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Some Possible Reasons Why the North Grand Schnucks Didn’t Make a Profit

April 17, 2014 Featured, North City, Retail 30 Comments

Local grocery store chain Schnucks made a big announcement on Monday regarding a store they acquired in their 1995 purchase of the National chain:

Next month, the region’s leading grocer will have only one store in the city north of Delmar Boulevard.

The Maryland Heights-based company announced Monday it is closing its grocery at North Grand Boulevard and Kossuth Avenue, effective 6 p.m. May 10. (stltoday)

Here is the press release:

ST. LOUIS – Leaders of Schnuck Markets, Inc. today announced they will not renew the lease on the Grand and Kossuth Store (4127 N. Grand, 63107) in north St. Louis. The store will close permanently at 6 p.m. on Saturday, May 10. No jobs will be lost; all 65 teammates will be transferred to nearby Schnucks stores.

According to Schnucks President and CEO Todd Schnuck, the 28,000-square-foot store has consistently operated in the red since it was purchased as part of the 1995 National acquisition. “Closing any store is a difficult decision particularly when we have invested so substantially in the 45-year-old facility including a $200,000 Pharmacy remodel just one year ago. Nothing we’ve done has helped improve the store’s performance.”

“Store Manager Roger Hines and Co-Manager Sharon Evans lead an experienced and dedicated team. Yet despite their best efforts and strong rapport with customers, the store continues to lose money,” Schnuck said. “While customers appreciate the offering we bring to the neighborhood, sales at this store will not offset needed repairs, escalating labor, utility and insurance costs.”

Currently, operating a total of nine stores within the city limits (including Grand and Kossuth), Schnucks continues to demonstrate its commitment to city residents. “In this particular location, we are challenged by lack of population growth and the opportunity to attract new customers,” said Schnuck. “We thank our customers and community partners for their support over the years and we will continue to look for more ways in which to deliver needed services to our customers in St. Louis City.”

Schnuck says that should the landlord entice another grocer to the site, Schnucks would leave the majority of the store’s fixtures in place. In the meantime, the company will start a sell down of goods prior to the May 10 close.

Pharmacy customers may continue to have their prescriptions filled through May 10. Additional information will be provided prior to the close.

Founded in St. Louis in 1939, Schnuck Markets, Inc. operates 101 stores (including Grand and Kossuth) and 95 in-store pharmacies in Missouri, Illinois, Indiana, Wisconsin and Iowa.

# # #

I’d been by this store numerous times, when it was a National I lived not far away in Old North St. Louis, but I’d never been inside. So the day after the announcement I boarded the #41 MetroBus, which stops on Kossuth right next to the store property.   Between downtown (14th & Washington) and the Schnucks a couple of passengers boarded the bus that got off at the Kossuth & Grand stop to do their grocery shopping.   Let’s take a critical look at this store to see why they couldn’t attract new customers.

View from the Kossuth bus stop
View from the Kossuth bus stop, a beauty supply &  laundromat are next door
Looking toward Grand from the front of a building on the same property
Looking toward Grand from the front of a building on the same property, a #70 MetroBus is in the background
The laundromat attached to the Schnucks
The laundromat attached to the Schnucks
Once at the Schnucks access to the south entranced is blocked by the carts
Once at the Schnucks access to the south entranced is blocked by the carts
The view from Grand
The view from Grand
The separation between the Grand sidewalk and the parking lot is almost nonexistent
The separation between the Grand sidewalk and the parking lot is almost nonexistent
The north entrance is close to Lee Ave but a dish-drainer type bike rack blocks direct access
The north entrance is close to Lee Ave but a dish-drainer type bike rack blocks direct access
The entry is just as impressive as the rest of the exterior
The entry is just as impressive as the rest of the exterior
Immediately you get the idea this Schnucks wants to be an ALDI or Save-A-Lot.
Immediately you get the idea this Schnucks wants to be an ALDI or Save-A-Lot.
The fresh produce dept, including greens,  was very nice though
The fresh produce dept, including greens, was very nice though
The pharmacy that was recently added or updated.
The pharmacy that was recently added or updated.
Throughout the store ceiling times were missing or water stained.
Throughout the store ceiling times were missing or water stained.

Now you’ve seen the store, inside and out. Think anyone goes out of their way to shop here? Nope! Anyone pass other grocery stores on the way home from work shop here? Nope! Those who live near this Schnucks likely shop elsewhere if they have a car or access to another bus route.

