At 2 pm Eastern today, please join us for a special “Remaking the Economy” webinar cosponsored with the Fund for Democratic Communities (F4DC), based on this paper. The webinar is titled Anatomy of a Failed Co-op: Lessons from Greensboro’s Renaissance Community Cooperative and will provide a chance to hear directly about lessons learned in the co-op organizing effort. On this webinar, you’ll hear from Sohnie Black and Ed Whitfield of F4DC and Roodline Volcy, former co-op board chair. Register for free here.
This is the story of a failure: the failure of the Renaissance Community Cooperative, or RCC. A pretty important failure, in our opinion. A failure for which we bear some responsibility.
Why, you may wonder, should we write about failure, especially this particular failure? Here’s why: For more than seven years, RCC was a huge focus for our organization, the Fund for Democratic Communities (F4DC). We staked a lot of our legacy on it. And it didn’t work. We need to know what went wrong in order to salvage something from the experience.
But why should anyone else care?
Because we—our organization, and many of the readers of this essay—are connected in a web of justice-seeking movements that aim to build a new, racially equitable, and cooperative solidarity economy that must come alive if we are to achieve a just transition.
We’re doing this work in a time of increasing crisis that requires a system-shifting response. That kind of transformative work is certain to have failures. A lot of failures. We have to learn from our failures, and recover quickly from failures, or we’ll never succeed. So, we are going to use a notable specific failure, the failure of RCC, to model the first steps in productively using failure.
In writing this article, we see ourselves as accountable, in the sense of we are giving an account of what happened, to the movements in which we work. We learned a lot about the grocery business as we worked on the RCC project. In other forums we can list out all that we learned and all that we got right. In this essay, however, we intend to focus on what we got wrong, so our movements better understand the terrain ahead.
To begin, let us explain a bit about who we are and how we came to know this version of “The Story of the RCC.” There were over 1,300 owners of the RCC, and we cannot presume to speak for all of them. This is our story, our account, yet you’ll see in the account that follows how we often use the pronoun “we” in speaking of RCC; for good or for ill, this is how embedded we came to be in the project, and it is from this embedded perspective that we tell this story.
Birth of a Dream
In January 1999, two of the authors of this article (Ed and Marnie) independently showed up at a community meeting called by a newly emerging group—Concerned Citizens of Northeast Greensboro—invited there by friends who lived in Northeast Greensboro. This Black and mostly working-class part of our city had just lost its only full-service grocery store a month before, when Winn-Dixie announced it would close its store on Phillips Avenue.
Recognizing the significance of the loss, residents immediately responded with calls to Winn-Dixie corporate headquarters, had a picket line at the store, and created Concerned Citizens. They worried that Winn-Dixie’s departure was a harbinger of a broader decline of the shopping center, which would in turn lead to further disinvestment in their community. More than 100 people packed into a church sanctuary, where they struggled to come up with solutions.
Eight years later, Ed and Marnie cofounded a small private operating foundation, F4DC, with a focus on economic democracy. By 2011, we noted there was still no full-service grocery store in northeast Greensboro. As predicted, the community was falling behind the rest of the city economically.
In the intervening years, Concerned Citizens had had to switch its focus to fight off the reopening of a landfill in the heart of the neighborhood. After years of organizing (including the development of a second organization with a citywide base—Citizens for Economic and Environmental Justice, or CEEJ), they had built a grassroots political powerhouse that overturned the vote to open the landfill and ultimately turned over the city council. On the night of that re-vote victory, F4DC approached the chair of CEEJ and proposed that it was time to get back to work on a grocery store for the neighborhood, one that the community itself would own, and we were willing to help.
This is the beginning of our connection to what became the Renaissance Community Cooperative, or RCC. F4DC played the role of chief technical assistance agent (and eventually, chief funder) to a community-led effort to build and operate its own cooperatively owned grocery store. It took five years to open the store, and by the time it opened in 2016, it had developed something of a national following.
Around the country, communities with similar problems were looking to the RCC to see if they might use a similar model to bring fresh food, good jobs, and economic development to their neighborhoods. In the US, food co-ops, at least since the 1970s, had mostly been used in affluent areas to build comparatively high-priced organic food stores. The RCC, in contrast, was designed as a more or less “conventional” grocery store that would sell the range of products one could find in a Kroger or Food Lion at what we hoped would be affordable prices.
