Annual Report 2015 - Independent Natural Food Retailers Association

Annual
Report
2015
Strengthening our members
through collaboration to
forge a sustainable future.
Independent
Natural Foods
Retailers Association
CEO Annual Report by Corinne Shindelar
My prediction of a dynamic and disruptive year for INFRA and its
members in 2015 proved to be accurate. The fast pace with which the
competition grew, brands were acquired or merged, our distributors
engaged in acquisitions, and food legislation was at the top of
government debate. Our member-owned cooperative experienced
growth, loss, and a roller coaster of activities. We celebrated 10 years
of business, added members, lost members, moved our Strategic
Priorities forward, and continued to build relevancy in the industry
with a louder voice.
2015 provides the ability to know where we can help strengthen our
members’ operations as well.
With the continued quick growth of INFRA, we planned and
executed quarterly in-person Board meetings for the first time. The
time spent together at our one and two-day meetings provided
consistency in governance oversight, strategy for our direction
as an association, and continued alignment between the CEO and
the Board. Operationally, it was a challenging year for INFRA, with
staff changes, office expansion and relocation, increased program
offerings, increased member usage of programs, and support for the
elevated competition independent retailers are experiencing.
1.
With a tremendous amount of satisfaction I report we accomplished
the goal that all members have access to regional supply agreements.
We signed and launched the Midwest Supply Agreement in January
2015, the Southeast and Southwest Supply Agreements in the summer,
and all supply agreements were fully executed by September, four
months ahead of target. The industry thought we were crazy for
attempting this plan, stating it could not be done, and scratching
their heads trying to figure out why INFRA was taking this direction.
Now our vendor and distributor partners are thanking us for being
so visionary and keeping a high level of integrity with both of our
primary distribution partners, KeHE and UNFI.
5.
Amidst all the excitement of supply agreements, we experienced
continued growth in all INFRA programs. The requirements of
participation are not easy for many of our members, yet it is necessary
for a virtual system that holds us accountable through process versus
hierarchy. By requiring members to participate in CoMetrics, SPINS,
and the INFRA Deals process we are finally able to have a lens into the
next best opportunities. We cannot deliver on member’s expectations
of leveraging our purchasing power and our voice to achieve our
values without these processes and expectations in place. Without
these tools we would have a very limited view of members activity,
making it extremely difficult to negotiate on a $1.3 billion book of
business within the organic and natural products industry. Our
partners take us seriously when we can accurately represent our
members. The work with members inside the supply agreements in
I continue to be excited about the work and purpose of INFRA and
know that 2016 will be equally challenging for all stakeholders. Yet
INFRA is in a great position to move forward with “Strengthening our
members in collaboration to forge a sustainable future.”
The INFRA Board of Directors examines the Balance Sheet and
Profit & Loss statements on a quarterly basis and have completed
their review for the fiscal year ending December 31, 2015. Financial
information in the report is expressed in percentages due to external
communication of this report.
The discovery process enabled me to clearly represent the future
opportunities to our Board of Directors. This information, coupled
with INFRA census data and member scorecard data, gave us a
clearer path than ever before and helped set the groundwork for the
Board stated Strategic Priorities as finalized at the November 2015
Board meeting:
2.
3.
4.
INFRA’s Community Service Day
Year-End Financial Results by MJ Mueller
Income
12.15%
69.77%
INFRA Deals
Other Programs
18.08%
INFRA welcomed 40 new members in 2015 for a total of 211 members
at yearend. These 211 members represent 328 storefronts and just
under $1.3 Billion in annual sales. Five members withdrew from the
association in 2015.
In order to improve member competitiveness, INFRA will
strengthen member operational alignment in existing and new
supply agreements.
Strengthen INFRA’s infrastructure to support its robust growth.
To enhance our members’ competitive edge, INFRA will develop
strategic partnerships and alliances to secure long-term access
to core products.
To increase member profitability and competitive edge, INFRA
will provide targeted resources to facilitate the implementation
of best practices.
