Annual Report

Annual 3 1 0 2

Report

Reports from the General Manager, Board President & CFO PLUS store highlights from the past year

We were certified as an organic retailer for the eighth year in a row.

Simply stated, that means we maintain the organic integrity of organic products from our back door to your basket.

We feature the best selection of organic, local produce of any store in Humboldt County! Our sales in local produce alone totaled more than $1 million!

FROM OUR

General Manager Annual Report | 2013 We welcomed 816 new members resulting in a total of 15,620 members owning the North Coast Co-op.

The North Coast Co-op employs an average of 185 people.

We improved access to safe and secure employee bike parking in Arcata, doubling the number parking spaces. See a video with the story on our You Tube page. http://www.youtube. com/watch?v=a3Plu4AuWao

We worked with EnergySmart Grocers to reduce our energy usage and saved more than $17,000!

We were certified as an organic retailer for the eighth year in a row. Simply stated, that means we maintain the organic integrity of organic products from our back door to your basket.

In July of 2012 we began hosting cooking classes and workshops in Arcata, which allowed us to expand our offerings to 63 classes and workshops for 500 participants.

By  Kelli  Reese,  General  Manager

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elcome  to  our  Fiscal  Year  2013  (FY13)  Annual  Report  covering  April  2012  -­  March  2013.  It’s  been  a  few  years  since  North  Coast  Co-­op  has  created  a  year  in  review  report  for  mailing  to  our  membership;Íž  we  feel  it’s  a  great  way  to  reach  a  broader  spectrum  of  our  members,  rather  than  a  presentation  at  the  Annual  Meeting  as  we  have  done  in  the  past  for  a  smaller  audience. Â

it  upon  themselves  to  see  how  much  they  could  raise  by  holding  a  friendly  competition.  You  responded  in  force  by  “rounding  upâ€?  purchases  each  time  you  shopped.  When  it  was  all  said  and  done  a  total  of  $12,850  was  donated  to  Food  for  People  including  the  Co-­op’s  match.  We  are  so  proud  of  our  cashiers  and  our  community  for  the  effort. Â

We  can’t  look  at  the  last  year  without  taking  a  moment  to  thank  David  Lippman,  General  Manager,  who  retired  in  January  2013.  He  was  here  during  a  time  when  there  were  many  pressing  needs  facing  him  and  the  fact  that  we  are  where  we  are  right  now  is  due  in  part  to  him.  Thank  you,  David.

employees  and  giving  them  the  tools  to  better  understand  DQG LQĂ€XHQFH WKH &R RS DQG WKHLU GHSDUWPHQWÂśV VXFFHVV Each  employee  knows  enough  about  the  company  to  understand  how  their  actions  will  affect  the  business  and  everyone  shares  in  the  success. Â

We  took  a  leadership  role  in  the  community  by  actively  participating  in  the  Prop  37  CA  Right  to  Know  campaign  LQ IDYRU RI *02 JHQHWLFDOO\ PRGL¿HG RUJDQLVP

labeling.  The  Co-­op  partnered  with  Label  GMOs,  Eureka  Natural  Foods,  Chautauqua  Natural  Foods,  Humboldt  Healthy  Foods  and  Central  Market  to  share  advertising  resources  to  both  gather  signatures  to  put  the  initiative  on  the  ballot  and  to  get  out  the  vote.  While  Prop  37  didn’t  pass,  we  opened  up  a  bigger  conversation  about  /DVW \HDU ZDV D SUR¿WDEOH \HDU for  North  Coast  Co-­op  GMOs  and  have  continued  to  revise  our  approach  on  the  after  years  of  decline.  The  turnaround  has  included  hard  GMO  issue  as  we  have  moved  forward  this  year.  work  by  every  employee  at  the  Co-­op  and  members  who  We  implemented  Open  Book  Management  (OBM),  have  continued  to  support  our  stores  through  patronage,  creating  greater  employee  engagement  and  understanding  input,  and  loyalty.  We  have  worked  hard  to  get  here  and  of  how  the  Co-­op  operates.  OBM  is  a  way  of  running  a  we  hope  you  enjoy  the  look  back  in  celebration  of  the  company  that  gets  everyone  focused  on  building  a  better  accomplishments  our  Co-­op  has  had  in  the  last  year.