RCC opened in October 2016. For over two years, it struggled, never coming close to its revenue targets. While F4DC had committed financial support to cover some startup costs, we had never intended to bankroll an operating business. We’d helped RCC to amass what we (and RCC’s lenders) thought was a sufficient capital reserve through loans and equity investments to ride out two-plus years of projected initial losses. But RCC’s sales were less than a third of what they needed to be. Despite being the only full-service grocery store in a service area of 35,000 people, RCC simply couldn’t attract enough customers.
Once RCC burned through its initial capital reserves, F4DC began making cash infusions through the purchase of non-voting stock, because the store’s mission was our mission: it was a key part of building an economy that was by and for the people in the community. We ultimately invested more than $1.5 million and considerable staff time in the hope of giving the store enough runway to build its customer base.
But it didn’t work. In January 2019, RCC closed its doors, a massive loss to 1,300 member-owners, the dozens of employees who lost their jobs, and the community that once again has no nearby grocery store. And, there being no better way to say this, it was a massive failure.
We use that word “failure” baldly, because here in late 2019, there are only a few tangibles left to show for all the labor and resources that went into RCC.
The Renaissance Cooperative Vision
Winn-Dixie closed its store on Phillips Avenue in 1998, despite the fact that it was profitable, as part of a shift in corporate strategy. Similar moves were happening across the US, as corporate chains chased higher profits in more affluent markets. The closure of the last grocery store in the area led to northeast Greensboro becoming what is now known as a “food desert,” though this terminology is being challenged by activists who think that “food apartheid” is more apt. The 35,000 people who live in northeast Greensboro—many of whom do not have cars—could no longer access fresh affordable food. Furthermore, the closure of the anchor store at the shopping center led to economic decline in the whole neighborhood.
In 2011, tired of waiting for outsiders to rescue them, the northeast Greensboro community decided to take matters into their own hands. Working with F4DC, they asked whether the community could own and operate its own store. But they were looking for more than just a grocery store. They also wanted greater economic opportunity in the form of jobs and community wealth building, and they wanted to do it in a way that built a thriving, inclusive community. In other words, they wanted to become masters of their own destiny.
Even though northeast Greensboro is a working-class community that battles poverty, it had a lot going for it. It was already organized, having spent much of the previous decade fighting to close that landfill in their neighborhood. After the landfill fight was won, they turned that organizing muscle toward solving the grocery store problem. They knew each other’s phone numbers. They were used to going to meetings month after month. They knew how to reach city leaders. And they liked working together to get things done. We mention this because we believe being an organized community is a necessary pre-condition for success.
Early on, the community formed a steering committee and began a membership drive, which they quickly redubbed an “ownership campaign.” The concept of community ownership was key. RCC would be 100-percent owned and controlled by the community, so the store would never pick up and leave seeking a higher return on investment elsewhere, as Winn-Dixie had done. A team of steering committee volunteers began selling $100 ownership shares—one household, one share, one vote. Over five years, more than 1,000 households bought a share.
As the project took root, the steering committee turned into a board, and an organizer got hired. The steering committee also commissioned a professional market study to assess financial viability. According to that study, the store could gross over $4 million per year, crossing into profitability within three years, typical of a grocery start-up.
If the revenue projections seemed overly rosy, we were convinced by the logic of the market study: There was no other grocery store for a two-mile radius. The 35,000 people who live in that two-mile radius were already spending $1.34 million every single week on groceries.
The author of the feasibility study, who had done similar market research for major grocery chains, projected that we could make those revenue goals by taking only 4.9 percent of existing market share within the two-mile radius and adding in another 20 percent of market revenue from shoppers beyond that radius. This was based on an industry standard called the 80-20 rule—not a far-fetched idea if you have a broad base of community support, as RCC had demonstrated.
The process of opening any grocery store takes time—time to find and secure a location, raise the capital, design and build out the store, select and contract with distributors who will put products on your shelves, locate and train your management team and staff, and so on. In the case of community owned food co-ops, it takes even longer, because you have to build into the process a community education and organizing campaign, and you also have to constantly explain the co-op model to community members, government agencies, and the business community. In our case, the fact that this co-op was to be opened in a largely Black working-class community meant even more explaining, proving, and hoop-jumping had to happen.
For us, this took five years. Ironically, the time it took was often cited as a reason to not take the project seriously, but looking back, we now wonder if we should have taken even more time, to build in even more community education and to build a stronger movement. In any event, the store had its soft opening in October 2016, and its grand opening in November. The history of the project is captured in a full-color booklet, titled More Than a Grocery Store, which was passed out at the store’s grand opening.