An ALDI is located  just the other side of Fairgrounds Park, it was built in 1999, the Schnucks was built in 1968. Those who use the #70 route can just as easily go to the much nicer ALDI. Those who drive likely pass other grocery stores on the drive home from work, so they have nicer options. I worked at Union near I-70 when the Schnucks at Union & Natural Bridge opened in 1998, I’d go by sometimes at lunch to get a salad.

The Kossuth Schnucks lacks profitable departments like salad/olive bars, deli, prepared foods, floral, etc. The store is only 28,000 sq ft, about half of most newer Schnucks, but larger than the 21,000 sq ft Culinaria store downtown that has all those departments. A ALDIs doesn’t have prepared foods, floral, etc and manage with 17,000 sq ft stores, but their model is very different from Schnucks.

And hours is another big difference. The Schnucks at Union & Natural Bridge is open, like many Schnucks, from 6am-midnight every day. This allows customers to shop before or after work. The Kossuth store hours have been “Mon-Sat 7am-9pm, Sun 8am-8pm” which means many can’t shop there even if they wanted to.

Is Schnucks the bad guy here? For the most part, no. Schnucks doesn’t own the property, they’re a tenant.

The North Grand building is owned by Marvin Holdings LLC, which lists Mishaal Taqui as its organizer. It acquired the building in the fourth quarter of 2013 and offered to do about $100,000 in roof repairs, said Taqui’s spokesman, Glenn Jamboretz.

Taqui wanted a multiyear lease from the retailer and a small rent increase to offset the cost of the repairs. It had been renting the building year-to-year for about $6,100 a month, Jamboretz said. A sales incentive clause sometimes bumped that monthly payment up to around $6,500.

Schnucks said no thanks to the multiyear lease, and soon after, announced it would close. (stltoday)

The closure of this store will leave a void on the market, the Schnucks carries products the nearby ALDI simply doesn’t stock. Those who get their prescriptions here will need to find another pharmacy, perhaps the Schnucks at Union & Natural Bridge. I can imagine some who are transit-dependant moving closer to another grocery store or a different bus line. The landlord will need to do lots of work to attract a quality store, even then it doesn’t seem likely.

The site is ideal for a 3-5 story urban building with 100,000 sq ft of ground floor retail, much of which could be a grocery store. I’d like to see local upstart Fields Foods consider such a store.

— Steve Patterson

  • Fozzie

    Bike racks and ill-placed sidewalks are the cause of commercial failure in north St. Louis?!?
    Your conclusion that a developer should build a 3- to 5-story building where no demand for density exists comically ignores common sense.

    • Douglas Charles Duckworth

      Blacks can take the bus / drive to South Saint Louis or The County. Due to divestment they’ve been doing that for a few decades. Maybe then they will actually move out as well thus making land cheaper on the North Side.

      Wonder who benefits from that scenario? Hmm…

    • http://urbanreviewstl.com/ Steve Patterson

      I was demonstrating the unappealing nature of the design, the Schnucks at Union & Natural Bridge lacks these negatives.
      As I noted, the entry feels risky and the interior is missing many ceiling tiles because of a leaking roof.
      They all add up to a negative shopping experience.

  • b.j.

    You have made some great points regarding building condition. Just wish the local media would have pointed those out. Reminds me of similar complaints over the Lindell store as to why people would drive out of their way to avoid shopping there.

    • http://urbanreviewstl.com/ Steve Patterson

      Thanks. Yes, the place is a dump. Schnucks doesn’t own it. Even if the new owner fixed the roof it’d still be an ugly store.

  • JZ71

    It’s simple – no/not enough profit = store closes.

    Too small, water leaks, “ugly” may have contributed, but daily revenues are the real criteria. Culinaria and here may be the same size, but I can guarantee you that revenues at Culinaria are higher.

    As for the “stopping on the way home from work”, most people choose to stop either close to home or close to work, not half way in between. For the people who live around here, they voted with their feet. spending more of their money at the nearby dollar stores and Aldi’s, and not at Schnuck’s – and money talks.

    • http://urbanreviewstl.com/ Steve Patterson

      The reasons people decided to shop elsewhere is because those with options wanted a better experience for the same cost. Shopping on the way home might mean a store right by work or somewhere along the drive, it doesn’t matter where.

