President’s Remarks by Jeremy Thomas

Good evening, and welcome to the Fall 2014 General Membership Meeting of Weaver’s Way Co-op.

The past six months have seen quite a few changes made, issues confronted and discussed, and programs launched. 

As many of you know, this is my first address as Board President. In June, Margaret Lenzi stepped down as President and the board elected me to the position. I want to thank Margaret personally and on behalf of the entire board for her years of remarkable service as President and continued service as a board member. She is a tireless advocate for Weavers Way and the cooperative economy here in Philadelphia, and we are a better organization for her involvement and leadership. 

Current Co-Op Operations

Glenn will present the financial details of Fiscal Year 2014 in more detail after I’m done, but I do want to highlight a few items that I believe are important. The board reviewed and approved the FY14 audit at our October meeting, and I'm proud to report the our operation is financially sound and brought in close to $20 million in revenue — $19,324,328 to be exact. Profit before income taxes also increased significantly and exceeded $400,000.   At the end of the Fiscal Year, cash on hand stood at just under $1.3 million, and long-term debt at just over $3.8 Million. The latter has come down as the Co-op refinanced some debts and paid others down in the last year.

As of September 2014, the Co-op has 5,290 active members.

At the recommendation of the auditor and finance committee, the board earlier this month approved a $300,000 patronage rebate for members. This significantly decreases the federal taxes we owe and will provide you with a rebate in the form of both cash and equity, the size of which depends on how much you spent during the year.

Before moving on, I’d like to provide a quick update on the issues related to fraudulent actions of our former CFO that were presented at the last general membership meeting. The District Attorney has brought multiple criminal charges against Mike McGeary related to theft, forgery and records tampering. While Mr. McGeary has repaid the Co-op for the amount stolen, we are still seeking restitution for legal fees and auditing costs related to his actions. 

I think it is important to remember that no system is foolproof, especially when someone is willing to fraudulently manipulate that system, forge documents and deceive their coworkers.  That said, Glenn has instituted additional safeguards to help prevent similar situations in the future. He is now responsible for personally reviewing all credit card transactions for the organization, and a board designee — the chair of the finance committee — will do the same for all of the General Manager's credit card transactions. 

Additionally, we have hired a controller and head of finance — Nancy Pontone — whose job it is to make Weavers Way a more professional organization and to lead us — with better systems — into the future as we grow. Nancy lives in East Falls, is a member lender and has years of banking, nonprofit and community finance experience. I want to thank Nancy for accepting our offer to join the Weavers Way team, and I would also like to thank Susan Beetle for not only all of her hard work over these years, but especially this year after she discovered the issues with Mr. McGeary’s credit reports and took on added responsibilities for these last five months.

Another step the board will be taking on an annual basis is asking the auditor to apply special testing — essentially an added level of deeper investigation — to one aspect of the operation, confidentially and without the knowledge of staff. 

Finally, some other quick success stories:

• Our stores now sell products from 225 local vendors. This means that about 30% of our product line is local, which I think is exceptional and showcases the hard work of staff in this area.
• The starting wage of employees has been increased from $10 per hour to $10.50 per hour, which is exceptional amongst our peers and something to be very proud of.
• The staff has been actively promoting member engagement, from committees discussing important topics like Co-op prices and food justice, to serious efforts to legalize backyard chickens, to educational opportunities around genetically modified organisms and the Homesteading Series which taught people about pickling, canning and other home food techniques. And let’s not forget that major events, like Harvest on Henry, are attracting and engaging both members and a wide range of people from the community who are less familiar with Weavers Way and our farms.
• Food For All was created and will launch in early 2015. This program, which I will highlight in a bit, will provide discounts at Weavers Way to those on public assistance programs.
• Weavers Way now has an improved web site thanks to Malcolm, our new part time web manager. He has done an excellent job improving the appearance and usability of the main and member web sites.
• We have continued the work of supporting and learning more about co-ops in the region, attending and promoting meetings of the Delaware Valley Consumer Food Co-ops, Philadelphia Area Cooperative Alliance and Mid Atlantic Food Cooperative Alliance to learn about and support all co-ops in the region.

Expansion

Most of you know we are actively exploring the prospect of opening another operation somewhere in the region.

At our last General Membership Meeting, Glenn shared some short and long-term plans associated with expansion. We have continued a robust and strategic conversation with Glenn and other staff about expansion, and at our September board meeting we met with the firm that has been hired to conduct the market analysis that will help to guide the Co-op's decisions around expansion and where that may occur.

