July 15, 2010

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Weavers Way gains new strength after fiscal crisis
Second of a two-part story

Co-op member Laurence Rosenzweig talks to general manager Glenn Bergman at Weavers Way, Chestnut Hill. (Photo by
Jennifer Katz)

Weavers Way Co-op was shocked into action in 2002 when it found itself engulfed in a financial crisis. Longtime bookkeeper Andrea Sheaffer had made several questionable calls to cover up financial distress, leaving the co-op an estimated $618,000 black hole in its records.

Sheaffer was never charged with malfeasance. The board established an accountability committee, which issued a report explaining as best it could what had transpired, blaming not just Sheaffer but the organization as a whole for being woefully undermanaged.

The report cited a systematic lack of financial control and created a model for structural change. It also did two very specific things: It attracted the attention of Glenn Bergman and created a strategic plan to move forward.

“I want you to know that it was this report that got me to apply for the GM job at WW,” wrote Bergman, the co-op’s general manager for the past seven years, in his e-mail sending the report. “I had been working in a corporate job as the regional VP for a very large company.  After reading the report I thought that this was as good as any corporate business report I had ever written.”

The board sought input for creating a long-term system of stability and growth. There were several issues to deal with. There was the undeniable smallness of the Mt. Airy store. Bergman became interested, “overinterested” he joked, about why people left the co-op. Although the number never reached alarming status, he wanted to know why someone would turn away.

“We started doing exit surveys and found that the majority were moving, but the other reason was that the store was too crowded,” he recounted. “They got bumped around. There was no room for a stroller, and there was no parking.”

Bergman and his staff were also faced with the reality that to maintain the volume of sales they had, or to grow, would be impossible for the staff and the building. They had bought, sold, rented and opened several satellite storefronts near the Carpenter Lane and Green Street intersection.

Adding to the bustle on the street were the Highpoint Café, Big Blue Marble bookstore, the Maternal Wellness Center and the Mt. Airy Moving Arts Studio. The store’s building needed costly repairs, and the board had invested a good deal of time restructuring the organization to better support itself.

But the first and foremost priority for Bergman was the stabilization of the co-op or, as he put it, to “solidify the finances and protect the brand.”

Bergman, the board, the staff and the members began to overhaul the organization. They created Weavers Way Community Programs, a separate nonprofit group, to run the co-op’s education programs. Tied closely to the co-ops mission, WWCP has its own board and must raise funds independently.

“The programs (that are now under WWCP) were draining our operating budget,” Bergman said. “We spun it off.”

As it grew, financial stability great enough to sustain an expansion continued to elude the co-op. What it needed was a second, economically viable location. Originally, the plan was to simply move. It was quickly abandoned when it became clear there was little support to leave the corner community with which it had become synonymous.

“One day a group of general managers from other co-ops came and spent the day here,” Bergman said. “They suggested doing a market study.”

A proposal for such a study had been sitting on his desk and on the advice of his cohorts, Bergman went ahead with the project.

“The study came back and said we should pick a second location in a contiguous area,” he said.

For one, it would be easier than jumping to a whole new area. Chestnut Hill was a logical location. After Mt. Airy, the co-op’s second largest contingent of members – 15 percent – was from the 19118 ZIP code. And, Bergman added, there was a need.

“There was no place in Chestnut Hill to get local, fresh, organic food,” he said.

In some ways the co-op is understated about what it has accomplished, and yet in other ways there is a palpable Weavers Way pride. Once the board and management team settled on the idea of expansion, they first had to put it to a membership vote. Then they had to raise money, so they launched a member loan campaign. To date they have raised $650,000 from 101 members.

“The member loan campaign is the backbone of the expansion,” Bergman said.

He said the total cost of the expansion was roughly $5.8 million for the purchase of the building and the construction. After the member loan campaign and the $900,000, contribution from State Senator Dwight Evans, the co-op had to borrow the rest.

Weavers Way became acquainted with Evans in 2007, when OARC approached the co-op to open a small store in West Oak Lane. Evan’s pet community development group provided $120,000 in assistance to update and outfit an Ogontz Avenue storefront for Weavers Way.

The store has yet to see a profit, and Bergman estimates that it is still about $30-40,000 away from breaking even. But the Ogontz store is much more than another co-op location – it is part of Weavers Way’s mission.

The co-op was founded under the seven guiding principles of the original Rochdale Pioneers: voluntary and open membership, democratic member control, member economic participation, autonomy and independence, education, training and information, cooperation among cooperatives and concern for community.

In modern language, the co-op’s principles are what is now referred to as a “triple bottom line of people, planet, profit.”

“We would like to do more of that,” Bergman said, referring to opening the small co-op in other communities. “We can’t afford it. You need plenty of cash.”

For years, the co-op used a members-only model where those wanting to participate in the co-op and shop at the store would join, pay for their share ($30 annual contribution or $400 lifetime contribution) and work a minimum of six hours a year.

 There was a brief period in the early years when membership did not require work hours, but as the co-op grew, having members work kept labor costs low and prices reasonable.

In order to increase revenues, in part to fund the expansion, the co-op changed its membership requirements to allow non-members to shop. The new membership structure has three-tiers: non-members, equity members (those who pay the annual or lifetime contribution and are entitled to profit distribution) and working members (those who make a contribution, work a minimum number of hours and receive a 5 percent discount at the co-op).

The decision to change the membership requirements created a chasm in the organization, and although the majority were aligned with what was originally a management recommendation, the dissenters have been clear in their opposition.

Melanie Jones had been a member since 2003 when she moved here from Maryland, where she participated in the Bethesda Food Co-op. Jones left the co-op after the membership changes took place.

“I felt that a lot of the decisions being made were because of the expansion,” she said. “The focus is on Chestnut Hill.”

Bergman does not disagree that the organization is focused on the success of Chestnut Hill. What he disagrees with it is that the membership changes will have a negative impact on the co-op and that the Chestnut Hill store is not vital to the growth and well being of Weavers Way.

Norman Weiss, the co-op’s purchasing manager, said he sees both sides of the argument, but feels comfortable with the present direction of the co-op.

“If the goal is to bring co-ops into other neighborhoods, to expose more people to the co-op movement, then it’s OK,” he said. “But there is a different dynamic when you work. You get to know each other. It builds community.”

If the short-term results are any indication, Weavers Way may be looking at pulling off a trifecta of success. With more than 600 new members (half of whom are working members) and $120,000 in weekly sales (almost four times what was predicted), the co-op has managed to retain the strength of its Mt. Airy flagship store, create a new financially viable store in Chestnut Hill and bolster its position as Philadelphia’s trailblazer in the co-operative movement.




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