Cooperative Grocers

At the Tenth Biennial Congress of the Co-operative League of the U. S. in Columbus, Ohio, last week President James P. Warbasse outlined in splendid simplicity a procedure by which "ordinary" capitalist corporations might undergo a sea change, become co-operatives in rour steps.* Said he: "By these natural steps a profit economic system can transform itself into a co-operative system without shock, or without any action of government whatever."

If gentle Dr. Warbasse had wished to enter into the complexities which would enshroud his middle way in the U. S., he might have referred his hearers to a formidable corporation called the Independent Grocers' Alliance of America. IGA is formidable because it is not only a capitalistic but an extremely efficient co-operative enterprise as well. It is an organ of enlightenment, a system of distribution, a father &mother to small grocers and the largest voluntary chain in the U. S. Last week 6,500 grocers in 44 states lighted candled birthday cakes in their windows to mark, proudly and with gratitude, IGA's tenth birthday.

Grocer's Friend. Thus illuminated by the glow of 65,000 candles was the career of a onetime Chicago accountant named J. (for Joseph) Frank Grimes. Accountant Grimes grasped the idea that the essentials of chainstore distribution-- mass buying, good merchandising--were not inseparable from the chainstore setup. In 1926 when the grief of independent grocers and wholesalers over chainstore competition was deepest. Accountant Grimes founded IGA. His accounting partners, William W. Thompson and Louis G. Groebe, became IGA secretary and treasurer, respectively. With a firm of advertising and merchandising experts they set up an organization to service retail grocers, show them how to run chainstores without selling out to them. Significant was their idea of doing the servicing not directly but through established wholesalers.

IGA nucleus was a group of 69 New York retailers calling themselves the "Acorn Stores." In its second year the IGA oak was spreading all over the U. S., did a total business of $60,000,000. By the end of 1928 there were IGA stores in 36 states. From his Chicago headquarters President Grimes planned country-wide sales campaigns to move macaroni, coffee, candy. He gave his grocers clean new forms for efficient budgeting, sent them experts in store-brightening and toothsome display. Deciding that convention speeches were tiresome, he sent out a traveling troupe to stage edifying grocery skits, later changed to talking films ("Vocalpix"), now shown by all IGA jobbers to their retailers. As a result of this high-powered education, the mortality rate among IGA grocers is only one-half of that of U. S. grocers as a whole (10%).

Capitalist Coop. To Founder Grimes IGA co-operation has been a profitable crusade. About 65% of the canned goods, coffee and some 900 other items sold in IGA stores are purchased by IGA wholesalers through IGA "Headquarters," which charges manufacturers the regular brokerage commission. "Headquarters" has not gone into manufacturing, is unlikely to do so. It buys more food from U. S. manufacturers and farmers than any other wholesale or chain organization except Great Atlantic & Pacific Tea Co. To test, ship and merchandise this food it employs 150 people at the Chicago office, and at branches in Seattle, New York, San Francisco.

Until 1932 all IGA stock was owned by the three original partners. In that year the wholesalers through whom IGA does business asked, and received, a 50% interest in the business, equal representation on the board of directors. There are now 65 IGA wholesalers with a total of 110 branches. Most of them are old, established houses like Milliken, Tomlinson Co. in New England and E. R. Godfrey & Sons Co. of Milwaukee (egg-bald, bespectacled President James D. Godfrey is chairman of the IGA board). From each store the wholesaler collects $3.50 per week for service. Each wholesaler pays IGA headquarters $4.75 per month per store for merchandising advice, mats, layouts, etc. Besides its brokerage commissions IGA receives about $372,500 per year from the wholesalers. The retailer foots this bill for service but he gets the by-product of lower prices, tested goods. And IGA retailers are now selling $400,000,000 worth of goods annually.

Sitting back in his executive chair in the Chicago office last week, Grocer Grimes had the satisfaction of sifting through a stack of congratulatory messages in recognition of the oak he had nurtured from his original Acorn members. He had telegrams from Illinois' Governor Henry Horner, Senators Burton K. Wheeler and Millard E. Tydings, and Alf Landon. Longest of all, the Landon tele gram was dispatched from Topeka, Kans., although Mr. Landon that day was only a few blocks away in Chicago's Congress Hotel. Wrote Franklin D. Roosevelt from the White House: "You have demonstrated . . . that problems which can not be solved by individual effort can be met by co-operative action."

In his own words Grocer Grimes is "an individualist but not a rugged individualist." An exploratory trip to Europe last year left him cold to authentic Rochdale Co-operative principles. Quick-witted, quick to smile, he is a masterful salesman, a fair golfer, a crack poker player and can multiply six figures by six figures in his head.

*The steps: 1) Education of stockholders in co-operative principles; 2) A resolution limiting each stockholder to one vote and banning proxy voting; 3) Limitation of interest and dividends to the current legal interest rate; 4) Co-operative profit sharing with consumers.

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