CCMA Conference Highlights Blog Post Graphic

The Role of Food Co-operatives in Responding to the Covid-19 Pandemic

Highlights from the June 2020 Consumer Cooperative Management Association (CCMA) Conference

Bob Gibson, TPSS Co–op Board Member

The Covid-19 pandemic has posed significant economic and operational challenges to the co-operative grocery business in the U.S. At the same time, the crisis has brought renewed attention to the role co-ops play in providing unique value to lower income and systemically disadvantaged members of their communities.

Some takeaways from the conference:

Economic and operational impacts of Covid-19:

  • Slightly more than half of the National Co-op Grocers Association’s 147 member stores had lower sales in the first full month (April) of the pandemic.
  • There was great disparity in sales, with co-ops that made the most aggressive changes in operations in face of the pandemic generally seeing the greatest losses.
  • The general economic downturn stressed the importance of co-ops – generally seen as pricier than conventional groceries – who often do more to offer shoppers low-cost, high-quality options.
  • The pandemic accelerated the move to e-commerce, a change that is necessary but, at this stage, fraught with difficulties.
  • The pandemic has revealed a growing consumer interest in access to locally-produced fresh and prepared foods, which aligns with one of the niche markets that co-ops excel in.

Focus on lower-income shoppers:

  • Several co-ops have achieved success with affordability/discount programs that have user-friendly designs, leverage existing benefit programs like SNAP, and increase the purchase of fresh, healthy food.
  • Co-ops are encouraging the patronage of new shoppers from a wider cross-section of their communities through innovative engagement programs. These emphasize how the co-op provides services and value not found in conventional groceries.

C.E. Pugh, CEO of National Co-op Grocers, said that there was a wide disparity among co-ops nationwide in how the pandemic affected co-op sales during the first two months of the pandemic. Some co-ops enjoyed a 60 percent growth in sales, while others saw a loss of sales of the same magnitude.

The co-ops that saw higher sales:

  • Chose to remain open with few restrictions
  • Offered a hybrid mix of conventional items and organic/natural selections

Co-ops with lower sales:

  • Chose to close partially or completely for a period
  • Strictly limited access to shoppers
  • Operated in a college town and the college closed
  • Shut down successful prepared foods operations and hot bars

“By definition, shopper metering [limiting access] and social distancing hurts the economics,” said Pugh. “Co-ops are caught between the awful choice of keeping their staff as safe as possible and how to be of greatest service to their communities.”

About 100 co-ops now offer an e-commerce option. “And I think we’ll see more e-commerce in the future,” he said. “It’s painful to set-up and manage well, but it is a valuable option. But no one has yet figured out how to make it profitable.”

Pugh noted that societal reaction to the pandemic plays to co-op strengths, including:

  • Greater desire to shop local and strengthen local communities
  • Greater desire to buy from local suppliers
  • A perception that co-ops operate with “transparency and love”

Pugh also noted that the pandemic poses threats to the co-op business model by:

  • Placing added strain on already tight margins and lack of deep financial resources
  • Emphasizing the image of co-ops as groceries with higher prices, more limited selections, and resistant to change

Pugh recommended that co-ops prepare for a variety of economic scenarios for the near future, which may include:

  • Slow but steady recovery
  • ‘Stagflation’ (high inflation, high unemployment, slowing economy)
  • Initial months of recovery followed by severe economic downturn in late 2020 into 2021

Pugh urged the cooperative leaders attending the CCMA conference to ask these questions as they grapple with the pandemic:

  • Can we find more affordable options for members of the community who are particularly strapped for cash?
  • Can we find more opportunities to work with local producers?
  • How can we strengthen relationships with other community organizations?
  • How can we do more to fight inequality?

“We have an important and unique role to play to help people in pain,” said Pugh. “We are led by intelligent, caring people. And we know what it means to take constructive action. We changed the food system in this country by introducing the co-operative option – we can take on this more important issue.”