The study will consider the market potential of a new store in several Philadelphia neighborhoods, including Germantown, Roxborough and Manayunk, South Philadelphia and Ambler. It is also worth noting that several of these locations have active food co-op startups at various stages of planning and organizing. We — meaning both the board and the staff — are actively engaging these groups as we explore options for expansion.

Here is the board’s perspective on expansion, based on the numerous discussions we have had on the topic and the decisions we have made to date:

• Our goal is to be very careful and very strategic as we work with Glenn to consider expansion and all of the associated options around size, location, and other important variables. We take the job of evaluating the potential success of any expansion very seriously.
• One significant benefit of expansion is that we will be increasing the cooperative economy in the region. If we truly believe the cooperative model of business is a good one, then expanding our reach into other areas in our region is something the board wants to support.
• Another benefit of expansion is that it will increase our resilience as an organization, allow us to deal with market competitors in the future, and allow us to take risks and innovate as we grow.
• Finally…this is just the beginning of a conversation around expansion. We are only now learning about the markets out there and how we may fit. The board is committed to a robust, open and expansive membership engagement process that will both communicate plans moving forward while incorporating feedback from our members along the way.

Eden Foods

One topic that arose this summer — Eden Foods — is a stark reminder of how national issues can impact and confront us right here in Northwest Philadelphia. The issue is complex, but to quickly summarize: The CEO of Eden Foods filed a legal challenge to the Affordable Care Act, claiming they should not have to pay for health insurance that covers contraceptives they oppose on religious grounds. 

This summer, several members sent a request to the board that it conduct a poll of the membership to assess the level of support for a boycott of Eden Foods products. I met with some of these members, along with several other board members and staff, to better understand their concerns and discuss the best way to move forward on what we came to see was an incredibly complex issue. While many members object to Eden’s position and actions relative to this topic, the company’s practices in purchasing, producing and packaging its food products are very consistent with many of the values — and ends — of the Co-op. Eden has remained independently owned and operated for 46 years, buys its raw products directly from over 370 family-owned farms, is against the use of genetically modified organisms, and was the first company to stop using cans lined with BPA — despite the resulting cost — due to negative health effects.

We all agreed that this was an incredibly complex issue that deserved more discussion and understanding. Furthermore, it was an opportunity to educate ourselves and the membership about the Co-op’s product philosophy and how we make decisions about what products to sell in our stores, be it Eden Soy, Poland Springs bottled water or local ice cream. So we scheduled a forum to learn more about — and have an open discussion of — these issues. In the meantime, letters and emails to Co-op staff and the Shuttle revealed a great diversity amongst our membership, from those supporting a boycott, to Catholic members supportive of Eden’s position, to members against Eden’s position but also against a boycott.

At the forum, Norman Weiss led a discussion — while showing off his unrivaled and groundbreaking PowerPoint skills — that reflected this diversity of viewpoints and helped us understand the complex decision making process when it comes to the tensions inherent in a values-based product philosophy that also must support a business’ bottom line and the desires of its customers. Participants left the meeting with the understanding that many of us need to be more informed about the products we purchase, and staff committed to finding new and innovative ways to inform Co-op shoppers about the products they purchase.

Where does this leave us relative to Eden Foods? The company is still moving forward with a position and political agenda that many find objectionable, but they are still committed to food and small business values that many seek — and have trouble finding — in the products they purchase. With the understanding that some members will object, the Co-op’s official position remains that members and shoppers should make their own decisions about purchasing Eden Foods products…we won’t make it for them. I encourage everyone to continue making informed decisions, to understand more about the companies that produce the food products you purchase, and to continue this important conversation.

Food Costs

Another issue that was elevated in discussions at the committee level, within the Shuttle and in conversations both inside and outside our stores, is the cost of products sold by the Co-op. This is a long-standing conversation, and one I expect will continue…possibly for as long as the Co-op is in existence (which I expect to be a very, very long time, by the way!). It is also one that is repeated in the aisles of food co-ops around the country.

Weaver’s Way began as a buyers club seeking to provide affordable, nutritious food to its members. As an operation that now manages four stores, employs around 150 workers and generated almost 20 million dollars in revenue in the last fiscal year, I believe it is fair to say that we look a little different than when we were founded over 40 years ago. 

However, I like to think that we have retained the mission of providing nutritious, ethically sourced, healthy food to as wide a population as possible. But it is also fair to acknowledge our need to stay in business and achieve margins that allow us to do so…and therefore some of our products are not always affordable to everyone. There is an inherent tension between our values here that both the staff and the board understand and genuinely do their best to navigate; and I think it is very important for the membership, and all of our customers, to know this.

