Community Wins: In the Face of Consolidation, Communities are Opening Their Own Grocery Stores

Date: 2 Aug 2023 | posted in: Retail | 0 Facebooktwitterredditmail
Community Wins is ILSR’s new series that profiles the range of ways communities are combating corporate power and building local self-reliance. This piece on how neighborhoods and towns are sustaining independent grocery stores is the first in our series.

When the longtime owner of Hometown Foods in tiny Conrad, Iowa announced in 2019 that he was closing the community’s only grocery store, some residents quickly mobilized to buy the business and keep it open. A few of them pooled their money to buy the building; one bought the fixtures; another bought the store’s inventory. They then approached Andy Havens, who owns two small grocery markets in nearby towns, about managing the store. He agreed to do so – and he is now gradually buying out the initial investors.[1]

Like Conrad, a growing number of towns and cities recognize that access to fresh, healthy food is a basic human right – and a civic responsibility. Yet, consolidation in the grocery sector has made it more difficult for independent grocery stores to survive and thrive, which has helped create and exacerbate food deserts. In the face of these challenges, many local governments and communities are finding ways to keep their grocery stores alive or, if they don’t have a full-service grocery store, finding ways to create one. In some places, people and community institutions are pitching in to give a grocery store a boost. In others, residents are coming together and launching grocery co-ops, owned by local residents. And a few local governments are creating a public option by operating grocery stores themselves.


For more information on consolidation in the grocery sector, the predatory encroachment of dollar store chains, the spread of food deserts, and what federal antitrust enforcers should do, check out our dollar store research products.

Community-Assisted Grocery Stores

As in Conrad, some local governments, nonprofit organizations, and residents have chipped in to keep grocery stores open or to create new stores where none exist. Whether by covering some expenses in order to lower operating costs or by jumping in to facilitate an ownership transition, community members have often made the crucial difference in ensuring that healthy food is available.

A high school class in Cody, Nebraska jump-started the town’s Circle C Market in 2008, filling a huge void for the tiny town (population: 167). Nebraska’s Center for Rural Affairs helped the community plan the store and secure start-up funding from the USDA and several foundations. The store is a nonprofit organization, managed by a board of directors; the town government owns the building; a full-time manager oversees day-to-day operations; and high school students staff the store, learning all aspects of the business.[2]

Urban neighborhoods — particularly those with predominantly Black and Latino and lower-income residents — are as likely to be food deserts as small, rural towns and, again, the personal commitment of residents and community institutions can be vital to creating grocery stores and keeping them open. In North Tulsa, for instance, which lost its last full-service grocery store in 2009, a $1.5 million Community Development Block Grant catalyzed an additional $4 million in investment from the Tulsa Economic Development Corporation, the city, and several foundations to create a new grocery store, the Oasis Fresh Market. The store, which opened in 2022, operates as a for-profit business with a nonprofit partner, The Oasis Projects (TOP), which offers classes in cooking, nutrition, financial management, and other needed community services.[3]

Community-assisted grocery stores like Circle C Market are popping up all over the country, in both small towns, like Axtell, Kansas[4] to larger cities, like Waco, Texas, where Jubilee Market was launched by a food bank and operates as a nonprofit.[5] And at least a dozen towns and cities have invested some of their pandemic-era American Rescue Plan Act money to develop, attract, or save local grocery stores.

 

Cooperative Grocery Stores

Co-op grocery stores are membership-based businesses. Community residents buy memberships and, in turn, receive benefits such as product discounts, dividends, and a voice in determining what the co-op sells and how it operates. The greatest benefit, though, is helping ensure that the community has a full-service grocery store.

Co-op stores have been around for a few centuries, but they gained traction in the 1960s and 1970s, when their self-structured business model made them a good fit for the budding natural foods industry. They have now mostly shed their counterculture vibe and are experiencing a big growth spurt, with more than 300 food co-ops now operating in the U.S.[6] Some, like Philadelphia’s Weavers Way, operate multiple stores.

