Incorporated: 1961
NAIC: 445110 Supermarkets and Other Grocery (Except Convenience) Stores
SIC: 5411 Grocery Stores
The largest food cooperative in the United States, PCC Natural Markets operates eight stores with an emphasis on natural foods in the Seattle neighborhoods of Seward Park, View Ridge, Greenlake, West Seattle, Fremont, and Kirkland, and in Redmond and Issaquah, Washington.
Becoming a Natural Food Co-Op: 1953-75
In 1953 John Affolter organized 15 families in Seattle and in Renton, Washington, into a food-buying club that operated out of the "depot" in his basement. Called Puget Consumer Cooperative, the club's inventory in the early days consisted of bulk grains, dried beans, honey, and railroad-damaged canned goods that were dropped off at members' homes. In 1961, the club incorporated as a cooperative. The original 15 member households each purchased $50 membership certificates that went to build and maintain the co-op's storefront in Renton. They paid dues semiannually in return for which they received a rebate based on a percentage of their purchases each year.
By 1967 the number of families in the co-op had grown to 340, and Affolter's basement depot closed after complaints about neighborhood traffic. A new storefront opened in the mostly residential neighborhood of Madrona in east-central Seattle. The co-op's members opted to end the rebate system and to institute instead an arrangement whereby each household paid dues in proportion to its size.
Two years later, membership had almost doubled to 650 households, and a split occurred between those who wanted their co-op to focus on natural foods and those whose interest was primarily in offering cost savings to members. Those focused on natural foods split off to open a Puget Consumer Cooperative storefront in the University District of Seattle in 1969 where sales for the first year topped $66,000. (A second group of members split off in 1971 because they felt the co-op was getting too large and started the Capitol Hill Co-op; in 1973 another group of members withdrew their certificates to start the Phinney Street Co-op with a loan from Puget Consumer Cooperative.)
Puget Consumer Cooperative continued to thrive and to evolve as a cooperative. In 1971 workers began to take on some management responsibilities, marking the beginning of democratic management at the co-op. The co-op board changed the bylaws to reflect this alteration: staff members became co-op members; all workers received equal pay; and staff meetings occurred more regularly. By 1973 co-op membership had grown to 1,887. Two years later, membership had close to doubled again, and Puget Consumer Cooperative's sales exceeded $1 million.
New Stores, New Challenges, and New Management
In order to accommodate the increase in size, the store in Madrona moved to a new location in Seattle's Ravenna neighborhood in 1976; members carried boxes, pushed handcarts, and drove vans and pickups filled with the necessary items to the Ravenna store. The new site attracted more clientele, and sales more than doubled while the staff tripled. Some of the co-op's new business came from the closing of the Capitol Hill Co-op. By 1977 earnings had increased to about $48,000.
Puget Consumer Cooperative purchased another co-op, Co-op East, and opened a second branch in Kirkland, a suburb of Seattle, in 1978. The move led the co-op, in 1979, to conduct a survey of its customers, which revealed the information that many shoppers traveled a considerable distance to get to Puget Consumer Cooperative. The decision to become a multistore organization followed and brought with it centralization of some business functions. A third store in Greenlake opened in 1980 and became the new home to Puget Consumer Cooperative's corporate headquarters.
Not all went smoothly for Puget Consumer Cooperative in the early 1980s, however. Despite net earnings in 1978 of $79,000, the Kirkland store was experiencing continued financial losses, while sales at the Ravenna store began to fall. To remedy these situations, the co-op board suspended democratic management at Kirkland, remodeled the store, reopened membership at Ravenna, and decided to hire a general manager.
The first general manager came on board in 1982 and left a year later. A second general manager, Lyle Whiteman, came on board in 1984 and the co-op moved its offices to a separate building in the University District. Meanwhile workers at the Kirkland and Greenlake stores and office staff unionized, and Puget Consumer Cooperative negotiated its first contract with their union in 1983; the office staff voted to decertify in 1985, while Ravenna staff joined the union in 1987.
