PCC Annual Meeting

Thank you for making 2003, PCC's fiftieth anniversary, a healthy year for our co-op and one in which we were able to continue our support for each of the communities in which we operate.

Certainly a major highlight of last year was the relocation of our Fremont store from the relatively cramped quarters it had been occupying since 1994 with its postage-sized parking lot, to our new store just a block away with more than twice the floor area and four times the parking space.

We were proud of the broad team of participants that brought that project to fruition, from the cross-disciplinary team of professionals whose efforts spanned over two years in the development and design of the project to the breadth of support from our staff at every other store. Many of those staff members provided support to the staff of the old store in order to make the transition as seamless as possible for our members and the many new shoppers who were drawn to the vastly improved facility. Read more about the many environmentally forward-thinking design elements of the store in the 2003 annual report.

Our sales continued to grow at a very strong rate in 2003 (over 11 percent) to a total of over $83 million, up from $75 million the year before. This continued growth was the result of both the continuing strong appeal of natural foods in our society as well as the continually improving strength of our staff in making our offering to our members and the broader public one of the most appealing in our region. These improvements occurred during a period when conventional grocery stores continued to expand their additions of our product lines to their shelves.

One less visible way in which the cooperative's financial success helped us all as members is that we were able to fund the entire several million dollar Fremont store from internal reserves, avoiding significant overhead from borrowing costs.

In addition to our economic successes, which are of course the foundation for everything else we are then able to accomplish, PCC can be proud of its outreach to the communities our stores serve. Our programs to support neighborhood organizations returned over $80,000 to over 200 different groups through our 1% for Education and 5% scrip program for school groups and non-profit associations. These programs allow our co-op's members to bring their friends and associates to our stores to enable us to make larger contributions to their neighborhood associations and schools, strengthening both groups.

PCC continued its long-standing Cash for the Hungry program. Members volunteered hundreds of hours to package over 35 tons of food from our stores that was then delivered to local food banks last year. Many individual events that present and promote our healthy food and lifestyle choices were carried to neighborhoods through the work of our very effective Community Relations team.

PCC intends to extend it efforts in product education in the months ahead. Our staff is now working on a 30 percent expansion in our FoodWorks! classes.

PCC sought to leverage its presence on key issues to our members through more active involvement and support of the Washington Sustainable Food and Farming Network, the only broad-based, statewide advocacy organization for sustainable agriculture in Washington state. This group has effectively represented us to legislative groups on topics such as funding organic agriculture research at Washington State University and numerous issues in agriculture at the state government level.

At the same time, PCC has continued its financial support for the independent non-profit PCC Farmland Fund, to which PCC continues as the largest single contributor. In addition to direct financial support, we were pleased to be able to loan the Fund $250,000 late in 2003 to close on its most recent acreage acquisition to support a ranching family in Eastern Washington. That family has a wonderful story to tell and we are pleased to have begun using some of their products in our delis to continue the Fund's work of helping organic growers both stay in business and find markets for their products.

Not everything was roses throughout the year, of course, as the competition strengthened near some of our stores, especially View Ridge, and we took a hit in the media surrounding an error in our seafood program late in the year. But the latter was quickly corrected and has resulted in a far stronger program being constructed by our own staff.

In fact, very shortly we will be announcing a partnership with the Monterey Bay Aquarium in which PCC adopts the aquarium's standards on sustainable fisheries and uses their reference materials in our stores to help guide all of us as consumers in making the best choices in support of seafood stocks over the long run.

This program will also link PCC to the Seattle Aquarium with its many educational and outreach efforts in conjunction with the Monterey Bay folks. Much more on this initiative will be appearing in our stores throughout this month.

Pleasingly, the competitive impacts from other store openings have been less than we had forecasted, due largely to the loyalty of our members and the spirited response of our staff in the affected stores. But we can anticipate more such challenges from competitors this year, especially on the east side, and in the years to come as more conventional operators put more emphasis on their natural foods offerings.

PCC was pleased to complete the organic certification of all seven of its stores recently after first certifying our Greenlake store as a pilot site in late 2002.

Even more important than the certification sticker on the wall, however, is the continually increasing percentage of organically grown products in our stores. Produce increased to 90 percent organic in 2003 while our bulk food sales rose to 60 percent being organically grown.

PCC also continued another year of being an excellent place to work, expanding our employment base, which now includes well over six hundred people working for your cooperative. Even in this very slow economy, PCC offers solid career paths at levels that can support families for an ever-increasing number of individuals. PCC management is proud of its partnership with the two labor unions that our staff has chosen to represent them. We look forward to continuing positive relations with them even though there are some very difficult issues arising in the contracts being negotiated with the conventional grocery industry.

Our membership continued to grow last year as well, though rather modestly. Nevertheless, our increasing appeal to shoppers who do not choose to actually join the co-op adds significantly to our economic strength (through purchasing power as well as cash flow), and thus improves our ability to offer solid member discounts and programs, strengthening the business for those who do choose to join and own it.

In conjunction with a major priority of our board of trustees and leadership from individuals like board chair Chantal Stevens, PCC has initiated a more comprehensive and better-articulated program on operating as a sustainable business. While many elements of that focus come quite naturally for a cooperative like PCC with such a long-standing emphasis on organics, this initiative will measure and generate improvements in many additional aspects of our operations and, especially, in our relationships with other businesses.

Looking further into the future, we are rather excited that developers around Puget Sound find the prospect of a PCC store in their project appealing. They continue to bring projects to our attention in which they seek PCC's participation. And you, our member owners, continue to express interest in additional stores, both to the north and to the south of our current store neighborhoods.

In partnership with your board of trustees, we in management intend to continue to think broadly about our future and the possible changes that could be warranted to meet it. That could entail small format stores in dense urban settings, for example in a place like Belltown, or partnering with some other complementary businesses, for example Ron Sher of Third Place Books and Honey Bear Bakery, in a larger format that would support each of the ventures. Or anything in between.

It is important that we remain flexible and imaginative to maintain our edge and our distinction as the community-based natural food stores of choice in the greater Puget Sound region. Thank you for supporting us in that effort both in 2003 and in the years to come.