Local Self-Reliance: Store Cooperative Owners in Philadelphia

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ILLUSTRATION: MOTHER EARTH NEWS STAFF
In dozens of that city's chain grocery stores, checkout clerks and other "ordinary" employees are becoming store cooperative owners in Philadelphia.

Philadelphia is the scene of another kind of revolution instigated by the Institute for Local Self-Reliance helping store cooperative owners in Philadelphia.

The institute for Local Self-Reliance works to help urban
residents gain greater control over their lives through the
use of low-technology, decentralist tools and concepts.
Because we believe that city dwellers and country folks
alike can profit from the institute’s admirable efforts,
we’ve made this “what’s happening where” report by the ILSR
staffers one of MOTHER’s regular features. If you would
like to know more, you can have a free catalog of ILSR’s
selection of books and pamphlets by sending the institute a
self-addressed, stamped envelope . . . or become an
associate member for a tax-deductible $35 per year ($50 for
institutions) and receive both a periodic report on the
institute’s work and a 20% discount on all the group’s
publications. Write to ILSR, Dept. TMEN, Washington, D. C.

Philadelphia, called the cradle of liberty for its role in
America’s fight for independence, is today the scene of
another kind of revolution: In dozens of that city’s chain
grocery stores, checkout clerks and other “ordinary”
employees are becoming store cooperative owners in Philadelphia. And ironically enough, the
parent of this experiment in worker ownership is none other
than A & P . . . the company that pioneered the concept
of the modern, corporation-controlled supermarket back in
1912.

The chain’s halcyon days were limited, however. In 1969 A
& P was still number one in domestic sales among all
retail food outlets, but the firm — now an “old
timer” — had grown fat and sloppy with success. Soon,
hungry new competitors — such as Safeway and Kroger
— overtook the giant . . . and by 1975 A & P had
fallen to fourth place.

It wasn’t long before large corporate losses began to pile
up, so — in an attempt to stop them — A & P
began to close many of its stores . . . and between 1974
and early 1982 it reduced the number of its locations from
3,468 to 1,055. However, each time the company shut down an
outlet, it was forced to lay off first those people who had
worked the shortest time, who — generally speaking
— were the younger and lowest-paid employees . . .
and to retain those with seniority and, usually, larger
paychecks.

As a result, the firm’s actual per-worker labor costs
remained extraordinarily high (the industry norm for annual
wages is just under 10% of total revenue, while A & P
was paying 15%). Furthermore, the reduction in employees
led to poorer customer service . . ..and the corporation
found itself in a vicious downward spiral caused by low
sales and high overhead, which — today —
continues to seriously threaten the future of the
once-great chain. A ray of hope, however, has begun to
shine in the Philadelphia region.

In the spring of 1982, Philadelphia’s United Food and
Commercial Workers union locals called laid-off A & P
personnel to a series of educational meetings on the
subject of employee ownership. The Philadelphia Association
of Cooperative Enterprise (PACE) acted as an advisor . . .
and nearly 200 people pledged $5,000 each for a share in
one of the reopened stores. With those funds as a basis,
the union submitted a bid to A & P of $4 million for a
block of 17 stores.

The chain’s management responded with a counteroffer: A
& P agreed to transfer ownership of 20 of the ill-fated
supermarkets to a new subsidiary, Super Fresh Food Centers,
with provisions that would allow an employees’ cooperative
organization at each of the locations to gradually buy the
store. Furthermore, A & P established “quality circles”
— committees of workers and supervisors — to
give participants a stronger voice in management and to
provide a forum for exchanging ideas.

The workers, in turn, agreed to reduce their vacations from
as much as four weeks to a maximum of just one week . . .
and took pay cuts of up to $2.00 an hour.

Under the arrangement, A & P will give each cooperative
a 1% share of that store’s gross sales . . as long as the
members together hold labor costs at all 20 locations to a
level of 10% of operating revenue. If the payroll
percentage figure goes up, the workers’ cut will be
decreased proportionately . . . while if salaries should
fall below 10%, the share to the cooperative will be
increased.

About half of the gross sales fund will be distributed as
employee bonuses, and the remainder will go into a master
account for buying additional stores. In the first year of
operation, this nest egg could yield as much as $1.5
million, which in turn could be used to borrow up to $9
million for new purchases.

Furthermore, in direct contrast to the “old way” of doing
business at A & P, each store will operate
independently of the others. Employees who wish to
become members of a cooperative simply invest $5,000 apiece
(the union will continue to represent workers, but cannot,
itself, own any of the outlets) . . . and anyone who wants
to join but has trouble coming up with the fee can get help
through the company’s credit union or through payroll
deduction financing. In the event that an individual leaves
the cooperative, he or she will receive the initial $5,000
plus a share of whatever profits have accumulated to that
point.

Meanwhile, other cities and corporations are watching the
endeavor with interest. Perhaps A & P — a company
once accused of driving “mom and pop” stores out of
existence — will become the progenitor of a new
generation of employee-managed enterprises. And these will
be neighborhood-based businesses . . . rooted in
and responsive to their communities, owned and operated by
the workers themselves, and keeping local dollars in the
local economy. This is the vision fostered by the
Philadelphia experiment.

EDITOR’S NOTE: For a superb account of today’s urban
woes
and a comprehensive, innovative
proposal for remedying those problems

you’ll want to read Self-Reliant Cities by David
Morris, founder and president of ILSR. The hardcover book
is available for $8.95 plus $1.50 shipping and handling
from the Institute for Local Self-Reliance, Dept. TMEN,
Washington, D. C.