The Life and Times of the Co-op Market: A storied institution comes to an end

Birth
The Hyde Park Co-Operative Society was founded in the midst of the Great Depression, November or December of 1932, by the Shank Family, who lived on 57th Street on the second story of a bookstore, the same building that currently houses the Hyde Park Bank. It was originally a buying club, a strategy against the tough times, where members pooled their resources in order to buy in bulk from wholesalers and save money. When it became clear that the scheme was failing, the small group approached Chicago economics professor and eventual state senator Paul H. Douglas for advice. He suggested they open a store. Mr. Shank was hired as its manager, and Mr. Leon H. Despres handled the legal birth of the store as a non-profit organization.

Life
Despres, a former alderman who is now 98, has been involved with the Co-Op for the entire duration of its seventy-five-year history. He remembers these earliest days: “One of the earliest developments came when we found out you could buy meat by the Grade. We began buying Grade A and greatly improved our diet and savings. We just didn’t know before then.” When the fledgling store began to falter, Douglas took the initiative to hire a new manager, one Walker Sandbach, a committed co-oper and pacifist who would become a principal motivating force in the institution’s development for decades to come. “The modest store went along for several years… it was getting along pretty well and we loved it.” The store relocated from Cable Court, a small street between Harper and Lake Park that no longer exists, to 57th Street, taking over a former grocery space. The Co-Op’s new location was “spic and span” and it soon became an established store in the neighborhood. The years unfolded. On the page, the life of an institution is reduced to a skeletal narrative, but throughout these years the place was filled with the bustle of people making their lives and discussing the changing world.

In the early ‘50s, during the time of bulldozed jazz bars and urban renewal, the Co-Op took over an old icehouse on Harper between 55th and 56th Streets. Icehouses used to store ice in the winter to sell by wagon during the summer. They engaged an architect to redesign the place, and the ribbon was cut in the spring of 1954. “The icehouse opening was, from our standpoint, sensational. It was so well designed and so deep and so attractive and so crowded with buyers that we felt the Co-Op had reached an important point,” Despres recalls.

Around 1956 the 55th Street shopping center was completed as part of the University’s first wave of urban renewal. They approached all the major chains of the time with the enticement of becoming Hyde Park’s premier grocer, but the only tenant they could find was Walgreen’s. In desperation the University realized the Co-Op could take over the space, the Co-Op did likewise, and the move was made. When the Co-Op’s current, now former, location opened forty-nine years ago, it was actually the largest supermarket in the city.

In the following decades the store’s sales climbed steadily and it became increasingly embedded in the life of the neighborhood, playing host and witness to so many chance meetings and organized events that it gained the centrality and status of an institution. Nobel prize winners, politicians, students, and community members, low-income or not, shopped side-by-side. Since urban renewal didn’t include a community center, the Co-Op became the informal meeting place for half a century of community organizations, providing them with storage, food, and volunteers. In the old days, it featured an in-store babysitter, a play script library, and a home economist who gave nutrition advice and cooking classes. Even in its last decade the Co-Op continued to run several programs and events, including a shut-in delivery service for people unable to do their own shopping, Illinois Link and WIC food stamps, purchasable food coupons for the homeless to avoid panhandling, and annual book and Christmas tree sales. It’s unclear how many of these will continue under the new grocer.

Lastly, there was the ever-divisive ‘co-op’ aspect of the enterprise. Co-operatives are businesses owned and controlled by the people who use their services, with the aim of letting the member-consumer advance his interests and desires in the decision-making process and of letting the whole community manage its own food supply. Applied to a grocery store this largely means that individuals can push for new products to be stocked, that they get dividends in profiting years, and that they have a say in big decisions. While this approach worked relatively well for a number of decades, participation and voter turnout both dwindled during the Co-Op’s final troubled decade. Critics and cynics claimed the co-operative model, as well as the shop, had outlived their times. Proponents still felt it to be a significant and necessary attempt to unify stakeholders – workers, shareholders, customers, and managers of all races – into a community.

