Q: What is the Gem City Market project all about?
Klein: The Gem City Market will be a vibrant worker- and community-owned full-service grocery store on lower Salem Avenue, just across the river from downtown Dayton. The incubation of the market has been a community-driven effort aimed at addressing the needs of Daytonians who live in what the United States Department of Agriculture considers a food desert. The Market will be a vital community asset that provides much-needed access healthy and fresh food. It will also include on-site health and nutrition classes and programming to encourage healthy choices and teach cooking techniques.
Q: What is GDUCI?
Klein: The Greater Dayton Union Co-op Initiative is a non-profit organization committed to incubating worker owned businesses that bring good jobs to Dayton. GDUCI incubates worker-owned startups, and provides technical support to existing businesses converting into cooperatives. GDUCI builds financing and management models and business plans to launch cooperatives with the highest chance of success, and we build ownership culture within our co-ops through training and leadership development,
Our work is inspired by the Mondragon Cooperative Corporation, the largest and most successful cooperative network in the world. Mondragon was founded after the Spanish Civil War in the Basque region of Spain, and began as a five-worker kerosene stove manufacturing co-op. Since 1956, it has transformed its region of Spain from high rates of poverty to full employment. It has grown into a multinational organization that employs 70,000 people and has billions of euros in annual revenue — and it’s still owned by its workers. We want to bring Mondragon’s resilient model to Dayton, to grow the economy and develop community wealth from the ground up. By creating an interconnected network of worker-owned businesses, GDUCI hopes to create wealth that is rooted in Dayton, support working families and lessen inequality. The Gem City Market is our first major initiative.
Q: Why are you looking at that part of the community?
Klein: The group of folks who would become GDUCI’s founders began their work informally in response to the Dayton and Montgomery County Public Health’s Opportunity Mapping process back in 2014 and 2015. It looked at how opportunity and risk are distributed in our county by looking at multiple factors —income levels, educational levels, employment, access to basic amenities, and also health outcomes. The west side of Dayton was found to have the least opportunity and bore the most risks — not surprising for those who are paying attention, but to see it on paper was pretty stark and depressing. A small working group came out of this process who wanted to work specifically on access to food in the form of full-service grocery stores. After the closing of the Kroger on Gettysburg in 2008, there was no full-service grocery store for the entire near-west side of the city, leaving folks without a vehicles depending on corner stores and Dollar General for their groceries. So, the geographic location of the need was clear from the outset.
Q: Talk about the concept of a “food desert.”
Klein: The USDA has defined “food deserts” as areas where there is both low access to food (nearest grocery store more than 1/2 mile or one mile) and also low income (census tract’s poverty rate is 20 percent or greater; or median family income is less than or equal to 80 percent of the state-wide median family income). Most of West Dayton is a food desert at one mile, and most of the entire city is a food desert at 1/2 mile. Montgomery County as a whole has fewer grocery stores and fewer stores that accept SNAP and WIC per 10,000 people than Ohio’s average. And shockingly, Dayton is the seconnd worst city in the nation for food hardship among families with children. One in three such households have trouble obtaining enough healthy food.
Q: What would make the market unusual, compared to other groceries?
Klein: Being a cooperative makes the market unusual. A cooperative is a legal entity under Ohio law that is owned by its members and operated for their benefit. In the case of the Gem City Market, our member-owners will be the employees of the store and the community. That means that while the store is a “for profit” entity, the benefit of our member owners (i.e. our community and workers) will be our top priority. Profit will be important to making the store successful, so I don’t want to imply we’re not committed to commercial viability. But profit will not be the be-all and end-all of our existence. The community and workers who own the store will get to elect the board of directors (who hire the management team), and vote on major course-setting decisions for the store at annual meetings. To me, the most important part of this is that this store is not going to make decisions that could impact the community (move, close, sell to an out-of-state entity) unless the community feels it is to their benefit.
Community members can become members now and play a role in shaping the Market by going to gemcitymarket.com. Shares are $100, payment plans are available, and those receiving SNAP or WIC can get a share for $10. We have a goal of selling at least 2,000 member-shares by the time we open in 2019.
Q: What other fundraising are you doing, and what’s your hoped-for timetable?
Klein: We are also working with partners to raise the funds to build the actual building that will house the store. This will happen in the form of a capital campaign where we’ll be pounding the pavement seeking philanthropic and grant funding. This equity will be used to leverage debt financing from local financial institutions who work in economic development. We hope to raise the capital necessary for the building within the next nine to 12 months and begin construction in 2018.
Q:How much are you trying to raise?
Klein: This is about a $4 million project including construction and operations.
Q: Where are you on the whole thing, progress-wise?
Klein: We’ve been told by the national Food Co-op Initiative that the average cooperative organizing project takes five to seven years. We’ve been working on this for about three years already, with early months doing community organizing, studying the industry and deciding on our model. Our business planning process took about a year, during which time we commissioned our market study, conducted a survery of over 1,100 Dayton residents (working with the University of Dayton), wrote a business plan and worked with a food industry consultant on our projections and financial plan. We incorporated in April and launched our membership campaign, and are excited to have already sold almost 600 shares in just three months, so we’re a bit ahead of schedule on that front. The grant and capital raise are going well, and while we raise, we’re already starting some of the pre-development work that will help us be ready to move quickly once we’ve hit our equity goal. We’re lucky to have some incredible partners, stakeholders and volunteers supporting this work.
Q: What has been some of the community response?
