Finding Growth Amid Challenges
Dear Seward Co-op owners,
By any metric, this has been a challenging year. It is a hard time to be grocery store—larger, corporate and multinational competitors continue to squeeze-out local businesses in our community and the effects of climate change and wealth disparity continue to impact our food system as a whole. Our cooperative values guide us toward equity and social responsibility; and this often creates a dynamic tension when we seek to support the livelihoods of employees and producers while also meeting the need for affordable food in our community.
After a small profit last year, this year we had a substantial loss. In FY2024, co-op sales declined by $166,240, or 0.4%, from the prior year. Our wage increase for the year totaled $813,453. Our total pre-tax loss was $857,969. There are several factors that contributed to this loss, including sales decline, wage increase and an increase in depreciation and interest expenses.
Seward Community Co-op and our employees’ union, UFCW Local 663, unanimously ratified a three-year contract, which provides higher wages and more staff benefits. We are very proud that this has been described as an industry-leading contract. Unfortunately, this significant increase in labor expense was not coupled with the sales increase that we had budgeted.
The first line of our Ends says that “Seward Co-op will sustain a healthy community.” In order to do this, we have to ensure our financial health. It’s what allows us to remain a strong resource for food, jobs, and a place for the community to connect. We continue to work diligently toward a level of profitability that will support our long-term sustainability. This is a long-game that continues to require major operational changes coupled with patient reflection. We need to adapt to a changing market, and we want to do so in a way that remains true to our Ends.
As previously communicated, over the past year we have assessed every aspect of co-op operations in order to implement expense reductions wherever possible. The leadership team completed a comprehensive expense audit and identified opportunities to reduce other overhead expenses by nearly $300,000 in annual savings over the next year.
This summer we also announced an agreement with a local non-profit to purchase the Creamery building. At this time, the agreement requires us to keep the identity of the buyer confidential. However, the buyer is deeply aligned with our values and Ends, and we are confident they will be able to use the Creamery building to expand their mission in the community.
The sale of the Creamery building is a positive step towards our strategic direction. The sale of the Creamery building will significantly decrease our operating expenses, and will reduce the co-op’s long-term liabilities as well as the complexity of our operations. Selling groceries is what we do best. With continued focus on simplifying and improving our operations, we can grow sales and achieve financial sustainability. This will allow us to grow the cooperative in alignment with our values and Ends.
Despite the year’s difficulties, looking through the Scorecard keeps me humbled and honored to be a part of the work our co-op does. It was back in 2006 we started using the Scorecard as a way to measure our successes that go beyond the financial. In 2014 we significantly reworked it together with the opening of the Friendship store, and this year marks the first time since then it’s been seriously reconsidered. There are too many changes to list, but I’m especially proud to highlight two major changes:
First, we changed the “equitable economic relationships” measures to lift up the ways we support one of the most important groups of our co-op community: employees! Back in 2014 we didn’t even have a union contract, whereas this fiscal year our union relationship is solidly a part of our co-op identity. Previously we reported our starting wage, but now we’ve expanded the section to address more specific union-related measures and hold ourselves accountable to them into the future.
Second, the “positive environmental impacts” section now better reflects what those words mean to us today. We’ve gotten more specific about what local sourcing means and now include more robust measures around energy usage, which lined up nicely with the work we did during the Franklin remodel to make the store more energy efficient.
Take your time looking through the Scorecard this year—this is a still-evolving tool that we use to measure our ability to sustain a healthy community that has equitable economic relationships, positive environmental impacts and inclusive, socially responsible practices. Our co-op does so much incredible work, and this is the place we get to brag about what makes us different from other corporate, multinational grocers in the marketplace.
We are in a challenging economic moment for our co-op, but I believe we can make it a turning point. As of this year, we now have over 24,700 total co-op owners. I want to thank each of you who continue choosing to shop at Seward Co-op amidst a competitive, corporate-dominated grocery industry; it is the most important thing our community can do to keep our co-op going. Our sales support great jobs in our neighborhoods and provide opportunities for local farmers and businesses in our wider communities to thrive.