Problem: inner city Louisville grocery stores are closing one after another, low neighborhood income, lack of large square footage and problems of loss prevention makes it difficult for national chains to keep grocery stores profitable.
Solution: Draw from the tradition of the “mom and pop” grocery and five-and-dime general store popularized by Family Dollar and Dollar General and build small square-footage grocery stores with modern amenities such as BOPIS (buy online pickup in store) and a heavy emphasis on local sourcing, and/or food cooperatives that source from local vendors. Build a network that can develop economies of scale.
Intellectual Bars, A New Remix
Wow! I have had a lot of…eh, vigorous discussion over the last couple of days! I have sunk some time in debates about other stuff, now I’m about to reinvest my time more wisely to share more information with you, my readers and give you all the attention that you deserve.
Narrow The Gap! forever is focused on delivering my faithful and loyal readers value and viable business models to implement in West Louisville and replicate nationally and worldwide. I am a student who studies patterns and practices of urban areas around the world, I am committed to continuous improvement through self-education in technology and synthesizing strategic planning, technology and media into the development of solutions that will stimulate and grow the economies of poor and working-class Black communities.
On Saturday, January 21, 2017, several hundred people gathered at the Second Street Kroger in a rally designed to keep the grocery open. Neighborhood advocates joined by several Louisville Metro council-people, stepped up with this rally to keep the store open…but I do not think that it is going to work. If a business is losing money at a location, exhortations aren’t going to keep them open. Businesses do not provide jobs or remain at a given location just because people need them, they do so because there is enough demand for their products where they have to hire the personnel necessary to meet that demand.
At the end, the people of a community have material needs that must be met, and if the current commercial realities attempt to say that it cannot be so, then new and/or different ones must be crafted to fill the vacuum.
Kroger claims that due to the inability to come to an agreement with the building owner at 924 South Second Street, that they will shut the neighborhood’s only area grocery down. This is part of a larger pattern of closing grocery stores in local urban areas over the last several years.
People need to have access to the fundamentals for living—food, clothing, shelter and transportation—and it is the elderly and disabled where getting to and from the current store is already a challenge, will have another layer of complexity in having to travel to another store with extra distance. Even through providing a shuttle from what will be the soon empty building of the Second Street location to another Kroger, another unnecessary layer of complexity has been added to a real and growing problem in Louisville urban neighborhoods, the disappearance of local grocery stores.
There was a local Pic-Pac grocery not far from my house that had been open as a grocery in that location for 60 years close down on January 1. There was a community market that tried to get established at 15th and Jefferson ten years ago that could only stay open for a few months. The Southland Terrace Kroger is slated for closure. Winn-Dixie stores on Fourth Street and 28th Street closed years ago. What gives? Why are these grocery stores failing to be viable and profitable? It’s a complex problem where commerce and empathy (or the lack thereof) are intertwined.
In the journey to answer this question and find or develop solutions, I searched for and found discussion boards around this topic, and I started an email discussion with a grocery store market research professional, a person with over 30 years of professional experience who clearly knew his stuff about the industry and the market. He shared with me how big box grocery stores have evolved their model to “Walmart”-ize their stores, with a twist: Huge square footage, more suburban locations with the inclusion of boutique elements (whether it be an upscale deli or bakery, or the offering of retailer cookware and accessories, and more), all in the effort of attracting upper middle-class income dollars. That large corporate grocers are starting to divest from grocery stores in locations where the majority of their income comes from public assistance (EBT, food stamps and WIC).
In our conversation, we had an exchange that honestly shocked me, and it exposed the fundamental divides and lack that poor and working-class Black (or otherwise urbanized) communities have and are forced to deal with, and the unwillingness in some humans, to understand or empathize for and with the people who live in them. This guy said to me, “If we got the government out of the feeding business then supermarkets might have a better chance of survival.”
That was a jaw-dropper.
This cat asserted that “government (has) to stop competing for labor and stop paying people not to work.” Others might want to have debates about the usefulness of government in various roles, but I assert that one of them are certainly “supporter of last resort,” so that’s a nonstarter for me. What the hell are these people then supposed to do? It is, however, a crystal-clear sign that there are humans that do not love poor and working-class people of color and that if we are going to have the resources and amenities that we deserve, we are going to have to get them, the things that we must do, we are going to have to do it, and in the areas where we do not know how, we shall have to learn it…and this is why we are taking this journey together, my readers, for new patterns and practices that will allow us to re-engineer our culture to acquiring and generating what we need and deserve.
