Vegetarians at the Gate

Health-food heavyweight Whole Foods takes aim at the Uptown crowd

Among the most flush is the Wedge Community Co-op, just south of the intersection of Franklin and Lyndale in south Minneapolis, which this week marks its 25th anniversary. Elizabeth Archerd, member services director there, says the co-op did $14.5 million in sales for its fiscal year that ended last June: That figure ranks the Wedge as the second largest natural foods co-op in the nation. "The Wedge has always, in all of its incarnations, outstripped what all of the natural-foods consultants said we could do in our building," Archerd says.

Co-op members share those good times. Last year the Wedge distributed $197,000 in cash "patronage rebates" to them, and an equal amount in stock. Now in its third home in the neighborhood, the co-op doubled its space in 1997 to just under 11,000 square feet of retail space. During this fiscal year, which ends in a few weeks, the Wedge is still growing at a rapid pace and expects to post sales of more than $16.4 million. Last year, the co-op tested the waters of further expansion when it surveyed members for their thoughts on a second store, but Archerd says right now there are no plans. "Everyone who lives more than five to ten miles away would like a store closer to them," she says. That would require significant investment, and Archerd says members have typically been wary of anything that might financially imperil the original store.

Opening another store would be one way of hanging onto market share in the face of increasing competition by, say, Whole Foods, which will be located but a few miles to the west of the Wedge. Or by Wild Oats Markets Inc. of Boulder, Colorado, which has 71 stores nationally. In 1998 the publicly traded chain saw sales of $398.9 million and a profit of $11.6 million. "We've long had a strong interest in the greater Minneapolis area," says Wild Oats president Jim Lee, who declines to give specifics about the company's possible real estate plans (Wild Oats' list of store openings through 2000 includes nothing in the Twin Cities area).

No sweat yet: The Wedge's Elizabeth Archerd says times are good for the local co-op, and a new chain-linked neighbor isn't worth worrying about
Diana Watters
No sweat yet: The Wedge's Elizabeth Archerd says times are good for the local co-op, and a new chain-linked neighbor isn't worth worrying about

Furthermore, traditional grocers are increasingly expanding their offerings of natural-foods products. Take, for instance, the overhauled Rainbow Foods in Minneapolis's Uptown neighborhood, within walking distance of the Wedge, which as of its recent Grand Re-opening features a much more expansive display of natural foods.

As competition from Whole Foods and others intensifies, local co-ops may revisit the idea of unifying in order to remain viable. The concept isn't new. In 1993 five co-ops--the Wedge, Mississippi Market, Seward Community Co-op in Minneapolis, Lakewinds Natural Foods of Minnetonka, and Valley Co-op in Stillwater--voted on a merger, which would have meant that members of one would be members of all. But only two of the co-ops got the necessary two-thirds vote: the Wedge and Lakewinds. Bottom line? Staying ruggedly independent won out.

That was six years ago, before the arrival of Whole Foods. Archerd says there's no concrete merger discussion right now, but allows that the topic is floating in the background. Mississippi Market's Mathewson says the benefits of such a merger would include collective buying muscle for the co-ops: They could purchase in greater bulk, which could lower costs at the store level; from a convenience standpoint, members would be able to shop at any participating co-op with a single membership.

In the wake of the no vote, local co-ops have found other ways to do business together. Those same five co-ops plus the Linden Hills Co-op in Minneapolis and Valley Natural Foods of Burnsville banded together last year to form an incorporated trade organization. Twin Cities Natural Food Co-ops collectively promotes member co-ops, including via the publication of the bi-monthly Co-op Consumer News. Too, the Wedge and Mississippi Market joined hands to retain the same public-relations firm to promote themselves to the media.

The joint efforts among local co-ops, Mathewson concludes, might best be read as a signal of what's to come--that is, more chain outlets peddling tofu, and the eventual overcrowding of today's room-for-all natural-foods market. "We may see some mergers and consolidations of some of the food co-ops in the Twin Cities," he says, stressing that those decisions are up to the member-owners. "I think the timing is good. A lot of our members at a lot of our stores realize it's much harder to operate independent stores."

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