Portland’s supermarket scene is about to get a new competitor. By early 2015, the Portland Food Co-op intends to open a grocery store in downtown Portland, a district dominated by Whole Foods, Hannaford and Trader Joe’s.
The business plan calls for a much smaller store than the ones operated by the large chains, but with a full offering of organic and natural groceries, including beer, wine and prepared foods. The store will emphasize locally grown and produced food.
“We’re looking for a space on or right near the peninsula in Portland,” said Rachelle Curran Apse, the co-op board member who is managing the opening of the store. “We want car, bus, foot and bike access, and for it to be close to the highway. Something similar in size to the old Whole Grocer.”
Apse said the co-op is actively looking for a location with up to 10,000 square feet of space, which is similar in size to Lois’ Natural Marketplace in Scarborough, Royal River Natural Foods in Freeport and the former Whole Grocer, a locally owned health food store bought and shuttered by Whole Foods when it moved to town in 2007. The Whole Grocer’s employees were all transferred to the new store.
Once the co-op signs a lease, it anticipates a year of work before opening the store, Apse said. A decision on the eventual location could come as early as this fall.
When Whole Foods bought the Whole Grocer in 2006, a group of roughly 15 people banded together in hopes of creating an alternative to the natural foods behemoth.
Wanting an immediate shopping alternative, the group formed a buying club, giving members discounted access to Maine-grown foods as well as products sold by the national distributors Frontier Natural Products and United Natural Foods. However, the group’s goal was always to open a retail space.
“The community said we need a natural food store owned by the community,” Apse said.
Portland’s previous cooperative food store closed in 1997. Called the Good Day Market, it opened in 1970 in the West End and later moved to a higher-rent location in the East End. At the time of the closure, the co-op’s treasurer told the Portland Press Herald the store’s demise was caused by mounting debt related to the move.
In 2011, philanthropist and hedge fund manger S. Donald Sussman, majority share owner of the Portland Press Herald/Maine Sunday Telegram, gave the Portland Food Co-op a five year, rent-free lease to a building on Hampshire Street and $44,000 to renovate it. The co-op uses the 4,700-square-foot former tobacco warehouse to take delivery of products, run member pickups and host meetings.
“At their roots, co-ops are about communities working together to grow and prosper,” Sussman said in a prepared statement at the time of the gift.
Member-owners govern cooperative businesses and share in the company’s profits and losses. Maine is home to a number of for-profit and nonprofit cooperatives, including small food businesses, such as the Belfast Co-op Store and Local Sprouts Cooperative Cafe, and larger organizations, such as Maine Community Health Options (one of the state’s two health insurance exchanges mandated by the Affordable Care Act) and the state’s many credit unions.
Since its humble beginnings in 2006, the Portland Food Co-op has grown to more than 400 member-owners, who order just shy of $250,000 in food through the co-op buying club each year. I joined the co-op earlier this year and learned about the plans for the store once the news was announced to the membership following the July 2 board of directors vote.
Before coming to that decision, the board studied the market. A volunteer team made up of local business people, managers of other Maine food co-ops and individuals from lending institutions hired Cooperative Development Services, a Minnesota- and Wisconsin-based management consulting firm, to prepare a competitive market analysis.
In the resulting report, consultant Debbie Suassuna noted “the natural food segment of the retail food industry has been increasing at a rate considerably faster than the conventional segment.” Given Greater Portland’s population size and demographics, Suassuna said, the area offers sufficient sales potential for a co-op despite the robust competition from nearby grocery stores.
Her report recommends the co-op lease a 10,000-square-foot retail space — big enough to allow the co-op to stock a full range of groceries.
University of Southern Maine associate marketing professor Jeanne Munger agreed that there is room for a co-op in Portland, where there is a popular Buy Local campaign and a thriving local food scene.
“You’ve got a lot of people in Portland that will buy into that sort of thing because they belong to that community,” Munger said. “These are the kind of places that are nibbling away at the traditional grocery stores.”
Munger said the local ownership and emphasis on local products will appeal to people in southern Maine. While pointing out the high failure rate for new businesses, Munger said the Portland Food Co-op has a leg up since it already has a presence in the community and has taken the time to assess the business environment.
“If they were just plopping into the market, I’d be skeptical,” Munger said. “But since they’ve been in the marketplace and done the market research, I think they have a chance. People have been supporting it, and that’s a really good sign that they’ll have a viable market.”
In order for the co-op to make the leap from buying club to retail storefront, the community will need to offer additional support.
The business plan, being finalized by Chad Sclove of Portland-based Common Good Ventures, calls for launching a campaign to attract at least 1,200 new member-owners before the store can be opened. Membership costs $100.
The membership drive will be followed by an effort to get member-owners to loan the co-op startup funds. The loan amount will vary depending on the size of the space the co-op leases, but will total more than $1 million.
“Generally with a co-op, half the money comes from members,” Apse said. “This is capital to get the store running. The details aren’t finalized, but the loans will then be paid back over a period of time. It is truly a community-owned and created business. That’s why we need to build a large base of member-owners first.”
The other half of the startup funding will come from lenders. The co-op plans to apply for loans from the Cooperative Fund of New England and the City of Portland Economic Development Revolving Loan.
Assuming the Portland Food Co-op can line up financing, it will then hire a general manager who will recruit up to 15 employees. The co-op would be open seven days a week, accept food stamps and offer discounts to help low-income shoppers become members.
While members can vote for the co-op’s leadership and take advantage of special member discount days, people without memberships will be welcome to shop at the store as well.
“It’s very important to us that nonmembers have access to everything because we want to be a resource to the community,” Apse said.
Avery Yale Kamila lives in Portland, where she shops local and writes about health food. She can be reached at: