PCC 2002 Annual Report

A message from the CEO

Our co-op ended 2002 having achieved another year of positive growth and economic success. Sales at our seven stores grew almost 12 percent last year on top of the seven percent growth in the previous year, both substantial gains in the economic climate we have all endured. PCC's earnings from operations remained very strong with this significant growth in volume and were boosted even further from the gain on the sale of the Ravenna property. We made some significant investments and commitments for the future of our organization.

In January we purchased our Seward Park building, which ensured the opportunity for a long-term presence in that neighborhood beyond the few remaining years on our former lease. We invested more than half a million dollars to remodel our West Seattle store to make it a more appealing destination for surrounding neighborhoods. And in September we signed the lease on our new site in the Fremont neighborhood, where we will invest more than three million dollars to relocate our current store — and leave behind its postage-stamp parking lot — in mid-2003. The new Fremont store will be almost twice the size of our current location and have almost four times as much parking space.

The greatest operational highlight of 2002 was the March launch of our Member Bonus Days program, which offered PCC members 10 percent off their entire shopping basket on the fifteenth of each month. After studying the program's pilot months, we were pleased to be able to expand it to two days every month in 2003. This eased the most frequent criticism of the program: the single day of access. Additional days — such as the four days of discounts in December offered as a year-end "thank you" to the membership for our fiscally strong year — remain possible in the future as operating results permit.

The program has been well received, boosting sales at each of our stores significantly while returning more than $600,000 in discounts to PCC members. In 2002 our management team developed and designed a modest branding campaign that will be rolled out in the spring of 2003. Our signage and communications to the general public had become fragmented over the years. We hope you will welcome the new look you will see as the new store signs, awnings and interior elements are unveiled at each of our stores.

The implementation of the National Organic Standards in October was certainly a major milestone. Many PCC members had lobbied for both the creation and the maintenance of integrity in this legislation that is now in effect across the country. Although there is no requirement for retail stores to be certified under the National Organic Standards, PCC voluntarily applied for certification.

We were pleased to have our Greenlake store achieve certification in relevant departments as a model and as one of the first certified retail grocers in Washington State. All other PCC stores are seeking organic certification in 2003.

We have a great deal to be thankful for in our cooperative at the end of 2002. The landscape of the natural food industry over the last year has been one of significant consolidation at the wholesale level; a step removed from most of us as shoppers, but a pointed reminder of how important it is to operate our cooperative business well and with a healthy bottom line. This allows us to deal more successfully with the intense pressures that will persist in the broader retail grocery sector.

Economies of scale and the massive size of our competitors will become larger issues for us in the years to come. Your support as members and the economies we gain from reaching out to non-member transitional shoppers help us maintain the distinctive offering that our stores continually strive to bring to each of you as the owners of this values-driven cooperative.

Thank you for your support this past year and into 2003, a year that promises to be another exciting chapter.

Tracy Wolpert, CEO
PCC Natural Markets