As part of our mission, we strive to make healthy and clean food more accessible and more affordable, and one way to ensure that we’re fulfilling that goal is to compare our prices to our competitors. This year, for the first time, we attempted a systematic price comparison with other local grocery stores, and we’d like to share the results with you.
The grocery industry is highly competitive – most food stores, including the Co-op, operate with a net profit margin of less than 2% – and people have a variety of choices when it comes to grocery shopping. We took a list of about 100 items that the Co-op sells regularly and compared our prices to those of five other stores: Tru Value Heriot Bay (Quadra), Healthyway (Campbell River), Save-On Foods (Campbell River), Thrifty Foods (Campbell River), and Edible Island (Courtenay). Not all of these stores carried all 100 items; in fact, we only have comparisons for between 50 and 60 items per store. We only looked at the exact same items – for example, we compared organic onions (not conventional onions because the Co-op doesn’t carry those) – but we did compare a variety of departments ranging from produce to frozen foods.
We don’t have enough information to make any definitive claims based on statistics, but we can say that the Co-op competes well with the city stores. The three departments where the Co-op’s prices either matched or were below the average of the other stores’ were produce, bulk, and meat; the Co-op was a bit more in the dairy, grocery, and frozen departments but still competitive (less than 5%); and the Co-op was significantly above in the non-food and wellness departments (more than 5%). Healthyway offered the best prices on this selection of items, and the prices at Edible Island were the most similar to the Co-op. For an average basket from any store, the Co-op was within 5% except for Healthyway.
The main reasons that the Co-op is more expensive are twofold. First, we obviously incur relatively high shipping costs; we paid more than $33,000 in food shipping last year – about 1.7% of our total sales – and this doesn’t include the costs that some suppliers pay on our behalf (but we pay through higher prices from them). Remember that most grocery stores operate on a net profit of less than 2%, so this is a huge cost; the Co-op’s operating profit last year was just 0.8%. Second, we are a relatively small store; our sales are still less than two million dollars per year – comparable to a busy gas station in the city. We can take advantage of buying large volumes for only the busy summer months; we’re always looking for ways to decrease the costs of our food purchases but it’s not easy. More generally, in the months and years to come, you can expect food prices to rise more than in other industries. By 2021, the minimum wage will have increased 40% from $10.85 (2016) to $15.20 (2021) in five years; currently it is $13.85 per hour. Because grocery businesses rely on relatively low-paid workers and have such small profit margins, wage increases like this cannot simply be absorbed; they will have to be passed on to shoppers in the form of price increases.
At the Co-op, we are glad to pay people well – starting most people above minimum wage – but we will have to struggle with these realities like all other grocery stores. The good news is that we’re making our pricing choices on purpose. We want produce, bulk, and meat items to be priced similarly to the city stores because we know that our island residents depend on them; we want dairy items to be priced similarly too, but the comparison showed that we have work to do there and now we’re looking at options to lower prices. Likewise, we don’t mind if non-food items (like toilet paper and laundry detergent) and wellness items (like supplements and shampoos) are more expensive because our priority is food. But we’re working on those areas too – like bringing in less expensive bulk options for soaps and detergents.
More good news is that, because we’re a Co-op, the money that we make goes back into our staff and the business. We aren’t sharing our profits with wealthy or far-away investors. We keep the money local – it goes to your friends and neighbors as well as the this land and building that we commonly own. That’s what community is all about. And more good news is that there are always ways to save at the Co-op. First, you can shop our monthly specials; our goal is to give discounts of at least 10% on the items you like to buy the most, and we’re adding more products (like from the wellness department) all the time. Second, you can pre-order any of the items we carry (and more!) by the case or in bulk for significant savings. Third, you can take advantage of the 10% off coupons we offer members three times a year. Look for all of these opportunities in future e-news!