Worker-Owned Grocer to Provide Bounty of Benefits for Inner City Community

Written by Amanda Maher. Image courtesy of applestreetmarket.coop

Access to fresh, healthy foods has been an issue plaguing inner cities for decades. Already operating at incredibly low profit margins, the economics of a grocery store can be challenging in any market – throw an urban environment into the mix, where inner city residents are presumed to lack the purchasing power to sustain retail stores, and it’s no wonder “food deserts” have grown in inner city markets.

But as ICIC has found, what inner cities lack in individual purchasing power, they make up in population density. While the average person may spend less per trip to the store, there are more customers per day.

So it came as a surprise to the Northside, Cincinnati community when their Save-A-Lot store on Apple Street closed abruptly in November 2013. With only two days notice given to customers, Save-A-Lot shuttered its doors, much like the Kroger did in College Hill and IGA in Clifton. Now, these three low-income neighborhoods had virtually nowhere to buy groceries. The one full-service grocery store within a 3-mile radius of Northside is poorly served by public transit—only one bus line connects Northside to the store, and this bus runs sporadically and never on Sundays.

Meanwhile, the Cincinnati Union Cooperative Initiative (CUCI) was launching the first of its worker-owned cooperatives, Our Harvest and Sustainergy. Could a similar model work for a grocery store? “I knew that CUCI had been starting worker-owned ventures. So I approached them about a grocery store within the first week of Save-A-Lot closing,” said Heather Sturgill, a Northside resident and community advocate. Shortly, residents from both Northside and Clifton joined the campaign.

CUCI responded by conducting a feasibility study to assess whether a market in either of these neighborhoods could survive. The results of the study and a neighborhood survey were illustrative of a market’s potential: “It showed that the consumer base of Northside, College Hill and the surrounding area is pretty diverse and there’s a lot of opportunity to be successful,” says Project Manager Casey Whitten-Amadon. “And in terms of competition, the northwest part of Cincinnati is one of the least competitive. The consumers are there and the market share is there.”

The former Save-A-Lot location was pegged as an ideal pilot location. Given its previous use as a grocery store, it would limit the need to retrofit the building. In order to get the new “Apple Street Market” up and running, CUCI launched a capital campaign. The worker-owned model makes these businesses inherently difficult to finance. To finance Apple Street Market, CUCI has held Community Ownership Drives, seeking to secure 1,500 individual investors, each of whom could purchase a share for $100, or less, depending on a sliding income-based scale. In a recent interview, Whitten-Amadon indicated that the Apple Street Market was close to reaching that goal. Given the local demographics and market to be served, the Cincinnati Development Fund has also provided Apple Street Market with below-market rate debt financing and generous payback terms.

With strong community support and financing in place, Apple Street Market is well-positioned to open in Spring 2015.

Importantly, Apple Street Market will re-introduce healthy, affordable foods to an otherwise underserved community. Perhaps more importantly, the jobs at Apple Street Market will be well-paying, positions with benefits. Using the Mondragon International model, which links each worker-owned cooperative to a labor union, the workers at the Apple Street Market will have collective bargaining rights unlike most workers at traditional grocery stores.

As ICIC’s comprehensive research on cluster-based economic development indicates, the food cluster provides real opportunities for inner city residents to access employment. Jobs in food-related industries – from production and processing, to wholesale, retail and restaurants – tend to require little formal education, making them accessible to the often under-skilled inner city population. Nationally, millions of workers are required of the food cluster: there are more than 800,000 food-related establishments employing 17 million workers, 60% of whom have a high school degree or less.

The Apple Street Market will test whether worker-owned cooperatives can add another valuable layer to the food industry’s employment ecosystem: well-paying positions, with benefits and profit sharing, in which workers have a vested interest in the market’s success. Meanwhile, the rest of the community will benefit from a locally-owned grocery store – one that CUCI hopes will serve as a catalyst for revitalizing the broader Northside community.

Read more about CUCI and the growth of worker-owned cooperatives in Cincinnati: What Works: Leveraging Union Support for Business Growth – The Mondragon USA Model