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We  continued  employee  trainings  with  a  series  devoted  to  healthy  communication  in  order  to  help  create  a  more  cohesive  workplace.  We  have  seen  an  increase  in  cooperative  spirit  with  direct  feedback  from  employees  who  have  worked  to  implement  the  tools  to  begin  to  create  a  new  culture  of  respect  and  compassion  at  the  Co-­op.

One  of  the  BEST  things  we  did  last  year  included  the  introduction  of  Mermaid  Sushi  in  both  stores.  The  response  from  our  members  and  shoppers  has  been  tremendous  and  really  helped  to  contribute  to  our  success  throughout  the  year.  In  FY13,  we  had  nearly  $400,000  in  sushi  sales  within  both  stores  combined.  We  sure  love  our  sushi!  Thank  you  for  responding  so  well  and  helping  As  we  approach  our  40th  Anniversary  Celebration  in  to  make  this  new  addition  a  success.

October,  I  can’t  help  but  feel  that  we  are  embarking  on  We  continued  work  on  store  improvements.  In  Arcata  a  future  that  includes  a  bright  outlook  for  North  Coast  we  relocated  the  customer  service  desk,  painted  the  Co-­op.  We  are  on  our  way  to  our  stated  goal  of  2%  net  interior,  reset  the  grocery  department,  and  expanded  income  where  we  feel  we  would  be  a  healthy  organization  the  Wellness  and  General  Merchandise  departments.  WKDW FDQ WDNH FDUH RI LWV HPSOR\HHV RIIHU EHQH¿WV WR RXU The  General  Merchandise  department  alone  has  shown  members,  operate  with  competitive  prices  and  invest  amazing  growth  of  28%  year  over  year.  In  Eureka,  we  LQ RXU LQIUDVWUXFWXUH $V ZH PRYH LQWR D QHZ ¿YH \HDU opened  up  the  area  in  front  of  the  Deli  as  it  was  a  high  planning  cycle  with  the  implementation  of  the  2013-­ WUDI¿F DUHD :H PRYHG %HHU UHVHW WKH :LQH GHSDUWPHQW 2018  Strategic  Plan,  I’m  excited  about  the  opportunities  and  increased  offerings  in  the  General  Merchandise  ahead  and  want  to  thank  you  for  our  continued  success.  department.  General  Merchandise  in  Eureka  has  also  Stay  tuned,  the  best  is  yet  to  come.„ shown  great  growth  of  18%  year  over  year.  We  took    our  time  on  some  of  these  projects  and  many  required  minimal  cash  outlay.

It  was  a  record  setting  year  for  our  annual  Share  the  Spirit  campaign  in  support  of  Food  for  People.  Each  year  we  accept  register  donations  from  shoppers  during  the  month  of  December  and  the  Co-­op  matches  up  to  $5,000.  This  past  year  the  cashiers  at  both  locations  took Â

Awards & Recognition Times-Standard Readers Choice award for: • Best Meat • Best Green-Friendly Store • Best Independent Grocer

Celebrated 26 years of the Co-op’s Pumpkin Patch. Just last year 3,597 kids from 50 area schools attended the Pumpkin Patch, each receiving a free pumpkin.

We donate all of our excess food to the food bank, Food for People, resulting in ___ pounds of food going to feed people in our community.

North Coast Journal Best of Humboldt award for Best Grocery Store.

Four and five star ratings on Yelp Award winning Merchandising Team in the Earth Friendly products in cooperation with the National Cooperative Grocers Association (NCGA) display contest

We re-envisioned our newsletter as a monthly publication and promoted the option for members to ‘go paperless.’ We had 900 members switch to paperless newsletters! You can switch to a paperless newsletter by sending an email to co-opnews@northcoastcoop.com with Go Paperless in the subject line.

FROM OUR

Board of Directors

By John Woolley, Board President

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our North Coast Co-­op Board of Directors is pleased to provide this summary of Board activities and accomplishments as part of the Annual Report. The North Coast Co-­op Board has policy-­based responsibilities as determined by the North Coast Co-­op bylaws, and the Administrative Policies which result from the agreements made between the General Manager and the Board of Directors. Once policies are determined, the operation and management of such become the responsibility of the General Manager. Therefore, under the long term general personnel policy rule, the Board’s primary role is the hiring and evaluation of the North Coast Co-­op General Manager.

