In June, the Coop announced it was looking into the feasibility of adding a second store at the site of the current RJ's Friendly Market in Waterbury. On August 17, the Coop Council reviewed the findings that were based on the past few months of research. This included a summary report from our community engagement process, a market study, and a draft pro forma budget.
Based on its review, the Council concluded that the initial budget projections for this specific proposal do not support The Coop's expansion into RJ's. It also recognized that there is strong (though not unanimous) support from people who live and work around Waterbury for The Coop to come to town. The Council continues to be interested in this location for a potential second store. It accepted the Coop Manager's recommendation to continue to explore options for this location with the current owner and review the preliminary budget projections with an outside source to assure its assumptions are accurate. The Council asked for a progress report at its September 7 meeting, though no final decision is anticipated in the near future.
Here is a summary of different parts of our research:
Community Engagement: The Coop worked with Flywheel Communications for our outreach. From our meetings, comment forms, letters and emails, The Coop received hundreds of comments about a possible store. The feedback was extremely valuable and raised many of the issues that will be addressed if The Coop ever brings a recommendation forward for a Member-Owner vote. A summary report is posted under announcements on the Coop website: www.hungermountain.com.
Market Study: The Coop commissioned G2G Research Consultants to study The Coop's current market and the potential for a second store in Waterbury or in Barre. It is based on a product mix similar to what The Coop currently carries. The research used shopping and census data, a database of demographics for natural food stores nationwide, and the consultant's observations of site characteristics.
The study concludes that based on regional access and demographics, Waterbury is generally a favorable location for a second store and that the specific location (the current RJ's) could generate over $7 million in sales during The Coop's first year. There would be a projected 10% impact on sales at the Montpelier store (about $1.7 million) since some current shoppers would find the new location more convenient. The research also determined that the sales potential for a Coop store in Barre would be significantly less than for one in Waterbury. In looking specifically at the current LACE location, the report concluded this site has a number of limitations including parking and lack of loading facilities.
Pro Forma Budget: With the marketing study in hand, The Coop developed a pro forma budget to project the performance and financial impact of operating in this specific location. We used a conservative assumption for sales, The Coop's historical operating data and the cost of maintaining the existing Waterbury store. The budget showed that the project as imagined would not be financially feasible. The sales would not equal the operating and financing expenses, resulting in negative cash flow for the first several years. As a result, the Council and management concluded that pursuing the opening of a storefront at the RJ's location under the current plan would be too risky. Management has agreed to further review the pro forma budgets and the key assumptions that informed them.
*A revision was made the original 8/18 update on 8/20 to clarify the council's position. We apologize for any misunderstanding about The Coop's intentions to explore the possibility of a second store in the RJ's Friendly Market space.
