WisBusiness: Food Co-Ops Fill Niche in Badger State

By Patrick Fitzgerald

Emerging during a time when the traditional acceptance of supermarket produce began to yield to the fledging organic food movement, food co-ops throughout the country have been fighting and clawing their way to acceptance since the late 1960’s.

The big three co-ops in Wisconsin: Outpost Natural Foods of Milwaukee, the Willy Street co-op of Madison, and the People’s Food co-op of La Crosse, all happened onto the retail food scene in the state during the early 1970s. During their infancies, all three of the co-ops ran on sparse funds and sometimes no workforce.

Beyond the initial years, the businesses have come from selling out of food bins in the basement of a student’s house, volunteer workforces, and shares sold for single dollar amounts to businesses with annual sales in the millions of dollars that are housed in state-of-the-art, sustainable infrastructure, such as the case for Outpost Natural Foods.

Since 1971, Milwaukee’s Outpost, once known as the East Kane Street Food Co-op, has grown into the most recognized and accessible food co-op in Milwaukee.

Though the store and its counterparts around the state didn’t always have the community visibility they currently enjoy, a small, dedicated core of founders and volunteers helped the fledgling co-op emerge from a tumultuous first year as ‘Outpost Natural Foods.’

Since then, the store moved several more times due its expanding membership, and settled at its current location in 1990.

From its meek beginnings that saw the company run by a completely volunteer workforce, Outpost has experienced a flurry of activity in recent time.

In 1997, the co-op’s flagship store on Capitol Drive in Milwaukee expanded by 2,000 square feet. It then received a complete facelift in 2003, bringing the location a revitalized meat department, a larger prepared foods area, and ‘green’ or sustainable finishes.

With the spate of activity at its flagship store and growing demand from owners pushing for a more accessible location, Outpost conducted several market and feasibility studies. They yielded the opening of the co-op’s second store in Wauwatosa in March 2000, and its third store in Bay View during September 2005.

Margaret Bert, Outpost’s director of communications, attributed the opening of the co-op’s third store to growing demand of different enclaves within the Milwaukee market.

“In a nutshell, we started out very small, we started out with unpaid positions, and we now employ over 300 people, most of them full-time.”

The story of Outpost’s growth is a familiar tale to Madison’s Willy Street and the People’s Food co-op in La Crosse.

Willy Street, open since 1974, has been profitable for the past twelve years, raking in sales of $15 million for the year. Since 1999, the store has also seen membership numbers jump from 6,000 to the current 14,000.

Communications Manager Brendon Smith credited a progressive-minded community in Madison that has helped Willy Street increase business throughout the years in addition to spreading its message.

“We’ve been doing this for so long that we’re able to help the community understand the benefits of an organic diet and why locally produced food is an important thing,” Smith said.

The People’s Food co-op in La Crosse, started in 1973 in the basement of a UW- La Crosse student’s house, relied on an honor system for payment when staff wasn’t available.

However, since its inception, the company has increased its membership from the original dozen or so to over 3,400 members currently.

General Manager Michelle Schry expects that membership tally to eclipse 5,000 within the next few years, which she says is impressive for a city of about 50,000 residents.

“We went from a little buying club to doing over $9.5 million in business this year,” Schry said.

Outpost Natural Foods, which sold owning shares for $2.50 apiece in 1970, has seen that price leap to $200 for 2007. With over 13,000 owners consolidated mostly within the Milwaukee area, Bert believes the passion and proactive nature of the growing ownership base is a reflection of consumers seizing the fortune of opportunity.

“We don’t live in Illinois, we don’t have to go foraging around for a co-op,” said Bert. “They’re right in our own backyard which is a really a value and asset to the community.”

Despite Outpost’s continual growth throughout the years, the co-op’s main obstacles throughout time has been educating and converting the community to the laurels of supporting co-ops.
Even when people around the country were questioning what they were eating, the store still had rough times reforming the “supermarket” generation and farmers alike to their emphasis on freshly harvested, organic ingredients.

“Its been a challenge to get people to see things differently,” said Bert. “There’s been a whole generation that’s been raised on the supermarket mentality, and that’s fine, but we think that there are other ways to be.”

The struggle to gain visibility within Milwaukee’s grocer community is a constant one, Bert said, even in light of its high-profile expansions and renovations.

“Every once in awhile, we still have people that come in and say ‘you know, I’ve lived here forever and I’ve never been to Outpost. Didn’t you guys just sell supplements?’”

Though Outpost still flits around the radar of most Milwaukee area consumers, Bert said the co-op’s board of directors has made sure the store has continued to meet shifting consumer demands.

“Our board is not an operational board, they’re a visionary board, and they really do set the tone,” said Bert. “The board is made up of people who live in the community, and they have their finger on the pulse of what they see and hear all the time, and what is important to the people they talk to.”

In addition to being in tune with its clientele and ownership base, the store also has a tight-knit relationship with its employees, offering paid health insurance to all staff as well as a 401(K) retirement savings plan. Outpost is also a UFCW – Local 1444 union shop, with Bert adding that the co-op boasts an exemplary relationship with the union.

“We have a very good relationship with the union,” said Bert. “Outpost is one of the model businesses when it comes to conflict resolution and interest-based bargaining.”

At the Bay View location, the co-op partnered with WE Energies to install an operational model of a solar panel at the store to keep its stores and historical message of sustainability in alignment.

“People can now see how much solar energy Outpost uses on any given day, how much we’ve collected, and what value that has,” said Bert. “It’s really interesting to see how much sun will produce how much energy.”

In terms of the future, the store intends to continue its push to get Milwaukee to go organic and educate residents on alternatives to the standard product lines that are available in supermarket chains across the area.

‘Outpost is out there, we want to be the example that we feel all businesses should reflect when it comes to mission-vision values,” said Bert. “All of these things we do because answering the needs of the community and providing something for them is what a club is all about.”