      • Greg

        Considering that many in North St. Louis do not have high mobility (i.e. their own car) and rely on public transit, I sincerely doubt the majority of the people near this store shop elsewhere. The true problem is the lack of population density in the area and the lower average income. People aren’t buying the higher margin items that can make a store profitable in a more affluent area. Realize that — nationwide — the average profit margin of a supermarket is 2-3%.

    • moe

      I once took over a cafeteria with a ceiling that looked just as bad, if not worse. I called maintenance and asked them to be replaced. Came in 2 days later, not only were the stained tiles replaced, but they replaced the entire ceiling so it matched. When I asked why it was never fixed in the first place….No one ever asked.

      • http://urbanreviewstl.com/ Steve Patterson

        It wasn’t raining on the day I was there, but putting new ceiling tikes tiles up when the roof leaks is a huge waste of money (material & labor).

  • JZ71

    The other half of the equation is that the building needs $100,000 in roof repairs and Schnuck’s is only willing / able to pay $6100-$6500 a month in rent. At that rate, ALL rent for the next 15-16 months would be going to pay for a new roof, leaving nothing for ANY other maintenance or improvements, much less a ROI for the landlord. Or, to put it another way, they’re only paying $2.61-$2.79 per square foot, probably triple net, now, which is what a lot of warehouse space goes for. Much like Schnuck’s, the landlord is in business to make money, and he/they need to choose between a tenant that doesn’t pay much rent versus waiting for one that will . . . .

    • http://urbanreviewstl.com/ Steve Patterson

      Exactly, to make this an attractive location the owner needs to spend at least $500,000. Schnucks usually doesn’t rent from others, they have their DESCO company to develop stores/shopping centers.

      • JZ71

        Unfortunately, to make this “an attractive location”, the location, itself, would have to change. The demographics of the surrounding neighborhood are a bigger challenge than the physical state of the structure. Any time a neighborhood is perceived to be “scary”, it’s going to be very difficult to attract shoppers from outside the neighborhood, especially for something as mundane as a grocery store.

        • http://urbanreviewstl.com/ Steve Patterson

          It doesn’t need to attract shoppers from more than a mile away. Those who live in the area are the demographics!

  • guest

    What is the point of this discussion?

  • Eric

    It is breathtaking how out of touch this piece is. The Schnucks failed because it’s located in a high-crime, impoverished area of rapidly declining population. Not because it was missing bows and ribbons on its facade. I’m sorry to be crude, but maybe if Steve had a job or family then he might be more aware of the pressures that the vast majority of customers face, particularly in North City, which drive their choices to a much greater degree than do aesthetics.

    • http://urbanreviewstl.com/ Steve Patterson

      You’re wrong, other grocery stores are in similar neighborhoods and survive. An ALDI is located just across Fairgrounds Park, it can be seen from the Schnucks parking lot.
      Given the same prices and selection, why would someone drive past this Schnucks to shop elsewhere? The experience is different and that’s largely based on condition (aesthetics).

      • Greg

        Except most of the people who live near this store CAN’T “drive past this Schnucks” because they don’t own a car.

        This comment is spot on: “The Schnucks failed because it’s located in a high-crime, impoverished area of rapidly declining population.”

        Aldi’s can survive because they are a lower cost operation compared to Schnucks — and have lower prices for shoppers.

        • http://urbanreviewstl.com/ Steve Patterson

          You’re wrong, most do in fact have access to a car. Look at the pics, cars in the parking lot. Spend anytime in north St. Louis and you’ll see that just like everywhere else most people do have a car.
          But, a much higher percentage don’t. As I indicated in the post, these are the people who’ll be impacted the most. Those who walk or take the #41 will suffer, at least until they can 1) move 2) get a car 3) another stores opens in this location.

          • JZ71

            No, they will still have Aldi’s (3616 Natural Bridge, 0.37 mile), Family Dollar (4314 N. Grand, 0.2 mile/3 blocks) and Dollar General (4038 N. Grand, 0.1 mile/1 block) all within walking distance. No, they won’t have the same selection that Schnuck’s offers, but no one is going to starve, either. Remember, the reason Schnuck’s is closing, and the others remain open, is that the local residents have voted with their dollars, and Schnuck’s didn’t get enough votes / business!

          • Douglas Charles Duckworth

            How do you know no one is going to starve? Are you in their situation? Do you often shop at Aldi, Family Dollar, or Dollar General? They sell unhealthy products which I suppose is okay from the perspective of someone who has many choices. Let them eat cake!

