Avoiding and addressing grocery store closures in small towns

Not having a local grocery is an all too often experience in rural communities. Understanding the reasons is key to developing strategies to overcome this crippling blow to the economic vitality and longevity in small town America.

Photo credit: Mark Thomas

Photo credit: Mark Thomas

Two prime reasons for closure of any small business are: lack of a suitable succession plan by the owners and, more importantly, a lack of local support. Some owners have a “work until they die” philosophy, others just simply want to close and retire. While this is a simple way out, this action harms the community for many years to come. Still others lack a sufficient balance sheet and/or a sufficiently profitable operating statement to attract a buyer. Not owning the real estate or not having a manageable lease arrangement can be a barrier also. Aging equipment and a lack of up-to-date technology can deter new potential owners as well.

Moreover, a lack of local support (which could be responsible for many of the above statements) should be investigated to determine, “Why did it close?” Operational impairments could include; lack of parking, poor receiving facilities, or an unattractive appearance. Price and choice of products are always front and center in the public eye. Has the owner invested in both the proper inventory so that turnover rates (freshness) are evident?

Surveys can be helpful in determining what the problems were and how they can be overcome. Perhaps a cooperative could be the answer. Forming a steering committee to facilitate this process is necessary. If five members of the community cannot come forward to serve, then most likely the venture is doomed from the start. But, a good sign of a vibrant community with a goal to establish a local grocery store is to have public participation in the process.

Starting with the demographics of the area will help in determining the consumption patterns and values of the local (potential) customers. Using a website like U.S. Census Bureau Fact Finder will help you answer, “How many people live in the area, what is the household size, and how much you would spend at a local store?” Answering the question of why the old one closed can be addressed by asking what needs to be done to garner your business.

Jon Bailey’s paper on, “The rural Grocery Stores: Importance and Challenges”  lists that, “3,252 people are needed to maintain a successful rural grocery store. To overcome the lack of population it is necessary that the community insure full participation by the local shoppers. One example of an ongoing operation has 70 percent of grocery needs being purchased from the local store is in Lorraine Armstrong’s article in Rural Cooperatives May/June 2017.

The cooperative model of ownership creates an environment that fosters community spirit and ties the members to the cooperative through shared responsibilities while enjoying mutual benefits. Having a local grocery store provides a setting for social amenities like meeting others in the community, keeping up property values and promoting a true sense of unified purpose.

Michigan State University Extension educators working with the Michigan State University Product Center Cooperative Development Center assist communities in discovering if a cooperative model could be beneficial for their community.

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