Dr. Claud Anderson has a crystal clear point on this, even as I believe his Powernomics model demands an Industrial Revolution 4.0 modification, that we better stop talking about other people when addressing Black issues. What is it getting you or us materially? You care about other causes? Fine. Understand that this business is this business and when it comes to our community’s needs…how much are others thinking about you other than an empathetic (take off the “em” and you’ve got the right part) pat on the head?
Be smart. We better recognize that these 100+ year old brick warehouses next to these railways that was built in our West Louisville neighborhoods are vital railways for American transportation. That we better own and claim properties in and near the big commercial trucking and transport hubs. That we better snap up and own the storefronts in Portland, Russell and California, and you sisters and brothers in other urban American cities have your similar spots in your hoods…because it is all ten minutes from downtown. Let’s become owners. Let’s develop this commerce. Family, be about family business.
Whatever may be said about me, whether it’s this or that, at the end…know the talk is irrelevant. Know this: Beyond a shadow of a doubt, I care about my people, I remained committed to continuous improvement and if you are willing to become The Leader That You Want To See, you will engage in patterns and practices that will reengineer the culture and the people.
To do this, I am going to revisit a piece written a year and a half ago, however I am going to integrate new elements into the model that can provide a blueprint to develop the necessary business plan and vision for community application and execution.
As a cat whom I researched with for a year said, “transformative business models that create solutions require the hood to transform into residents who want solutions.”
Let’s reintroduce the BOPIS (buy online, pickup in store) model.
In August 2015 I rolled this business model out to you the readers. This model gives customers the ability to use their mobile device, tablet or computer to shop for products just like any e-commerce website. This is a model that Amazon, Target and Walmart have started implementing, but technology allows the small startup to use technology just like the fat cats do. Walmart, in similarity with Publix, Swiss Farms and SmartMart are using curbside pickup.
I covered this in extensive detail back then, so I don’t want to go too far in repeating myself. Reference the original article on some of the technical details on how to ramp this up.
Readers, please understand what I am working to do here. My focus with these pieces are the development and redevelopment of poor and working-class majority Black communities…our “hoods,” if you will. I am starting in West Louisville because that is where I am and where I am from and this is what I am about, but my influence draws from global urban models and markets around the world to apply in these…our communities. I am not concerned about the problems of others when doing these pieces…this is for the people who are committed to actually making these…our communities empowered.
Do you want to know how intersectionality is going to help here? Come to West Louisville and spend money with Black businesses. For those with more resources and you have a business background, mentor African American entrepreneurs and help them to design strong business plans and provide them startup and operating capital…but do not look to manipulate and control them. If you want to help, help us develop the means to empower our communities.
Family Dollar and Dollar General: Attack From The Small-Box Retailers
A lot of brothers and sisters in West Louisville complain about the proliferation of both Family Dollar and Dollar General small-box store chains throughout West Louisville neighborhoods. To be sure, in some areas, you can find either one or the other on every five or six blocks on some streets…and they don’t like it. They often say, “Why do we have all of these little stores? Why can’t we have (fill-in big-box suburban retailer here)?”
The main reason is that the corporations that own these smaller format stores have figured things out about the spending patterns in our neighborhoods. Be sure on this. How do they do it? Small-box stores “focus on consumables, or items that people buy several times a week, like food and tobacco products. The consumables market segment, especially food, has been one of the fastest-growing categories among discount retailers. Small stores focus on consumables because they have limited space, and the discount-retail model thrives on high volume. The best way to keep that volume going is by filling stores with items that people consume.”
Small stores, focus on consumables. That's a start. A threat that steps in the way of that are that many such stores also specialize in food-like edible products as opposed to food, and I am a believer that we can have better and do better than that.
Family Dollar and Dollar General stores on average expect 7 to 11 percent operating profits for operations. That's saying for every $1 million invested in operations and inventory, they expect $70,000-$110,000 in profit yearly per store. That is also why they have strategies of many small stores, building up collective power in numbers and area domination. FD and DG stores dominate our neighborhoods because they have studied the economics of our neighborhoods and designed a strategy that both fills a needed niche and can be profitable for their corporations at the same time.
This same sort of economic study by big-box retailers on our neighborhoods have determined that our communities relative lack of income along with other perceived risks (loss prevention problems, safety) would not make for profitable ventures for expansion. This is unfortunate, but this is their position. That doesn't mean that we have to accept that, but there needs to be a strategy on what we can do.
Family Dollar and Dollar General are corporations, but their retail model keeps it small, they keep the products relevant (things that people need, want and buy on limited incomes), and there are many locations that make them local and easy to get to. Rather than complain against it, respect the strategy, study the strategy, and repeat it and make it work for our benefit.
