Marketing Study

We Can Do It! Leading Food Co-Op Firm Reports Enough Sales Potential in State College to Support a Full-line Natural Foods Co-Op

When our “founding mothers” first began discussing a food co-op in State College, they knew in their hearts that there was sufficient support in the community for it to succeed. After all, nearly every University town already had a member-owned food co-op (Ithaca; Madison; Champaign-Urbana; South Bend; Pittsburgh, Harrisonburg, Va.— to name a few).

We did not have a firm empirical basis for this belief. True, an unscientific online survey conducted in July 2013 obtained results from 651 people. It showed hundreds of people who wanted a store that featured local products and supported local farmers. The Keystone Development Center pulled from this study in the feasibility study it completed for Friends & Farmers in November 2013. It confirmed that a co-op in State College was indeed feasible. Now we have further basis to report that we can indeed open a successful food co- op here. Our $10,000 “Seed Grant” from Food Co-op Initiative funded a Market Study that drew on a proprietary database of existing food co-ops throughout the United States. The report’s bottom line: “Based on the population size, demographic composition, and competitive environment of the State College market area, combined with the experiences of other natural foods co-ops in similar market situations, it appears that there is sufficient sales potential to support a full-line natural foods co-op.”

The market study will be an essential component of a loan application package for banks and other financial institutions, and will help the co-op in its efforts to sign a lease for a future location for its store. Momentum toward the opening of a physical store is accelerating. The co-op now has more than 400 households signed on as members, and is poised to double its membership to the 800-member “tipping point.” It isn’t that hard for each member to recruit just one more member.

Friends & Farmers is broadcasting its message far and wide. It received a $92,000 grant from USDA’s Agricultural Marketing Service to grow its retail Online Market and start a Wholesale Online Market where local producers can offer products to restaurants and institutions. The board has hired a grant administrator and marketing manager, paid for by the grant, to grow both Online Markets. We have established working relationships with local vendors that few existing co-ops can match. And Friends & Farmers played a major role in organizing a successful food summit on November 20.

The co-op has made important strides, and the market study gives us reason to believe that the hard work will be worth it. This is Big News folks. It confirms what our membership thought was true. We can do it!

Some key findings of the recently completed study:

  • Growth in the natural food market has been occurring at a rate of between 5 and 10 percent year, and is expected to continuer.
  • The co-op store will serve a relatively large-sized trade area in terms of geography, extending between 15 and 25 miles.
  • The demographic composition of the proposed co-op’s trade area is fairly comparable to the co-op database store average with respect to the key demographic characteristics that correlate positively with natural foods co-op sales performance levels.
  • The Market Study suggests a store comprising 10,000 square feet, with 6,250 square feet of retail space in the store. Recommended features include a relatively “broad selection” of natural and local food, including pre-packaged fresh and frozen meat, poultry, and seafood; a deli counter with made-to-order sandwiches, prepared foods (including a selection of value-added meats), self-service hot/cold food bars, grab and go foods, a specialty drink bar, and an indoor café/seating area; a bakery; classroom/meeting space; and a demonstration kitchen.

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