JoAnn Fabrics was an 800-store, $2bn-revenue craft supply chain founded by German immigrants in 1940s Cleveland. Leonard Green & Partners, the private equity firm that owned it, drove the company into bankruptcy in 2025 — one of hundreds of US companies PE has gutted this year alone. The stores are closed. The community they served — wedding dress makers, upholsterers, milliners, rug repairers, hobbyists — lost both their supply chain and their gathering place. Now a grassroots effort led by Sandy McClenahan, a 35-year-old legal assistant and hat maker, is exploring whether a member-owned cooperative could fill the void. A Reddit survey last month drew hundreds of responses, including at least one person from every US state and 30 who volunteered as founding members. The ambition isn't just to sell fabric. It's to build what McClenahan calls an "ecosystem" — a structure that connects crafters, preserves small-business skills, and resists the acquisition logic that killed JoAnn in the first place. The co-op model isn't a fringe idea. REI, Ace Hardware, Land O'Lakes, and Publix all operate as cooperatives or employee-owned entities. Worker-backed co-ops specifically have more than doubled in the US, from 315 firms in 2014 to 820 in 2024, driven partly by driver-owned rideshare platforms. Employee stock ownership plans (Esops) have also risen for three consecutive years, with more than 6,400 companies now offering them. A federal bill passed on 16 September is expected to lower barriers to forming new ones. A demographic accelerant is approaching. Roughly 40% of US small businesses are owned by baby boomers now entering retirement. McKinsey estimates they're about to transfer approximately $5tn in small business assets — the so-called "silver tsunami." Private equity is already positioning to acquire these businesses, from funeral homes to HVAC repair shops to dental practices. Harvard Business School and the University of Wisconsin's Center for Cooperatives are among the institutions arguing that cooperative conversion should be on the table as an alternative to PE buyouts. The track record of recent conversions is encouraging on a small scale. Ward's Lumber in upstate New York, formerly family-owned, transitioned to a cooperative and kept profits local. Doug O'Brien, president of the National Cooperative Business Association, points to REI as a model: a community of enthusiasts who care about product quality and sector culture, organized around member ownership rather than investor returns. The JoAnn effort is embryonic — McClenahan stresses it's very early days. Replacing a $2bn national chain with a cooperative is a fundamentally different proposition than converting a single lumberyard. The capital requirements, supply chain complexity, and real estate footprint that a physical crafting hub demands are enormous. But the diagnosis is precise: the problem wasn't that the craft market died. It's that the ownership structure extracted value until nothing was left. What's interesting here isn't whether this specific co-op succeeds. It's the pattern. When PE strips a community asset, the community sometimes tries to rebuild it under a structure designed to prevent the same extraction. The silver tsunami will test whether cooperative models can scale fast enough to compete with PE's acquisition machinery for the $5tn in boomer-owned businesses about to change hands.