            Local residents voted with their dollars? Not really. Poor residents were abandoned by the market which clearly does function properly.

            Food Deserts are a violation of basic human rights. You complain about North Side crime yet do not seem to understand the situation which poor people face daily. Rebuilding this store and offering affordable healthy food options would go a long way towards helping people who are in need. It’s not some pie in the sky BS plan like NorthSide Degeneration either.

            Why does STL government subsidize downtown retail developments for affluent loft developers who have high mobility yet ignore the needs of those without means? Maybe because the Slay administration is hostile to poor African American North Side residents.

          • Joseph Stalin

            Of course it racism…What a red herring! Get a clue. What you are espousing makes no sense business-wise. Companies must make a profit. The government has no place forcing a company to stay at a money losing location AND slash prices so customers feel they can afford it. It makes ZERO sense.

            The reason they are closing is no one shops there and it isn’t profitable. If they don’t want to sink money into a sinking ship, that is their prerogative.

            Now Aldi’s actually has a wealth of nutritious food and their produce is all local. I live 5 minutes from a Schnucks and drive 30 minutes to go to Aldis because the quality of their produce/meat is better than Schnucks and cheaper. They even offer organic options. Try comparing the nutritious value / taste / cost of food at Aldi’s and Schnucks. Aldi’s blows Schnucks away because it is 30% cheaper, tastes just as good if not better, and is the same nutrition-wise. Stop being a fool. In today’s economy, value is vital. Aldis realized that long ago and optimized their operation to offer great value. Schnucks and Dierberg’s are much smaller regional presences and unless they learn to compete, they will closing more locations.

            You show your ignorance when you make such silly statements about human-rights violations in regard to this story.

          • moe

            Douglas, I rarely come back to this site anymore…it’s not worth it. You are correct and I find it so rare that I agree with some of your views that I decided to comment. This site has become nothing but “I’ll tell you how it should be done and you’re wrong if you don’t”, “everyone should shop local except for me” and full of racism and bigotry. The moderator and reader’s approach of “let them hang themselves” is blatant approval when posters comment calling the homeless animals and roaches and not calling them out on it.
            Your “Let them eat cake” is just another extension of this and is right on spot. 99% of these commenters and Steve would barely live a day if they TRULY understood and LIVED in a food desert. Reading a few articles is NOT living it. They find it acceptable to damn someone for having a diet of chips instead of learning what its like to haul a week’s worth of groceries home from the store by hand in the rain by walking as they would have the least of our neighbors do.

          • Sgt Stadanko

            i am stating my opinion, which is shared by many. i may not be politically correct, years of dealing with the public has made this tough ol’ bird callus, but if you had to deal with some of these panhandlers on a daily basis, witnessed one defecting on a public sidewalk, calling a woman the most filthy name you can call one – just because she didn’t give him ‘spare change’… calling them what i call them is justified. steve provides a forum for opinions and just because you don’t like what i have to say, you take it out on him. where do you live and what do you do for a living? i would be surprised if you are a loft owner downtown at ground zero of where these indigents terrorize the people spending dollars and keeping the downtown economy going. over and out, Sarge

          • JZ71

            Actually, Aldi’s is one of one of my “go-to” choices when I shop. Have you, Doug, ever even been in one? They do a great job of covering the basics, including fresh meats and vegetables. Where they are different from Schnuck’s and Dierberg’s is that the vast majority of what they offer is “private label” / “generic” stuff, stuff that isn’t advertised on the TV. But taste- and quality-wise, I find them to be comparable to, and many times, superior to the “big boys”.

            You assert that “the Slay administration is hostile to the poor”. What do you expect “the government” to do, with our tax dollars, to convince Schnuck’s to stay open, here? Subsidize their rent? Give them a direct subsidy? Pay for a full-time police presence? Eliminate / rebate the taxes they generate and pay here? This was a successful business for several decades – what changed? Two big things – the demographics of the neighborhood and the competition. 10-15 years ago, there were no Aldi’s, Family Dollar or Dollar General nearby – those dollars likely went to Schnuck’s or National. Should the city tell the new competitors that they can’t open? That local residents must continue to shop only at the existing businesses?! The new guys came in with lower prices (something that most poor people DO appreciate) and the local residents CHOSE to spend their money at the competition.