This was no small project. More than a 1,000 people and dozens of organizations participated. There were the organizations that the community itself had nurtured: especially Concerned Citizens and CEEJ. There were the churches, especially Mount Zion Baptist Church and Starmount Presbyterian, which gave $40,000 and $50,000 grants respectively. There was the City of Greensboro, which provided $250,000 in grants and, in the store’s last year, provided some staff support on the marketing side. Guilford County came in with a $25,000 grant for marketing in the store’s last year as well. Self-Help Ventures Fund, which came to own the shopping center in the lead-up to the store’s opening, provided a generous tenant improvement allowance, and tried, in the last year of operations, to help us get more customers in the door. The lenders—Shared Capital Cooperative, The Working World, Southern Reparations Loan Fund, and Regenerative Finance, especially—made supportive loans and then struggled alongside the Board, management, and staff, as we all tried to make it work. Without these and dozens of other organizations and individuals, the store would never have opened or survived as long as it did.
The RCC opened in a 10,530-square-foot, custom-designed space, taking up about half the square footage within the old Winn-Dixie footprint. While small by today’s standards, it’s still the size of a standard supermarket of the 1960s, large enough to sell pretty much everything, from meat and seafood, to dairy, to produce, to bakery goods, to canned and boxed goods. It was a full-service grocery store that stocked more than 12,000 distinct products, all tracked through a modern point-of-sale system. Our projections showed that the wholesale prices we were paying were low enough to allow us to keep the prices affordable.
When the store opened, it had 32 employees (roughly half full-time), led by an experienced general manager who reported to RCC’s nine-member board (a common arrangement in food co-ops). The majority of the store’s employees came from within two miles of the store, and several who lived next door in a public housing community. The lowest starting wage was $10 per hour, 25-to-40 percent higher than starting wages at nearby stores. Full-timers got fully paid health insurance, which is somewhat unusual in North Carolina retail.
These higher-than-industry-standard wage levels—albeit still not truly living wages—were baked in because of RCC’s commitment to community. The jobs were for community residents, the profits were to stay there, and the store would never leave to make more money elsewhere.
By the time the store closed in 2019, RCC was down to 16 employees, mainly through attrition—the result of cost-cutting due to depressed sales. The $10 minimum still held for new employees, and senior employees had moved up to $11 per hour, or higher if they had more responsibility.
It cost about $2.5 million to open the store, most of which went to big ticket start-up costs like the design and build-out of the space, equipment, and initial inventory. The capital stack was roughly 40-percent debt and 60-precent equity. Equity came in the form of grants from the City of Greensboro and several foundations, coupled with a tenant improvement allowance from the landlord, owner shares, non-voting preferred shares, and grassroots fundraising.
On the debt side, the primary lender was Shared Capital Cooperative, followed by a subordinated loan from the Southern Reparations Loan Fund/The Working World/Regenerative Finance, and numerous smaller loans from member-owners and other supporters.
Adding to that initial $2.5 million outlay were $1.5 million in cash infusions from F4DC after the store opened. The whole project cost $4 million. That’s chump change to the big grocery chains, but in the economic justice world, that’s serious money. After all that investment of money, not to mention time, it’s fair to ask, is there nothing left behind?
What the RCC Left Behind
Even though we’re highlighting RCC’s failures, it’s important to stand those failures next to RCC’s accomplishments, some of which are lasting. First, the shopping center, although in need of an anchor tenant since RCC closed, is in far better shape than before the project began.
A grassroots “insurgency” in 2012-2013, led by RCC’s early backers, drew attention to the center and attracted Self-Help to the northeast corner of Greensboro in the first place. RCC’s presence helped Self-Help garner both city financing (mostly forgivable loans) and New Markets Tax Credits that substantially mitigated their risk. Additionally, RCC-paid tenant improvements, equipment, and fixtures are still in place, making it much easier and cheaper for Self-Help’s next tenant to launch. Of course, RCC is just one of many players who can claim credit for the renovated shopping center. Nevertheless, it’s a lasting asset.
The shopping center is not just an economic asset—it’s also a spiritual asset. The name Renaissance was first attached to the grocery store by the RCC’s champions and was later adopted by the city and Self-Help as the name of the shopping center; the notion of “rebirth” was critical to the neighborhood’s sense of where it needed to go. It’s impossible to quantify, but the transformation of that eyesore to the clean lines and stone edifice that Renaissance is today continues to fuel the hopes and imaginations of the people who live in the immediate area.
