- Aasa Marshall

Retail grocery is hard — but not impossible

 

The retail grocery business is hard. Large upfront capital costs for space and inventory. Small margins and stiff competition. The need for marketing, procurement, merchandising, accounting and operations management. These things demand a lot of expertise, time, and people. Unless the store is part of a larger entity like a federation or corporate chain, it’s hard to make a go of it.

Large chain stores and federations can make it in this sector despite the narrow margins. Their collective buying power, warehousing, and the consolidation of administrative staff in a head office help lower costs. Add in high volumes and the ability to quickly turn over product, and the stores become viable. Plus, they often create supplementary or external revenue through offering financial services, credit cards, and petroleum. Small, independently-run businesses tend to have a harder time.

 

One Big Table proves it can be done

That doesn’t mean it can’t be done. Small grocery and specialty stores can be successful by thinking creatively and finding the right niche. One Big Table, a small co-operative grocery store in Kelowna that specializes in BC-produced food, is doing things right. Much of its success can be linked to how the founders managed the start-up phase.

Guilio Piccioli is one of the founding members of One Big Table. A chef by trade, he can often be found behind the counter of this small, cozy storefront making coffee for customers or telling them about the wide assortment of local products that fill the shelves. Not only have he and the other founders created a unique business focused on buying local goods and supporting the local economy, they were able to turn a (very small) profit in their first year of operations, which is unusual for any start-up retail outlet.

How did they do it? And what can other potential niche retailers learn from One Big Table’s strategies? Let’s take a look.

Think outside the box

One Big Table didn’t start out as a storefront business. Before becoming a co-operative grocery store, it began as a catering company that turned traditional catering on its head.

“I had the realization: why wait for phone calls from people asking for catering?” Piccioli said of the company’s early days. “Why not host our own events?”

The company was dedicated to using local ingredients, but quickly found that access to locally-produced food was limited — despite the bounty of food grown in the Okanagan. They decided to partner with local food suppliers to host private “Renegade Dinner” events in memorable locations.

“We had one dinner in a bakery,” Piccioli recalled. “The only lights on were the lights from the oven, and the baker was there telling their story and their approach to food. People remember [those events] fondly, and so we went to the next step to open a shop.”

Even then the group didn’t jump straight to a storefront location. In preparation, the co-op’s founders did pop-up shops around Kelowna. Outside of cafés, bookstores, and breweries they set up tables and sold produce to people on the street who frequented the already-established businesses.

Do your homework

While running the pop-up shops, members of the fledgling business also had customers fill out short surveys to gather information about their customer base. This information came in handy later when deciding on a business strategy: a mini market analysis, if you will.

An important aspect of any co-op is ensuring the decision makers reflect the membership. Co-ops tend to work best when the people who use the co-op are the ones who make decisions for it. Co-ops created from the bottom-up generally work best. A co-op that’s imposed on a market or community will find it much more difficult to establish itself.

Thanks to the pop-up shops and Renegade Dinners, One Big Table got a good idea of who its membership would be before opening its doors. By the time the co-op started up, they already recruited around 200 members. A year after opening they had 600.

Because of this insight into their membership base, the co-op continues to do cool things. For example, they rent out their commercial kitchen to local entrepreneurs, who use the space to create products. As a result, One Big Table’s Kitchen Collective supports new business, the local economy, and their membership all at once.

 

Educate yourself

Before formally choosing a corporate structure, Piccioli said understanding the co-op model was important to him. He took part in the three-day “Co-operate Now” program: an initiative by partner organizations Vancity and the British Columbia Co-operative Association.

This unique program helped him prepare a roadmap for the project, he said. It also clarified the reasons the group wanted to create a co-op and helped them recognize some of the model’s limitations. Meeting others who have gone through the development process was also an essential part of his training, he said.

Not everyone has access to this great program, of course. However, using other available resources to become well-informed about the model and the process is an important first step, he said.

Piccioli also recommended looking around for business development resources. One Big Table used Purppl, a “social enterprise accelerator,” to help get up and running.

Co-operatives First also offers free services. For groups looking to start co-op businesses, we provide direct supports, a unique resource site called the Co-op Creator, an online governance course, and a whole lot more.

Cut costs by building community partnerships

Starting a business is often capital-intensive, and the initial and ongoing costs of doing business can be a barrier to success – especially in a sector with razor-thin margins. For One Big Table, connecting with people in the community, tapping local resources, and finding the right partners helped to mitigate costs.

One Big Table teamed up with The John Howard Society when looking for a storefront location for their shop. The space, adjacent to the non-profit’s location, was previously a café. It already housed some equipment, like a coffee machine and refrigerators. With a bit of paint and other improvements, the co-op opened its doors for only $8,000.

“The key to our success was to find community partners that supported our vision and that we could support in exchange,” Piccioli said.

For example, One Big Table plans to continue the John Howard Society’s employment programs at the café in exchange for renting this affordable space.

Have some fun

Not everything about starting a business is going to be enjoyable – but staying positive and having some fun will not only keep you motivated, it can strengthen your business as well.

“It’s been a hard process but really extremely fulfilling,” Piccioli said. “If you’re thinking about starting a similar project, some things are gonna be extremely boring and some are gonna be extremely fun … I feel like a much more confident person because of everything I’ve learned in the process, which makes it a fulfilling experience.”