I encourage you to review Glenn’s article in the September Shuttle explaining why some of our prices are high. Many products cost more because they are organic, locally sourced and from companies that implement ethical animal treatment practices. Some are fair trade certified and supplied by cooperative enterprises around the world that pay their workers a living wage and support social and economic development in the region where they are produced, and they therefore come at a higher cost. 

We pay our staff a high starting wage and allow them to join our health plan, something we should be very proud of, as I mentioned earlier; but this adds a significant amount to our payroll that is higher than other food operations and impacts our ability to lower prices. So the truth is, we could change our practices and lower prices to be in line with other stores like Trader Joe’s and Aldi, but it will come at the cost of some of the very core values and decisions that set us apart from those operations.

The staff works very hard to provide a scale and variety of products so that all of those that wish to shop at Weavers Way can do so. And I’m very proud of the new program called “Food for All” which will provide all members eligible for SNAP and WIC public assistance programs with 10% off all purchases storewide. And for those who otherwise qualify but are not yet members, they can become members for a greatly reduced annual membership fee of $5.

Finally, we are starting to rollout more discounting and sales promotions that members can take advantage of as they shop at the Co-op.

Now, What About Competition?

Yes, construction has begun at the old Magarity site and it appears that the Fresh Market is coming to Chestnut Hill. They will be our neighbors  

But let’s not complain about competition; if I had my wish, I’d put all negative feelings about competition to rest right now. We are a member owned store that pays its employees well; provides healthy, quality food products; has two small but great health, beauty and wellness operations; is committed to buying as many local products as possible and has the flexibility to do so;cares greatly about supporting the local economy; and operates according to standards that move beyond simple profit. These qualities set us apart from our competition and are our greatest assets.

What are we doing to prepare for a more competitive environment?

• Staff will also continue to reinforce these differentiators with shoppers on the sales floor, communicating the message that we are a co-op, believe in the importance of local and transparent supply chains, along with those other values that make us unique.
• Just last week, staff went through an intensive customer service training program run by Zingerman’s, a first step in improving our customer service within the stores for customers and internally between staff.
• We will be making investments that will improve the shopping experience in Chestnut Hill, including an improved back yard that can be used for eating, relaxing, events and other social activities. The Co-op will also continue to develop partnerships with local organizations and nonprofits.
• The discounting and sales promotions mentioned above will also help us in a more competitive environment. 

Does this mean we do not need to worry about new competition? Absolutely not; but we needn’t be overly stressed out by it either. We need to be assertive and proactive, and I am encouraged by the strategic steps that staff is already taking to continue improving our operation. Ultimately, I am confident that Weavers Way is strong and will remain so because people will keep shopping here due to those aspects that set us apart.

People will shop at Weavers Way because they know their dollar will directly support the local economy.

People will shop at Weavers Way because it has the best customer service in the region.

People will shop at Weavers Way because its stores are places they want to be, with friends and other members they want to talk to.

People will shop at Weavers Way because they know they can spend their money there to support values they hold dear, buying products that are local, grown responsibly, or provided by businesses that treat their workers well.

And, perhaps most importantly, people will shop at Weavers Way because they own it.

Other stores will come — some will stay and some will go — but I believe Weavers Way will survive and improve because its member owners have a voice and a personal stake in its success. We the board, and the staff, answer directly to you…not to an anonymous group of stockholders who demand ever growing profit margins, not to a single owner increasing his or her family wealth, but to its principal customers - its member owners. You are the key to Weavers Way’s ability to survive — and thrive — in light of new or increased competition.

So let’s not sling mud or criticize a new competitor down the street or anyone else for that matter; but let’s embrace our core values and the role we all play in the success of this amazing operation.

The Next Six Months

So what do we expect the next six months to entail?

• Please look for announcements related to opportunities to discuss expansion. While the format of those discussions is yet to be determined, our plans to expand will rely on good input from our members.
• A committee of the board has done very good work to draft a new set of bylaws for the Co-op. While the changes are not dramatic, they greatly streamline and simplify our guiding document and are much easier to understand. Please look for a public release of the draft in the upcoming months. A vote on the amended bylaws will be held at our Spring General Membership Meeting.
• The leadership committee has been working hard to revise the board candidate recruitment process so potential candidates are well informed and prepared to become board members. The election will occur in the spring and will be finalized at the next General Membership Meeting. We hope to have a very good slate of candidates, and I encourage those that want to run to do so and for you all to encourage good candidates to run as well.