1960s faded and the Berkeley stores became less efficient than their competitors, patronage declined.
Heavy Losses
Many co-op members now regard the organization with a mixture of exasperation and loyalty. “There are things that they used to stock that they don’t any more,” said Doris Balabanian, 38, shopping in the Shattuck Avenue store with her 2-year-old son, Andrew. “I don’t want to shop anywhere else, but I work outside the home and my time is limited.”
By the early 1980s, the co-op was losing millions of dollars annually. The organization survived only by closing all stores outside Berkeley. Consequently, the employees still working at the co-op are those with the most seniority, giving co-op higher labor costs than its competitors.
Last year, management and employees began negotiations to make the co-op a “hybrid,” owned half by employees and half by members. Employees were to take a 15% wage cut, with the money going into a stock ownership fund. The idea was to cut operating costs over the short term and give employees a greater stake in making the organization more efficient over the long term. Certified Grocers loaned the co-op $1 million last April on the condition that the restructuring plan be approved by Dec. 31.
But the plan moved forward at a glacial pace. Employees finally signed off on it April 15, two weeks after the deadline Certified Grocers had set for repayment of the loan. The co-op board took two more weeks to agree to the plan, and by that time, Certified Grocers decided it could no longer extend credit to the co-op, according to Bill Christy, president of Certified Grocers.
Stock Dwindled
“The biggest single factor was the inability of the different factions to agree within the time frame,” Christy said.
Without the credit, empty shelves began appearing in the stores.
“That was the biggest blow to morale,” said Marcia Edelin, a 15-year co-op employee.
The union withdrew its offer, and last week the board decided it had no choice but to put the stores up for sale. President Miller said he had had several offers and hopes to make a decision this week. The members, however, will have to sign off on whatever offer the board decides to accept.
A group of longtime members hopes to salvage one store and continue to run it as a co-operative, but management is pessimistic.