INFRA will develop and identify opportunities to ensure member
differentiation.
Dues
INFRA paid 40% of 2015 net gains in cash to members for a total
patronage distribution of $115,000. The INFRA Board chose to not
extend the INFRA Bucks program for 2016 due to les than 20% of
members fully taking advantage of this program. It was determined a
larger cash distribution to members would be a better use of resources.
Expense by Department
22.53%
Marketing and Communications
In 2015, a rework of INFRA’s chart of accounts was implemented. This
took place to reflect current and future activities and to allow for more
sophisticated reporting on INFRA programs. The new pie charts in
this report best illustrate INFRA’s use of resources. There are two
illustrations of expenses and costs. The first one is by department and
includes wages and direct costs for programs in each department.
The second illustrates: 1) overall staffing expense for all programs
and activities, 2) direct cost of programs including the INFRA Deals
flyer printing, ECRS and Genius Central billing, CoMetrics, SPINS and
Supply Agreements, 3) general overhead expenses for INFRA and 4)
the expense of member events and programs including Share Groups,
the INFRA Annual Conference and Region Manager activities.
The viability of having a successful member-owned cooperative of
independent natural food retailers is no longer in question after 10
years of successful growth. Our role and relevancy in the market has
never been stronger or more needed to ensure long-term survival of
independents in organic and natural food, whatever that looks like
in the future. We have a lot of work to do to continue to protect the
integrity of the food system, to be leaders in a movement to secure
access to real, clean food for future generations.
16.86%
Retail Services
Expense by Account
14.21%
Staffing
7.01%
22.53%
24.94%
Direct Program Costs
One of INFRA’s new employee benefits in 2015 was the opportunity to have a paid day of work with a non-profit community organization,
whose mission is aligned with INFRA values. Preference is given to sustainable food-based projects and organizations. INFRA’s Marketing
team volunteered at the Women’s Environmental Institute, planting garlic.
Overhead
All Other Programs
Balance Sheet
2015
2014
Assets
Cash on Hand
77.02%
81.77%
Other Assets
22.98%
18.23%
Total Assets
100.00% 100.00%
Expenses increased in 2015 due to increased staffing in all departments
to support continued growth. INFRA moved offices, which meant
increased overhead costs for rent, utilities, phones and the cost of
moving itself. As projected there were increased costs and expenses
in all programs and departments in 2015 due to increased number of
members that INFRA continues to experience.
In Cooperation,
Corinne
Purchasing
36.63%
Overall revenue grew by 20.6% over 2014. INFRA Deals grew by 18%.
Member dues grew by 20.7%. Other Programs accounted for the
largest percentage of income growth at 30%. Other Programs in 2015
were Supply Agreements, pass through programs ECRS and Genius
Central, ART, Retail Consulting, SPINS, CoMetrics, Rebates and Event
Sponsorships. The growth in these programs can be attributed to
increased membership and participation due to supply agreement
requirements.
Here is to another year of leveraging our voice, and thank you to all
our members for supporting me as your CEO for the past 10 years.
Finance and Operations
23.98%
Liabilities and Equity
Liabilities
4.43%2.54%
Members’ Equity
74.49%
66.85%
Current Year Earnings
21.08%
30.61%
Total Liabilities and Equity
100.00% 100.00%
INFRA Celebrates
10 years of
collaboration!
