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The Goldilocks Solution Finding a Just Right Store Size

Explore the "Goldilocks Solution" to store size for co-ops, balancing risks and opportunities. This guide draws on classic fairy tales to illustrate the principles of finding the right fit. It examines the pitfalls of being too small or too large, emphasizing careful business planning, market studies, and community engagement. By studying successful co-ops and understanding their unique needs, we can navigate the complexities of grocery retail, avoiding common misconceptions and aligning with community expectations for sustainable growth.

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The Goldilocks Solution Finding a Just Right Store Size

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  1. The Goldilocks SolutionFinding a Just Right Store Size

  2. Agenda Fairy Tales & Co-ops: What should you believe? • Once Upon a Time • Goldilocks (& the Three Bears) • The Three Little Pigs • The Moral of the Story • Happily Ever After

  3. Myths & Misconceptions • Co-ops can start small and grow– haven’t they always? • People will support us because we are a co-op • Small stores don’t require as much organizing and planning to be successful. • Bigger store = bigger risk • If we don’t do something soon, our members will abandon us.

  4. Updating a few fairy tales Grocery stores: • Have very low profit margins– WHEN SUCCESSFUL • Your competitors invest in state of the art equipment, information systems, merchandising and promotion. • Economies of scale matter • You can buy Silk ® at Walmart ® cheaper than through your distributor

  5. Goldilocks as Mentor • Review the Options • Test the Fit • (Avoid Angry Bears)

  6. Too Small • Revenues are low, expenses are disproportionately high • Unlikely to qualify for NCGA membership • Limited ability to meet the community’s needs and expectations • Perishables (local food) require lots of space and high turnover • Susceptible to competition • Even if profitable, capital will accrue verrrrrrry slowly. • Future expansion will look a lot like starting over.

  7. Too Big • Overhead costs not covered by sales volume • Empty space/empty feel • Rare

  8. Just Right • Inventory mix and selection matches market needs • Enough space to operate efficiently and shop comfortably • Room to grow into mature sales projections • Sales revenue and margins can cover expenses and generate surplus Store size should be a business decision, based on hard numbers, analysis, and vision.

  9. Porridge • Yelm Food Co-op, Yelm, WA population 7,000 • Spiral Natural Foods Co-op & Grocery, Hastings, MN population 23,000 • Common Ground Food Cooperative, Champaign-Urbana, IL population. 82,000/41,500

  10. Yelm Food Co-op

  11. Spiral Natural Foods

  12. Common Ground

  13. Goldilocks Revisited Finding “Just Right” • Vision • Market Study • Feasibility Research • Community Survey • Site Selection

  14. 3 Little Pigs • House of Straw • Quick & Easy! • Immediate gratification • Huff and puff… • House of Sticks • Recognition of need for more structure… • … but inadequate execution • Huff and puff… • House of Stone • Extra care and investment • Built to last • Wolf Kabobs

  15. What if Small is the Only Option? • Careful business planning is critical • Are there potential reductions to operating expenses? • How long will they exist? • Is the competitive environment stable? • Do you have the best possible site? • Is a buying club a better option?

  16. The Moral of the Story Use good business plans, Get professional advice, Build the right sized co-op, And…

  17. Questions?

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