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A Predictable Demise
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Business New Haven
10/30/2000
By: BNH
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What a mess.
On Oct. 25, the Yale Co-op closed its doors, probably for good.
The scene on the Co-op's final day was a sad one: bargain-hunters picking the 113-year-old carcass clean from 75-percent-off racks; shoppers in checkout lines wishing Co-op employers luck.
There were desperate 11th-hour efforts by store employees to salvage the business, but these offered scant hope of success after the Co-op inventory and furnishings were scattered to the winds.
There are no winners here. The non-profit Yale Co-operative Society loses its reason for being. Chapel Square of New Haven Inc., the non-profit formed in 1997 by the Greater New Haven Chamber of Commerce to fill the ownership void at Chapel Square Mall, loses more than its “anchor” tenant - it is on the hook for more than half of the $1.5 million it borrowed in 1997 to help the Co-op relocate from its Broadway home (from which Yale evicted it in favor of giant chain Barnes & Noble) to the center-city mall.
The city isn't a winner, since the money it lent the chamber group may not be repaid. And the mall can't be sold, because it is the object of protracted litigation between its owner and Baltimore developer David Cordish, who had an option to buy the property then sued over what he said were violations of his deal.
The company brought in to run the Co-op, Wallace's Book Stores, is out the $1 million it says it spent to fix up the Co-op. It also paid a $120,000 settlement to avoid being sued for violating the terms of its “ten-year” management deal to run the store.
And, lastly, the Co-op's employees are not winners. On October 31, they'll hit the streets in search of new employment.
If you read only the Yale Daily News, you would think the villain in this sorry saga was Yale for kicking the Co-op out of its longtime home in favor of a giant chain, effectively shipping millions of shoppers' dollars out of state (Barnes & Noble is in New York).
But there's plenty of blame to go around. In the past we applauded the chamber for saving, sort of, Chapel Square Mall. By doing so it protected dozens of jobs as well as performed a useful service for the mall's mostly center-city clientele, some of whom may not own cars and thus have few shopping alternatives.
But the Co-op deal was queer from the git-go. The goal of saving Co-op jobs sounds like a socially useful endeavor - but we can think of few instances in New Haven when such an effort has succeeded. What did the city and chamber think would be the Co-op's niche once Yale had stripped it of its official-bookstore status?
Government (and quasi-governmental entities) typically have a tin ear for the marketplace. Yet in this case the city and chamber decided that they knew better than, say, potential private investors that the Chapel Square Co-op concept was a winner.
Even when Wallace's - a successful college bookstore operator - was brought in as a savior, they seemed to realize there was no practical way to reclaim the “real Yale bookstore” mantle from Barnes & Noble. Instead, they announced, they would seek to position the Co-op more as a department store featuring fewer Yale-branded items and more general merchandise and apparel.
But Wallace's never accomplished that objective, and the Co-op retained a college-bookstore feel right to the end. Perhaps Wallace's just couldn't figure out how to make the change.
In New Haven's command-and-control economy, the free marketplace be damned. City officials know best who will be the winners, and who the losers.
Except when so many of the “winners” - U.S. Repeating Arms, Williams Specialty Steel, Starter Corp., and now the Co-op - so often turn out to be losers.
When government thinks it knows how to run a private business, everyone is a loser.
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