Members and
vendors support
stores affected by
Hurricane Sandy
Board of Directors
adopts new mission
statement
215+ members
177 members
136 members
A group of
independent
retailers begin
examining the
possibility of jointly
launching a private
label program for
commodity goods
INFRA officially hires
Corinne Shindelar as
its first employee
Corinne Shindelar
hired to research
market potential,
viability, and
independents’
interest level
2004
INFRA established
as a purchasing
cooperative
2005
Earth Fare,
Jimbo’s...Naturally!,
New Frontier, and
New Leaf agree to
jointly fund the
costs of a feasibility
study
2006
2007
Board of Directors
approves final draft
of By-laws and
Membership
Agreement at EXPO
West
The four original
founders of INFRA
agreed to fund
development for the
association
page 2
First promotional
program, first SPC
(now INFRA Deals)
Flyer
2008
Launched
partnership
with
CoMetrics
INFRA partners with
Non-GMO Project to
promote 10-10-10
(Non-GMO Day)
2009
47 members
$452 MM in sales
First Regional
Share Group
30 members
First Large Store
Share Group
2011
INFRA Board
Retreat to
Growing Power
First Non-GMO
Month
page 3
INFRA Annual
Conference
boasts 141
retailer
attendees
85 members
2010
Conference Tabletop
expands to 100
vendors
100 members
First Conference
(then Buyer Event)
2012
62 members
2013
INFRA Launches
Academy of
Retail Training
2014
INFRA launches
Independent
Choice(TM)
Controlled Label
INFRA announces its
First Peer Awards
page 4
2015
Letter from the Board Chair by Joe Nolan
I hoped that all of you saw increased sales, customer counts, and
profitability in 2015. Unfortunately, I know that is not the case.
Continued and increasing competition from both the super naturals
and conventional channels led quite a few INFRA member stores in
2015 to decreased sales, with many of us lowering margins to remain
competitive.
CoMetrics and ART are just two tools in INFRA members arsenal.
There are also the great share groups, the annual June conference,
the great monthly calls on marketing and category management
reviews, plus many more. Commit yourself this year to looking at all
INFRA has to offer and see how many of these can help you improve
your top and bottom lines.
The INFRA Board and staff continue to recognize that the changing
landscape means INFRA needs to continually hone the programs and
services it offers its members. While the purchasing agreements that
all members now have access to in all regions (Thank you Corinne and
staff!) has given us greater flexibility to offer lower pricing or selective
sale prices, our lower cost of goods isn’t enough. Fortunately, INFRA
members have access to numerous tools which are free or affordable,
which can help improve our financials.
And improving your sales and profitability is important not just to
you, but the INFRA staff and Board as well. This year the Board set as
its BHAG (Big Hairy Audacious Goal) –
If you are like our store, you are constantly looking at your profit
and loss statements trying to figure out how to lower costs. We use
CoMetrics religiously to offer insight into how our financials stack up
against other INFRA member stores. Is our 4% grocery labor budget
too high? Are we spending too much in our café supplies? Should we
be increasing our health and beauty margins? How is our marketing
budget compared to other member stores?
Yes, CoMetrics is vital to our stores success, and INFRA has also long
recognized that this tool can be the difference between maintaining
profits or having to close up shop. So important that the INFRA Board
in 2015 authorized waiving the $1000 annual cost of this valuable
tool for members on Supply Agreements and who meet the quarterly
submissions deadlines.
The Academy of Retail Services (ART) is another program our store
has made use of. I imagine every storeowner and manager would
like more time to train and educate their employees, but with labor
budgets as tight as they are, it may seem difficult to justify. The ART
program at INFRA makes training much simpler and takes little time
out of managers’ schedules. Having an educated workforce can
help create greater customer retention and less employee turnover.
Yes, there is a small annual cost for ART, but it’s money well spent!
If you’re unsure, talk to the INFRA staff and take a few tests yourself
before committing.
To have 100% of members experiencing positive sales growth
and improved profitability, year over year, by 12/31/2019
This BHAG is used as the driving force for decisions made by the
board and staff. It speaks to the commitment your chosen board
members and the INFRA employees have towards helping all our coop membership succeed. BUT, while we can lead a horse to water, we
can’t make it drink. YOU need to make a commitment to using all of
the wonderful resources available to you.
I am happy to be able to repeat what I did in last year’s annual report
letter - INFRA has never been in a better place, financially speaking.
The strength of INFRA will continue to help our community combat
the ongoing competitive marketplace and help us all on the path to
success.
This summer marks the end of my 6th year on the board and
second year as INFRA Board Chairperson. It has been a tremendous
experience, being surrounded by so many dedicated staff and board
members, learning so much, both from a business and personal
perspective. I will miss it. Thank you all for teaching me so much!