Death
The beginning of the Co-Op’s end was its expansion to the now-shuttered 47th Street location. In 2000, the 47th Street commercial lot was developed with the intention of housing a grocery store. Fearing the potential competition, and expecting a development spurt for the surrounding area, a faction on the Co-Op’s board pushed for an expansion, but this involved getting its main supplier, Certified Grocers, to adopt the store’s lease and sub-lease it to the Co-Op. This was met with substantial opposition from some of the members in the form of vocal arguments, a lawsuit, and the election of a slate of anti-expansionists (including two former aldermen) to the Board that attempted (and failed) to persuade the expansionist bloc from moving forward. No one can say some of the captains didn’t see the iceberg looming.

The board went ahead and fatally tied the Co-Op to an outrageously asymmetrical twenty-five-year lease with no escape clause and weighty annual rent of $1 million. These stringent terms placed the business in the vulnerable position of needing all its locations to turn a profit consistently for the next twenty-five years to prevent it from an easy slide into snowballing debt. And slide they did, after the 47th Street store failed to make a profit for five years straight. In 2006 the store was shuttered, and since no replacement was found, it was gutted beyond use while its annual rent continued to drag down the enterprise. (Certified seemed perfectly happy to bleed its fellow co-operative, knowing now that the site was unprofitable but legally guaranteed a handsome inflow from the Co-Op while on indefinite life-support on the University’s dime, or until its dying breath.)

The lease and the general mismanagement took their toll: last year, the Co-Op was consistently four, eventually ten months behind in paying the University, its 55th Street landlord, and 30-60 days behind in paying its suppliers. Despite efforts to increase profits and close these gaps, the Co-Op found itself $3.3-3.9 million in the hole to its various creditors, suppliers, and landlords while making $1 million a year (or less, depending on whose figures you believe) solely from the remaining 55th Street store and losing $1 million on 47th Street’s rent alone. This insufficient profit margin meant the hole was growing deeper by the month, only to be further eroded by compounding interest. The situation was not sustainable, and the store was therefore financially insolvent. Only the University’s leniency was keeping food on the shelves and paychecks in the mail.

The force of these numbers, once released and publicized, helped spread the awareness that something had to give. For many this something had to be the Co-Op, and many, especially students, were glad. By all accounts, the Co-Op had been decaying: its food quality was poor, the service getting poorer, and the financial pressures had driven prices up while forcing it to shed many of its community programs and functions. Its glory days had ended in the ’80s, and now, for many, what was left seemed destined to end as well, on account of its own mismanagement.

By last November, the numbers and the mounting pressure had pushed the board to make a decision. They announced to the Co-Op’s members that there would be an advisory vote on the fate of the store, one they were not bound to follow, and they provided two options. Under Option A, proposed by the UofC, the Co-Op would close, Certified would cancel the lease for a single payment of $1 million, and the University would forgive $1 million in back rent as well as assume the rest (approximately $2 million) of the Co-Op’s debts. This would allow the Co-Op to die with pride, evading a humiliating and time-consuming liquidation process that would leave the community without food for several months. It would also ensure a quick and painless transition, as the 55th Street location would be immediately taken over by one of two grocers the university had been in talks with. Employees would lose their job, with back pay and vacation compensation as well as the opportunity for re-hire, and members would lose their shares.