This past year, General Manager David Lippmann retired. After a nationwide search, the Board interviewed and selected Kelli Reese as the new General Manager. Mrs. Reese was the North Coast Co-­ op’s Arcata Store Manager for more than three years, and prior to that was the Durango Natural Foods Co-­op General Manager in Colorado.

Under the 3rd Cooperative Guiding Principle: Member Economic Participation, the Board directed attention to amending “C” Shares.

By capping the amount of dividend-­earning shares that any one member can own, the Board is allowing for a more balanced approach and enabling more equitable member participation. The Board also updated and standardized Fair Share status. This past year was noted DV D WLPH WR XSGDWH WKH 1RUWK &RDVW &R RS ¿YH \HDU 6WUDWHJLF 3ODQ With the help of nationally experienced cooperative consultant, Holly O’Neil, the Board initiated the strategic planning process, including input from members as well as a day-­long workshop which included employees and members. The data generated from all the input has been developed and presented to the Board for approval this fall. The Strategic Plan will help set the tone and direction the North Coast Co-­op will follow to meet new challenges in the coming years.

helping probe into the role of the Co-­op in the community and what challenges lie ahead.

These annual retreats are helpful in building the board team and enthusiasm for the future.

Each board member serves on one or more committees, which are essential working groups that do the detail research and development for the future policies the Board needs to consider.

Board Committees include: General Manager Evaluation, Board Nominating Process, and Bylaws Review. This year, with the Strategic Plan underway, an additional committee was established to secure the process and to assist in general review of the Strategic Plan.

BOARD OF

Each Board member also carried the shared responsibility to produce monthly articles for publication in the Co-­op News. Additionally, the Board examined the process utilized to respond to the various member letters, either online, via mail, or in person and began the process of updating these procedures so that members receive a quick response from the appropriate level.In all the Board duties and activities, the Seven Cooperative Principles are kept in mind.

We work at keeping the Principles in front of each decision, as they are important in helping us to maintain the unique distinction the Cooperative business model has in our community. It is not always easy, but is always critically necessary.

Board Members from left:

The Board thanks the members for its attention to the operations of the stores, welcoming your input and suggestions, participating in the community events, and in general being supportive of your The Board attended its annual facilitated board retreat. Besides member-­owned cooperative. As the North Coast Co-­op grows into setting in motion the strategic planning process, the retreat assists the next years ahead, your participation will be as crucial as ever. with new board member orientation and communication, as well as

DIRECTORS

2013

Steve Suttell, Treasurer Fred Moore, Board Member Kate Lancaster, Secretary Tim Silva, Board Member Melanie Cunningham, Vice President John Woolley, President

FROM OUR

Chief Financial Officer %\ .HOOL &RVWD &KLHI )LQDQFLDO 2IÂżFHU

Eureka $12,636,053

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ANNUAL SALES

BY STORE

his  last  year  of  the  Co-­op  has  had  some  personnel  changes  in  the  accounting  department.  With  me  coming  on  to  replace  Jeff  Peacock  and  Abby  Quenzer  replacing  Bud  Culberson,  half  the  department  changed.  With  these  types  of  changes  there  is  always  a  transition  time  for  new  staff  to  learn  the  current  methods  and  implement  some  new  and  fresh  ideas.  As  we  moved  through  the  year  there  have  been  a  number  of  areas  we  have  really  tightened  up  the  controls  by  putting  new  policies  and  procedures  in  place,  along  with  looking  for  areas  to  streamline  and  make  some  SURFHVVHV PRUH HI¿FLHQW 7KHVH FKDQJHV WDNH WLPH and  the  patience  of  all  to  start,  work  out  the  kinks  and  come  to  a  great  end  result.  We  are  continuing  with  this  process  in  this  new  year  and  anticipate  more  changes.