Wishing you clear sailing over the next year.
Joe Nolan
Good Harvest Market
Waukesha, WI
Independent Natural Food Retailers Association Board of Directors
Joe Nolan, Chair
Good Harvest Market
Terry Brett
Kimberton Whole Foods
Paku Misra
Sunflower Natural Foods Market
Cheryl Hughes, Vice Chair
The Whole Wheatery
Diane Gibb-Lahodny
Campbell’s Nutrition
John Pittari
New Morning Market
Kimberly Hallinan, Treasurer
New Leaf Community Markets
Aaron Gottlieb
Native Sun Natural Foods Markets
Mylese Tucker
Nature’s Cupboard
Aaron Gottschalk, Secretary
Wildberries Marketplace
Donna Layburn
Alameda Natural Grocery
Corinne Shindelar, CEO
INFRA
page 5
INFRA Members (as of March 2016)
Alaska
Natural Pantry
Rainbow Foods
Alabama
Manna Grocery & Deli
Arkansas
Nature’s Wonders
Prairie Market
The Truck Patch
California
Alameda Natural Grocery
Berryvale Grocery
Bi-Rite Market - 18th St
Canyon Market
Community Market
Driver’s Market
Elements Natural Food
Good Earth Organic and Natural
Foods
Herbies Natural Foods
Honey’s Natural Market & Wellness
Jimbo’s. . .Naturally!
Lupines
Mother Truckers & Natural Selection
New Earth Market
New Frontiers Natural Marketplace
New Leaf Valley Stores
New Moon Natural Foods
Rainbow Acres Natural Food
Ramona Family Naturals Market
Real Food Company
The Market
The Natural Grocery Company
The Whole Wheatery
Wildberries Marketplace
Colorado
The Crunchy Grocer
Connecticut
Chamomille Natural Foods
It’s Only Natural Market
Nature’s Temptations
New Morning Market
Super Natural Market & Deli
DC
Yes! Organic Markets
Delaware
Harvest Market
Florida
Abby’s Health and Nutrition
Get Healthy
Healthy Living Organic & Natural
Market
Nassau Health Foods
Native Sun Natural Foods Markets
Nature’s Food Patch
Nutrition Smart
Peggy’s Natural Foods
Sunshine Natural Foods
Tunie’s Natural Grocery
Wild Fields Marketplace
Georgia
Brighter Day Natural Foods
Farmer’s Natural Foods
Nature’s Corner Market
Hawaii
Down to Earth Organic & Natural
Papaya’s Natural Foods & Cafe
Iowa
Campbell’s Nutrition
Everybody’s Whole Foods
Idaho
Pilgrim’s Market
Wealth of Health Natural Market
Winter Ridge Natural Foods
Montana
2J’s Fresh Market
Good Food Store
Heavens Peak Organics
Hennessy Market
Mission Mountain Natural Foods
Mountain Valley Foods
Real Food Market + Deli
Third Street Market
Illinois
Choices Natural Market
Cornucopia Natural Food & FC
Heritage Health Foods
Heritage Natural Foods
Kankakee Natural Foods
Local Foods
Naturally Organic
Polson’s Natural Foods
Southtown Health Foods
Sunrise Health Foods - IL
Indiana
Down to Earth Natural Foods - IN
Georgetown Market
Healthy Horizons
Natural Choices for Healthful Living
Nature’s Cupboard
Nature’s Pharm - Lafayette
The Good Earth Natural Food Co - IN
The Sunspot Natural Market
Kansas
Kountry Kupboard
Kentucky
Happy Meadow Natural Foods
Rainbow Blossom
Massachusetts
Cambridge Naturals
City Feed and Supply
Common Crow Natural Health
Cornucopia Foods
Debra’s Natural Gourmet
Down to Earth Natural Foods - MA
Five Seventy Market
Guido’s Fresh Marketplace
Nantucket Green Grocer
Natural Food Exchange
Organic Market
Roots Natural Foods
The Alternative Market
The Good Seed Natural Food Market
The Natural Grocer