RCC had big dreams. Of course, we never reached anything close to profitability, but over our two-plus years of operation, we employed local people, paid more than $12,000 in city property taxes, and supported other local and regional businesses, including buying more than $1.6 million in goods from area distributors, especially Merchant Distributors, Inc. (MDI)—a North Carolina-based firm that itself employs 1,300 people in our part of the state.
Perhaps the good jobs RCC provided were its biggest contribution. We had hoped to move over $2 million in wages and benefits into the neighborhood in the first three years. We fell short, as we closed before the three-year mark and cut staff as sales lagged. But we did provide $1.3 million in wages and benefits, and the vast majority of people earning those wages and benefits were from the immediate neighborhood.
Besides the economic value of wages and benefits, RCC employees received training, got to practice new skills as part of a team, and for many, feel valued and respected for the first time in their working lives. RCC provided opportunities to returning citizens and other so-called “hard-to-employ” people.
On the store’s last day, the staff gathered in a final appreciation circle. Alternating between tears and laughter, person after person declared this to be the best job they had ever had; many said they believed it would be the best job they would ever have.
As we listened, we silently prayed that their RCC jobs would not be the best they ever had, but rather would lead to better jobs. Sadly, nine months out from the closure, that has not been the case for most. For example, one of the most talented staffers in the RCC is now in her second turn as an assistant manager at a convenience store. Even as assistant manager, she earns around $10 per hour and is looking for a more affordable place to rent. It’s not a booming economy in northeast Greensboro, not for experienced grocery store workers, despite what the statistics say about low unemployment.
A Meditation on Failure
Over the seven years of our engagement with the RCC project, we participated in close to 100 community meetings. And in meeting after meeting, community leaders would emphatically declare, “Failure is not an option!”
Thinking about this now, we wonder if that sentiment is actually counterproductive. Certainly, the word “option” suggests choice. That’s just a gross oversimplification and a misdirection—of course, failure was very much a clear and present danger, every step of the way, and it wasn’t because we chose it!
Despite the fact that business—really, all of life—is littered with failures, people don’t talk much about it, except to cast blame from time to time. Even now that RCC is closed, many remain reluctant to label it a failure, because that word seems to imply that it was all for nothing.
Now, we emphatically don’t believe that RCC was all for nothing! But that’s how many people think about the word “failure.” That conclusion is particularly painful in marginalized communities, where people are often unjustly labeled defective, and thus, inherent failures. Trying to get out from under that stigma can make you mighty averse to the term “failure.”
But we insist on claiming this word, because grappling with failure is how we’re going to finally succeed. We’re not the only ones thinking this way. In her book Emergent Strategy: Shaping Change, Changing Worlds, adrienne maree brown says, “Never a failure, always a lesson.”
We agree, but we differ on her phrasing. We say: there have been and will always be plenty of failures, and they all carry worthy lessons. “Street” education is not, in fact, free. Failure is the cost of a good education. So, we contend that if you never fail at anything, you won’t learn, and you’re not shooting high enough. Given the crises we face, we need to shoot big. Not for glory, but for survival. Playing small will not save us. So, if we’re going to play big and fail, let’s make the most of it!
Interestingly, there’s a lot of rhetoric in the venture capital world about failure. The famous Mark Zuckerberg aphorism “Move fast and break things” certainly hints at destruction, if not failure. “Fail faster” was all the rage a few years ago in Silicon Valley. We are not sure how sincere any of it is, because little guys still get blamed and ostracized for their failures. But there is something to be learned from the venture capitalist attitude toward failure.
Because if we strive for transformation, we’re going to fail along the way. If we’re just trying to get into what Jack Stack dubbed “the great game of business,” we cannot afford to be all weird and precious about failure. We cannot afford to attach “it was all for nothing” meanings to a simple business failure, when half of all businesses close up shop within five years of starting and only 30 percent make it to their 10-year anniversary.
Retail, in particular, struggles against conglomeration as Amazon and a handful of others use their economic resources and political clout to consolidate their market share. With all these business failures around us, we still hear inane comments like, “Well, the RCC failure proves that co-ops don’t work.” Yet last year, even as retail giants Toys R Us and Sears (“where America shops”) filed for bankruptcy, no one said, “Well, those Sears and Toys R Us failures prove that corporate capitalism doesn’t work.”
Blame versus learning
As RCC struggled, and since the store closed, each of us has publicly spoken about the challenges—to model transparency. Our goal is to inform the movements to which we are con