Option B involved filing for Chapter 11 Bankruptcy, which would allow the Co-Op to reorganize and shed the 47th Street lease. This was dependent on 1) getting a bankruptcy loan to pay their amassed debt 2) Certified agreeing to have the lease bought out for $2.2 million 3) finding $400,000 to pay for going into bankruptcy. A lot of contingencies and an even bigger resulting debt of $5 million, but the Co-Op would then be free to plug on, ideals and all, with the hopes of generating enough profit to eventually climb out of its deepened, though reconfigured hole. Proponents claimed this was feasible in 5 years; skeptics doubted their optimistic profit-predictions and management capacity, or simply longed for a change in the sub-par status quo.
At this juncture we should pause, step back, and consider our constellation of actors, all of whom were active in the unfolding of these events but especially in the vote itself. On the closure side, you had the University, particularly Hank Webber and his office of community relations, 4th Ward Alderman Toni Preckwinkle, Hungry4Change, an organization formed solely for the election, the Chicago Maroon, and Hyde Park Progress, the most prominent and self-styled of a handful of blogs that cover Hyde Park and its development. On the other, the Hyde Park Herald; the everGreen, the Co-Op’s newsletter; and Save The Co-Op (www.savethecoop.com), an ad hoc organization formed in reaction to Hungry4Change. In the middle was the board, split in its support, and the wider pool of members being tugged at from all sides and no doubt tugging at each other. Generally, the spectrum of opinion was weighted with the younger and university-affiliated preferring A, with the opposite demographic for B. These sides were surprisingly conscious of themselves and of their opponents, and reveal a lot about the current fault lines in Hyde Park politics, especially over issues of development.

The ensuing information war raged in meetings, mailboxes, bulletin boards, and on the internet. Various interpretations of the situation, including of the relative responsibility of the involved parties, were pushed around, along with varying assessments of the merits and possibilities of each option. There was intense cross-analysis of arguments, actions, and strategies. Groups on both sides accused each other of framing selectively the Co-Op’s circumstances or of outright distorting facts. The Herald was accused of yellow journalism, blatant spin, and obstructionism, while the everGreen itself claimed that Hungry4Change was part of an elaborate and well-funded University campaign of misinformation, including PR consultants, full page ads in the Maroon, a website, glossy pamphlets, mass mailings, and a phone campaign. In some readings the University was a gentrifying monolith, in others a generous landlord with the larger community’s interests at heart. Conspiracy theories abounded and charges of corruption and collusion between the University and the alderman were aired at board meetings.

Eventually, Option B fell through because the bank wasn’t willing to risk giving the Co-Op the necessary bankruptcy loan. The option was changed to getting a regular commercial loan for the same amount, and pushing forward without going through bankruptcy procedure, which would’ve required the assent of the University and, most improbable of all, Certified’s willing acceptance of a reduced sum of $1 million for the lease. Most voters probably weren’t even aware of the switch.

The vote helped settle things. Option A – 3,200; Option B – 2,049, 61 percent to 39 percent. All parties accepted the legitimacy of the vote. In the end, democracy killed the democratic institution.

Funeral
Last Sunday the Co-Op went out in style with a New Orleans-style jazz funeral. The aisles were barren save for a few idle cans that had been brought together for funeral-goers to peck at. The band and the crowd of older folks came together in the derelict produce section, now a linoleum ghost of its former green self. Speech-givers gave speeches between bright rhythmic numbers, outlining the Co-Op’s trajectory and accomplishments, underlining the sentiment that something irrecoverable was being lost, and trying to create as a sense of closure.
“The purpose of our meeting is to console each other,” Mr Despres declared defiantly as he looked out into the assembled crowd. “No chain store no matter how attractive in the beginning can possibly do for the community…what we did for ourselves.”

The mood was an uneasy mix of nostalgia and celebration. There was little embittered feeling, for the most part. A woman passed out fliers confirming the existence of some final holdouts, a contingent of the Save the Co-Op group was presently reviewing the legality of the University’s actions and plotting some final, quixotic counterattack. At one point, when those assembled called out the things they had liked best about the store, it struck me that a huge body of shared experience was being voiced in public for the last time. The band then lead the procession through the barren aisles and out into the frozen afternoon.

On the way out:
 “Wooo-eee it’s been an exciting day!”

“You think so?”

“Yeah… bittersweet.”

Special thanks to Hallie Trauger for assistance reporting this article.