Klein: My favorite thing about this work has been the community response. People have lots of questions, which makes sense because this is a new model. But once they’ve heard our vision and plan, people get really excited. Our community meetings have all had about 150 people in attendance, we’ve unexpectedly had food donated at each meeting (so far), and we’ve had dozens of people wanting to volunteer. I think folks are ready to start creating Dayton institutions that belong to us — that no one can decide to move away. And people get the need for access to grocery stores intuitively. Everyone wants convenient access to groceries.
Q: What will the service area be? Is downtown included?
Klein: Anyone can shop at the Gem City Market. Because of our location on lower Salem, our primary trade area (according to our market study) includes the area west of the River, north of U.S. 35, south of Hillcrest and east of Philadelphia. We also anticipate people who drive to and from work on Salem, and folks who live and work downtown will shop with us. We didn’t include downtown in our sales projections because we wanted to be conservative and not skew our income numbers, but we have had a ton of positive feedback from folks downtown, many of whom have already become cooperative members.
Q: What are some of the challenges?
Klein: The grocery industry has very thin margins, and this is even more pronounced in lower-income neighborhoods. The median income where we will locate is $28,000 per year, though there are also folks with higher incomes living in the neighborhood. So our challenging goal is to meet our revenue goals while serving the needs of our diverse community — those who have very limited food budgets who prioritize low prices and those with a little more disposable income who are looking for unique offerings. We are working on a dynamic pricing strategy to serve all our customers and make sure everyone is welcome, and we do think this will be our biggest operational challenge.
There have also been some other cooperatives in neighborhoods like ours that have not met their sales goals in the first year or two. Because we knew that, we were extremely conservative in our projections, and so we do feel confident we can meet sales goals. We have a few advantages going for us, by virtue of cooperative ownership. Our customers will also be owners, so hopefully they’re be more loyal. And employee ownership has been shown to increase efficiency, decrease waste, and lower employee theft and turn-over, so we think we’ll benefit from a highly qualified, deeply engaged staff. It will be super critical to hire an opening general manager who has deep industry experience and understands our mission as well.
Q: You recently won a big national award for your work in this area – can you tell us about it?
Klein: I was so thrilled and humbled to be chosen as a 2017 Echoing Green Fellow for my work with GDUCI. Echoing Green’s mission is to identify high-potential social change leaders from around the world and provide them with seed funding, training, and deep support to accelerate their impact. This year, there were 3,000 applicants from 164 countries, and they chose 36 fellows from 10 countries. To be included in this incredible community of next-generation leaders is really incredible. I am so proud to bring the resources that this fellowship provides back to Dayton.
Echoing Green has been supporting social impact entrepreneurship for 30 years, supporting activists and leaders around the world.
Q: What’s the most interesting thing you’ve learned from the project so far?
Klein: I have learned more about the grocery industry than I ever thought I’d know! (And I still have a lot to learn). I have also really been struck by our community’s capacity for optimism and innovation. I’m proud of how solid our plan is, but there is no question it’s a new idea. Co-ops have been around forever, but using a co-op to address a food desert is a relatively new thing, even nationally. So, when we came to the community with the idea, I was ready for people to be skeptical. But once we told the story, showed people our “math” literally and figuratively, this community (including business, government, neighbors) really embraced our effort.
Q: Why do think this is an idea whose time has come now?
Klein: I believe cooperative ownership, and especially worker co-ops, are a strong and needed response to our current economic reality. In Dayton, we’ve learned the hard way that national and multi-national employers come and go, and will follow cheaper labor or market conditions regardless of their history or ties to Dayton. Traditional businesses will respond to the market, and at this point, the market doesn’t think we need a grocery store in West Dayton. But the health of the community demands that we do. We need a core of businesses that are rooted in and accountable to our community. I believe a network of worker-owned businesses (and those that are also community owned in the retail sector) can fill this gap and compliment the more traditional economic development happening in our city.
Employee ownership is also a way to reconnect people to their own economic empowerment. I think we’ve seen in the last year that many blue collar workers in cities like Dayton feel disenfranchised and disconnected from the big economic forces shaping their lives — and this disconnection has led to anger and resentment. Giving them the tools and training to become owners in their business is one way to put them back some control over their economic destiny.
Q: Finally, how did you get involved in all this – what was your interest in the problem and the project, and what got you hooked into it so deeply?
Klein: The depressing statistics about Dayton’s food crisis, and especially the disproportionate impact on neighborhoods of color, make the Gem City Market a project that must succeed. I wake up every morning thinking about how to make this Market a reality. One community member told me “I shop at the Gem City Market in my dreams.” I think that about sums up my level of commitment: we have to get this done for our community. Most of the folks who’ve come together to work on this project over the past three years have come because of their commitments to food justice, economic justice and racial justice.
For me personally, my background is in the labor movement, and I was drawn to my work with unions because they are a means to a democratic workplace where employees have more power over their day-to-day lives. I don’t doubt the need for strong management practices and leadership in a business, but I think the pendulum has swung too far in the direction of centralized control and at-will, causal employment. This has led also to the rise in income inequality that threatens America’s strong middle class.
When I leaned about the national co-op movement, and especially the model based on Mondragon’s remarkable success, I got excited about another means of democratizing the workplace and empowering working people. Front-line employees have a lot of knowledge about how a business operates, and many of our most successful businesses are ones that honor their employees from top to bottom, and involve them in some level of decision-making. I believe cooperative ownership is a unique way to broaden access to economic opportunity and ownership culture.