Partnerships for Healthy Food
The small-store groceries that I propose should be a location that partners with existing nonprofits and organizations that provide fresh produce access for community residents. I mentioned this more in detail here. Fresh Stops are community-focused and run enterprises where one can order fresh produce that you pick up on a weekly, biweekly or monthly basis. A Fresh Stop location will often have cooking demonstrations and other activities that brings neighborhoods together around achieving healthy food and access to it for all communities.
Fresh Stops are open to anyone who wants the goods and are created, run and maintained by community leaders. Most Fresh Stops reserve 75% of their shares for individuals and families that identify as “low-income” according to the WIC eligibility guidelines. They operate on a sliding scale based on income. $6/share for mothers using WIC, $12/share for EBT/Food Stamp recipients or that qualifies with the income guidelines, and $25/share for everyone else.
These West Louisville- and urban New Grocery stores must reach out and partner with other Black farmers, local farmers and buying clubs as well. I had an opportunity to meet and dialogue with Dr. Ridgely Muhammad, the National Minister of Agriculture for the Nation of Islam and the manager of Muhammad Farms, a 1,556 acre tract of land in Georgia. They produce watermelons and a variety of dry goods staples (beans, lentils, rice, wheat flour and more) that could be part of an ordering system that can provide just-in-time provision of staple goods. Partnerships with Black farmers, in the state of Kentucky and the southeast region for more shippable goods is a must with this store's design.
Go small. Implement technology as a shortcut to expand the power and range of the store's offerings. Implement online ordering and drive through pickup with this store model as a differentiating feature. Specialize in consumables. How can these kind of new stores be efficient that the goods that they sell are going to be goods that people in the neighborhood want to buy? Smart data and intelligence-gathering are a must.
Gather Intelligence. Using SQL server merge (link), create a $5/month GoDaddy Coming Soon site that allows people to enter products and items that they would like to buy from a West Louisville urban grocery. This page can be set up to scan UPC codes using a mobile that can be piped directly into your database. Remember, data gathering is everything.
As this database develops, what happens is that you gain more detail on what your responders buy and you will have better data and intelligence on how to fill the inventory for these stores. This allows you to hit the ground running at the start and people willing to invest in your vision will be impressed by your ability to engage the market and sign up potential customers ready to do business with you.
Location, Location, Location (Part Two). The recent closures of urban groceries, with a Family Dollar coming to the 24th and Market location of the former Pic-Pac and To Be Determined with the closure of the Second Street Kroger, opportunities about for locations between 3,000-10,000 square feet to be had in implementing small, local with online ordering and fulfillment. As several city councilpeople participated in the rally, it would be my hope that they would enthusiastically get behind support of directing tax-increment financing (TIF) resources towards this project. It would create local jobs and be a tax generator for the community.
Community Capital Fundraising, Part Two. Locally, Sponsor4Success (S4S) Properties has moved into realty acquisition and community development projects, both residential and commercial. As a board member of S4S, crowdfunding for long-reaching community development projects are something that we are passionately committed in doing. Once again, we must leverage our talent in film and video production from members in the Black Media Collaborative to produce video presentations on how the development of a (multiple) grocery store project in West Louisville can create community jobs, provide greater access to fresh vegetables and fruits and healthy eating, and create oases in the so-called food deserts throughout West Louisville. This shall require major effort. The dream is free, but the hustle, while necessary, is optional.
What More Will It Take? After the business planning, after the data gathering, after the partnerships, after the fundraising, forward with the development...next, call in the media and the city's leadership for the opening day ribbon cutting. As the orders roll in, as the trucks and vans come in delivering inventory, as the staff greets everyone with smiles and commitment to the very best of service, let's start the win. Those who will take on this project, anticipate items going out of stock, make sure you monitor well what items are being more frequently requested (and you can easily do so with a digital inventory system as solution), also allowing you to keep your inventory lean and costs minimized. As a smaller store, intelligent inventory management is critical in keeping service high and costs low. It is also vital to be readily able to accept money over the internet, prepaid cards, WIC, EBT and direct debit to avoid high merchant fees. This business model wins because it creates both entry-level and STEM support jobs, creates opportunity for adjunct business and enterprise to develop around it and the means to keep more generated dollars circulating through and operating in West Louisville neighborhoods. It also provides a Black-owned, Black-operated staple business (food, clothing, shelter, transportation) to be a part of a predominantly Black neighborhood.
The struggle to "narrow the gap" is real. When there seems to be resistance in multiple places for real Black empowerment and Black community empowerment, steps must be taken to do this for ourselves. We must seize opportunities and find ways to work together—to gather and organize skilled, talented people around an objective, and form the necessary partnership to develop and recreate our neighborhoods. Let's be willing. Let's start winning. Let us commit to win.