All grocery co-ops are capitalized, at least partially, through paid memberships (although, in all but a handful of instances, anyone can shop there). Many also seek additional donations or investments. Boston’s Dorchester Food Co-op, for example, is using the federal Securities and Exchange Commission’s relatively new Regulation Crowdfunding registration exemption (Reg CF) to invite investment from members of the community. The minimum amount someone can invest is $2,000, and they must agree to keep their money invested in the co-op for at least five years, after which they can sell their ownership shares back to the co-op if they wish. The co-op, which opened in 2023, plans to pay dividends to its shareholders in profitable years.[7]

A growing number of co-op grocery stores also receive some community assistance to defray construction and other start-up costs. In June 2023, for instance, the Mecklenburg Board of County Commissioners earmarked $3 million of its FY2024 budget to help the nonprofit West Boulevard Neighborhood Coalition open a co-op food market in this predominantly Black Charlotte neighborhood that has had no full-service grocery store for 30 years. The new food market, Three Sisters Market, will open in 2024.[8]

 

Publicly Owned Grocery Stores

When other options haven’t panned out, a few local governments have assumed outright ownership of grocery stores themselves. Baldwin Market, in Baldwin, Fla., is a good example. The town’s IGA grocery store closed in 2018, and the mayor’s efforts to recruit a new store fell flat. So, he and the town council decided to open a store itself. The town already owned the building and land, so it just needed to cover the costs of inventory, staff, and some equipment upgrades. The store operates as a for-profit and is gradually paying back the town’s initial investment.[9] There are community-owned grocery stores in at least three Kansas towns (in Caney, Erie,[10] and St. Paul[11]), and local governments in other states are exploring the idea.

Meanwhile, less than a year after Conrad, Iowa community members rescued Hometown Foods, a developer proposed building a Dollar General store on the outskirts of the town. Residents quickly mobilized again, defeating the proposal. A Dollar General had opened a few years earlier in nearby Ackley and, within a year and a half, the town had lost its only grocery store and its only hardware store. Conrad’s residents made sure their town didn’t meet the same fate.[12]


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Notes

[1] Chuck Friend, “Johnson Announces Sale of Conrad Hometown Foods Location,” Times-Republican, December 4, 2019.

[2] Mike Tobias, “The Circle C in Tiny Cody Calls Itself ‘More Than a Store,’ and Here’s Why,” Nebraska Public Media, December 27, 2016.

[3] Gary G. Hamer, AICP, “Partnerships and Federal Funding Build an Oasis in a Food Desert,” Planning Magazine, March 16, 2023.

[4] “A Rural Kansas Community Bands Together to Open a Locally Owned, Full-Service Grocery Store,” IFF, April 24, 2023.

[5] Amal Ahmed, “Market with a Mission: Non-Profit Grocery Stores Help Heal ‘Food Deserts’,” The Guardian, April 3, 2022.

[6] Jon Steinman, Grocery Story: The Promise of Food Co-ops in the Age of Grocery Giants, New Society Publishers, 2022.

[7] Oscar Perry Abello, “How Small Community Investors Helped get a Boston Food Co-op off the Ground,” Next City, July 26, 2022.

[8] Destiniee Jaram, “West Boulevard Corridor to Open a Co-op Grocery Store, Easing the Needs of a Food Desert,” Q City Metro, June 20, 2023.

[9] Beth Reese Cravey, “Baldwin Opens Rare Town-Run Grocery Store to Fill Food Gap,” The Florida Times-Union, September 25, 2019.

[10] Michael Waters, “The Small Town that Saved Its Only Grocery Store – By Buying It,” The Hustle, September 10, 2022.

[11] Janet Shamlian and Alicia Hastey, “Rural Residents Rely on Dwindling Number of Grocery Stores,” CBS Evening News, March 17, 2022.

[12] Interview with Krista Grant, Executive Director of Conrad Chamber Main Street, November 11, 2022.


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Kennedy Smith

Kennedy Smith is a Senior Researcher for the Institute for Local Self-Reliance's Independent Business Initiative. Her work focuses on analyzing the factors threatening independent businesses and developing policy and programmatic tools that communities can use to address these issues and build thriving, equitable local economies.