            I agree, food deserts are a problem in any community, especially poor ones. But I do not agree that we have one here. You may not be able to find smoked paprika, smoked gouda or kiwis at the stores that will be left, but you will be able to find good food at good prices – prices that are probably less than Schnuck’s charged for the same items. If you view that as “unfair”, so be it, but much like playing the race card, playing the food desert card, when one doesn’t exist, just discredits your larger argument. You state “Local residents voted with their dollars? Not really. Poor residents were abandoned by the market which clearly does function properly.” Here is a perfect example of “the market” in action – cheaper competitors came in and customers with limited dollars chose to spend them where they would stretch the farthest!

          • http://urbanreviewstl.com/ Steve Patterson

            You say “no” in reply to my comment then seem to agree with me. I’m saying those with cars (most) have or will shop elsewhere.
            Those who use the #41, or walk to this store, will struggle — they’ll need to walk further if they can, take 2 buses, shop at convenience stores, or move.

          • JZ71

            This sums up why the store is closing: “I’d been by this store numerous times, when it was a National I lived not far away in Old North St. Louis, but I’d never been inside.” Retail does not survive when people say that they’ve “been by this store numerous times . . . but I’[ve] never been inside”, retail survives ONLY when they have customers – good intentions do not count! Retail also adjusts to the surrounding neighborhoods and their economic priorities. as long as people need groceries, have the money to spend on groceries AND spend their money in the neighborhood, SOMEOME will meet that need and desire. It may not be Schnuck’s, it may note be Aldi’s, it may not even be Save A Lot or Dollar General, but if there’s demend, that demand will be met. But much like Left Bank Books closing their downtown location, it always boils down to real revenues, not good intentions . . . .

          • http://urbanreviewstl.com/ Steve Patterson

            Yes, like I’ve been saying those with cars can easily shop elsewhere. When I lived in Old North I was pretty close but just as close was the National store on Cass, Schnucks closed that years ago. It was razed for the new alignment of Tucker.

            The Left Bank is very different though, it’s a very nice store. I like it much better than their original in the CWE. I’ve purchased items there, and attended events. Not everyone needs to buy books, everyone needs groceries.

    • http://urbanreviewstl.com/ Steve Patterson

      Furthermore, my fiancé and I have to budget carefully to meet our monthly obligations. Living on a fixed income + low wages isn’t a life of luxury!

  • Eli Williams

    Ok. I live a half block from the Culinaria downtown. Do I shop there, NO! It has beautiful aesthetics, The store is very clean, and the employees are generally very nice. So I should be shopping there right? The prices are astronomical. Even higher than the former Kossuth Schnucks, whose prices i felt were high as well, and I’ve been there on several occasions. The store was not clean. It had a strong odor, which was probably from a leaky roof. And the panhandlers don’t help. And yes there are some questionable folks I’ve seen around this location. So I didn’t shop here either. Having a neighborhood grocer is excellent when you don’t have transportation. I most certainly agree. But most of the folks on the North Side have survived much worse, and I don’t believe any one will starve, because this Schnucks is gone. I believe the North Side will do what it has always done. Adapt. All of these folks crying racism are driving me nuts. Why? Because its our own fault. Mr. Duckworth talks about “Poor African American North Side residents”. If i lived on the North Side, I would be livid. Because that’s demeaning. But more importantly, I go on the north side quite often and what i see disturbs me more. Dropout Rates are High. Crime is High. Teenage Pregnancies are high. Unemployment is high. But Why? You look at the what and blame Mayor Slay. I don’t ever remember Mayor Slay to tell any young African American Male, to watch BET, crave that life, drop out of school cause he cant get high and go to school, get a few girls in the “hood” pregnant, because that what his “role Models aka known as BET” tell him is the good life, and then don’t go to work because you cant pass a UA, and you don’t have a diploma. The government didn’t create this problem and the government can’t fix it. We as African Americans need to start taking a more active role in parenting and raising our children. So we don’t create more of the problem. There are residents on the North Side, some are well educated, some are not poor, some are not ghetto, and have children who are becoming excellent young men and women. We never hear about them. We’ve spent months talking a bout a store closure, But how many of people talking have become an effective role model to an at risk youth, so they wont go to BET for a role model. So in essence the real problem IS NOT Schnucks; its the neighborhoods we’ve allowed to be created that created this problem demographic. Lives do not come with remotes, You have to get Up and change them. Stop Talking and Start Doing.

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