Maryland
Chestertown Natural Foods
Roots Market
The Good Earth Natural Foods
Company - MD
Maine
Bath Natural Market
Lois’ Natural Marketplace
Morning Glory Natural Foods
New Morning Natural Foods
Royal River Natural Foods
Spice of Life
Uncle Dean’s Good Groceries
Michigan
BetterHealth Market
Natural Health Center
Minnesota
Sydney’s Local Organic Market
Missouri
MaMa Jean’s Natural Market
Natural Health Organic Foods
Nature’s Own Health Market
Pennsylvania
Big Bear NF - Morrisville
Bloom Naturally
Earthlight Natural Foods
Everything Natural Under the Sun
Frey’s Better Foods
Kimberton Whole Foods
Leg Up Farmers Market
Lemon Street Market
Martindale’s Natural Market
Nature’s Harvest
Nature’s Pantry
Nature’s Way Market
Organnons Natural Market
North Carolina
Apple Crate Natural Market
Bare Essentials Natural Market
Food Matters Market
Harmony Farms Natural Foods
Healthy Home Market
Living Well Down East
Lovey’s Market
Organic Marketplace
West Village Market & Deli
Rhode Island
The Green Grocer
South Carolina
14 Carrot Whole Foods
Bay Naturals
Belue Farms Natural Foods Market
Bert’s Market
Rosewood Market & Deli
New Hampshire
Maggie’s Market
Natural Choice Market
Nature’s Green Grocer
Portsmouth Health Food Center
Tennesee
Grubb’s Grocery
Harvest Grocery
Natural Foods Market
Nutrition World
The Market at the Tree of Life Center
The Turnip Truck Natural Market
New Jersey
A-1 Nutrition Store
Back to Nature
Basil Bandwagon NM - Flemington
Dean’s Natural Food Market
Green Acres Health Food Store
Green Life Market
Green Street Market
Healthfair Natural and Organic Food
Market
Healthway Natural Food Center
Healthy Thymes Market
Nature’s Corner Natural Market
Nature’s Nutrition
Nature’s Pavilion
Pangaea Naturals
Whole Earth Center
Texas
Fresh Plus
Virginia
Ellwood Thompson’s
Good Foods Grocery
Health Nut Nutrition
Health Trail Natural Foods
Organic Food Depot
Rebecca’s Natural Food
New York
A Matter of Health
A Matter of Health I
Cornucopia Natural Foods
Down to Earth Whole Foods
Downtown Natural Market - Church
Four Seasons Natural Foods
Good ‘N Natural
Green Planet Grocery
Hart’s Local Grocers
Hawthorne Valley Farm Store
Kaaterskill Farm Natural Storehouse
Inc
LifeThyme Natural Market
Lori’s Natural Foods Center
Mother Earth’s Storehouse
Nature’s Pantry - Fishkill
Rising Tide Natural Foods
Sunflower Natural Foods Market
Sweetpea’s Market
The Local Food Market - OMG
Uncle Sam’s Good & Natural Products
Ohio
Raisin Rack Natural Foods
Troyer’s Country Market
Oklahoma
Native Roots Market
Oregon
LifeSource Natural Foods
Nature’s Pantry Natural Foods
Oregon Natural Market
Sundance Natural Foods
page 6
Vermont
Natural Provisions
Natural Provisions Market and Deli
Washington
Bear Foods Natural Market
Blossom Grocery
Farm Fresh Market
Meyers Falls Market
Rocket Market
The Woolley Market
Wisconsin
Downtown Grocery
Good Harvest Market
Greens N Grains
The Free Market
The Grainery
Village Market
West Virginia
Community Garden Market
Good Natured Market & Vegetarian
Cafe
Mother Earth Foods
Wyoming
Jackson Whole Grocer
693 Raymond Ave, St. Paul, MN 55114
Phone: (651) 888-4700 Fax: (612) 435-2379
http://www.naturalfoodretailers.net
[email protected]