I’m  excited  to  be  a  part  of  the  growth  of  the  Co-­op.  With  this  last  year  the  stores  together  increased  sales  by  2.77%  from  the  prior  year.  This  equates  to  $823,462.  Something  I  found  very  interesting  is  that  in  the  prior  year  our  sales  to  members  were  56%  of  our  total  sales  and  in  this  year-­end  our  sales  to  members  came  in  DW :LWK WKH SURVSHFW RI XV VWDUWLQJ WR SURMHFW SUR¿W DQG SD\LQJ SDWURQDJH refunds  it’s  so  important  to  give  your  member  number  to  the  cashier  no  matter  how  small  the  purchase.  The  patronage  refund  we  give  you  is  tax  free  and  also  lowers  the  taxable  income  for  the  Co-­op,  so  it’s  a  win-­win.

I  can  tell  that  the  Co-­op  has  been  working  on  maintaining  and  monitoring  expenses  for  a  few  years  now  and  it  really  is  starting  to  show.  The  Cost  of  Goods  (COGS)  only  increased  over  prior  year  by  2.27%.  If  the  sales  go  up,  the  COGS  are  going  to  go  up.  With  sales  increasing  2.77%  we  were  buying  smart.  This  increased  our  margin  by  .3%  or  $105,000.

3D\UROO ZDV EXGJHWHG DW RI RXU VDOHV DQG ¿QDO \HDU HQG ZH FDPH LQ DW 26.1%.  This  is  a  variance  from  the  anticipated  budget  at  $231,000;͞  every  little  bit  makes  a  difference.

2XU JHQHUDO RSHUDWLQJ H[SHQVHV DQG RFFXSDQF\ H[SHQVHV ÂżQLVKHG WKH \HDU DW 9.1%  of  our  sales.   The  budget  was  8.9%  so  a  bit  more  than  budgeted,  but  down  from  9.4%  the  previous  year.   There  really  was  not  any  one  area  that  seemed  high  in  expenses  overall.  There  were  some  necessary  unplanned  repairs  to  refrigeration  and  equipment  but  nothing  else  was  excessively  high.  With  budgets,  we  plan  for  what  we  hope  is  going  to  happen  and  sometimes  it  works  out  and  other  times  you  have  to  have  an  explanation  for  what  happened.   :H ÂżQLVKHG WKH \HDU ZLWK D SRVLWLYH QHW LQFRPH RI EHIRUH WD[HV 2XU WD[ SD\PHQW ZDV ZKLFK EURXJKW XV WR D ÂżQDO QHW LQFRPH RI 7KLV LV RI RXU DQQXDO VDOHV ,Q WKH SULRU \HDU RXU ÂżQDO QHW LQFRPH ZDV of  our  sales  so  growth  of  .7%  is  positive  and  shows  everyone  is  working  hard  to  better  life  at  the  Co-­op  for  everyone.  To  be  a  healthy  Co-­op  we  have  a  goal  of  2%  of  our  sales,  so  we  are  on  the  right  path  to  keep  the  positive  momentum  going.  It’s  always  great  to  show  a  positive  net  income.  In  looking  at  our  needs  going  forward  with  building  maintenance  and  aging  equipment,  along  with  technology  needs  always  changing,  it’s  so  important  to  build  cash  for  our  future.   , FDQÂśW ZDLW WR VHH ZKDW LV FRPLQJ DKHDG LQ WKH QHZ ÂżVFDO \HDU ZLWK WKH membership  always  growing,  the  projects  that  are  happening  and  the  growth  we  anticipate  for  the  Co-­op.  It’s  so  great  to  be  part  of  such  a  fantastic  group  of  passionate  people  who  love  the  Co-­op  and  what  is  stands  for.  „  Â

April 2012-March2013

Arcata $17,924,370

Bakery 3.5% Produce 16.8%

Deli 7.5%

Sushi 1.3% Meat 8.4%

Floral 0.5% Wellness 7.6%

PERCENTAGE OF SALES BY DEPARTMENT

General Merchandise 1.9%

Cheese 4.8%

April 2012-March 2013

Frozen 3.1%

Dairy 8.4%

Grocery 22.6%

Beer Wine 2.8% 3.2%

Bulk 7.6%

The North Coast Co-op became profitable and paid patronage refunds to 10,964 of its members—the first time since 1994.

We worked with EnergySmart Grocers to reduce our energy usage and saved more than $17,000!

As a part of our commitment to the community, 193 organizations received a total of $22,559 in donations and sponsorships.