Turning Business Around
During the second half of the 1980s, Puget Consumer Cooperative began to pursue a course of cautious expansion. Two new stores were opened in 1985 and 1987--in Seward Park and View Ridge respectively. In 1989 a store in West Seattle became store number six. In 1990 these six stores boasted combined revenues of about $26 million and more than 35,000 active members. There were more than 200 staff members.
The early 1990s continued to be a time of change in leadership, finances, and politics for the co-op. Despite several years of negative earnings from 1992 to 1994, Puget Consumer Cooperative purchased the Meat Shop, Inc., in 1991. (In 1985, it had installed a Meat Shop, Inc., counter at the Ravenna store over some members' objections.) After Lyle Whiteman left his position as general manager in 1991, Jeff Voltz replaced him in 1992. Also in 1992 Puget Consumer Cooperative opened a South Everett store, which closed in 1995. A store in Fremont opened in 1994.
By 1995, with 300 staff and sales exceeding $800,000 per week, Puget Consumer Cooperative's financial situation promised to turn itself around. That year, Puget Consumer Cooperative purchased Greenlake Market, and in 1996 it opened a co-op in the Greenlake neighborhood, its seventh store, nearby. In 1997, sales for all of Puget Consumer Cooperative reached $1 million each week with net earnings about 2 percent of sales. The year 1998, when Puget Consumer Cooperative began to do business as PCC Natural Markets, was even more profitable than 1997.
Cultivating Growth and Environmental Responsibility
By 1998 PCC Natural Markets was the largest natural food co-op in the United States. It still held firmly to established co-op values of listening to members' wants and needs and of working closely with the communities in which it was located. All locations placed a priority on using local vendors and approximately 60 percent of the produce was organic. In the case of the new Greenlake store, both the parking lot and the merchandising emphasized environmental responsibility.
At the same time, according to Voltz in a 1997 Progressive Grocer article, "Changes we've made to both product selection and the design style have helped us sell more groceries than ever. We have a professional look and style that we didn't have before." These changes translated to profits of about $1 million on about $50 million in sales in 1998 and $58 million in 1999. Still bent on bringing more stores to its then-35,000 members, PCC opened another new store in Issaquah, Washington, in 1999.
During the late 1990s, the board transitioned to a different model of governance, one that cast board members as the "servant leaders," followed by a management restructure in 2000. When Voltz left PCC in 2000, Tracy Wolpert and Randy Lee assumed the roles of co-chief executives. PCC also took active steps to support its vision of locally produced produce. The newly formed PCC Farmland Fund, a nonprofit entity, purchased a $600,000 piece of property in the Dungeness River Delta to save it from development in partnership with the state Fish and Wildlife Department. The plan called for PCC to seek reimbursement for half the purchase price from a federal grant, at which point the state would take title of the land and lease it to PCC in perpetuity for farming.
Becoming More Competitive
By the first years of the new century, the market for organic and natural foods was growing fast at about 25 percent a year, although even by 2004, organic foods accounted for only 1 to 2 percent of food sales nationally. "The world is changing. Co-ops across America over the last 30 years really cultivated and supported organic agriculture. Now it's becoming mainstream," Voltz said in the Seattle Times in 2001.
However, PCC was once again experiencing financial losses--$1.4 million on revenues of $63 million in 2000, a decrease of about 6 percent over 1999, caused in part by the expense of opening the Issaquah store. PCC closed its Ravenna store in 2001 after competition from a neighboring QFC market led to a drop in sales of nearly 20 percent. Whole Foods arrived in Seattle in 2000 and started cutting into PCC's profits as well.
The co-op took steps to make itself more competitive in 2001. Under Wolpert, who became sole chief executive officer in the spring, it replaced many clothing and general merchandise items with perishable foods, introduced catering and a boxed lunch program, expanded the bakery line, boosted its amount of organic produce, and introduced lamb and pork items. The co-op also investigated new marketing after a 2000 survey revealed that PCC's name was not familiar to many people who shopped near PCC stores. It adopted a new logo in 2003.
PCC also invested in training for employees to boost their knowledge about products and to improve workers' attitudes. "When I got here, there was a lack of focus on sales," said Wolpert, a 20-year veteran of Von's supermarkets, in a 2001 Puget Sound Business Journal. He continued, "There were few consequences for doing things poorly, or rewards for doing things right. So we've restored accountability."
Efforts paid off. In 2001, revenues jumped to $67 million. The co-op did $75 million in sales in 2002, a 12 percent increase over 2001. Although a slight scandal erupted in 2003, after evidence showed that it had sold fish labeled as "environmentally friendly" that originated from unvetted sources. Although it was never clear whether the mislabeling occurred within co-op stores or before the fish reached PCC, EcoFish, Inc., the co-op's supplier of fish harvested in an environmentally approved manner, suspended its contract with PCC. In 2004, PCC switched to a new fish supplier, Ocean Bay, and partnered with Monterey Bay Aquarium to educate consumers about sustainable seafood.
Continued Commitment to Natural Foods and Healthy Choices
By 2004 sales had reached $89 million, up more than 10 percent from 2003, and the number of customers shopping at PCC was up 8 percent. About 90 percent of PCC's produce was certified organic and about 60 percent of its bulk grocery items were as well. As part of its mission to educate consumers about the foods they eat, the co-op began its Kid Picks program in 2004. It put together samples of healthful foods for tasting in schools, at community events, and in stores. Those items approved by more than two-thirds of kids were labeled "Kid Picks."
The year 2005 marked the completion of extensive remodels at most of PCC's seven stores. In 2003, the Fremont store had moved to a new location. In 2006, the co-op added an eighth location in Redmond, Washington. A banner year for PCC, in 2006, sales topped $100 million as co-op membership reached 40,000, and employees numbered 700.
Even as the co-op enjoyed the boom in the organic industry and while sales in mainstream supermarkets remained flat, it remained true to its mission of affordable food, sold in accordance with its commitment to education, fair trade, and environmental stewardship. In 2007, PCC removed all products with trans-fats, BGH, and high-fructose corn syrup from its shelves and stopped using plastic bags. As part of its remodeling efforts, all stores had full recycling facilities and energy-efficient lighting and water fixtures. The co-op also voluntarily instituted country-of-origin labeling for meat, seafood, peanuts, and fresh produce. Local county government named it the "Best Workplace for Recycling 2007" and in 2008, PCC's Redmond store exceeded the U.S. Green Building Council's LEED Gold Certification for energy efficiency.
According to the company's web site, "The products we sell are not only healthier than those found in conventional sources, they're likely to be produced in a way that helps sustain the environment or that is cruelty-free, meaning animals are range-grazed without hormones or antibiotics, fish are sustainably harvested and products are not tested on animals. We encourage our members to shop this way, too." With a ninth store to be constructed in Edmonds, Washington, in mid-2008 and with interest in organic, responsibly produced food and personal items increasing, PCC Natural Markets looked toward a future of steady growth.
Principal Competitors
Quality Food Centers, Inc.; Whole Foods Market, Inc.; Albertsons LLC; Trader Joe's Company.
Further Reading
Burrows, Kate, "An Organic Success: PCC Natural Markets, the Nation's Largest Organic Food Coop, Says It Provides Seattle-Area Customers with High-Quality Organic Foods," U.S. Business Review, January 1, 2007, p. 164.
Denn, Rebekah, "PCC's 'Premium Fish' Was Wrongly Labeled; Some Products Sold As EcoFish Really Weren't, Say Workers," Seattle Post-Intelligencer, October 24, 2003, p. A1.
Engleman, Eric, "Largest 100 Private Companies: PCC Natural Marker; PCC Returns to Its Organic Roots After a Few Lean Years," Puget Sound Business Journal, June 20, 2003, p. 46.
"From Hippies to Hip," Progressive Grocer, December 1, 1997.
Holt, Gordy, "Reclaiming a Fertile Delta," Seattle Post-Intelligencer, May 26, 2000, p. B1.
Moriwaki, Lee, "Landmark Store Closing--Competition Squeezes Out Ravenna PCC," Seattle Times, January 8, 2001, p. A4.
"PCC Touts High Sales, Labor Contract at Annual Meeting," http://www.progressivegrocer.com, April 29, 2005.
Tice, Carol, "Natural Choice," Puget Sound Business Journal, August 31, 2001, p. 8.
— Carrie Rothburd
