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

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.

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

Culinaria Responds To Competition From Fields Foods, Improves Produce Department

When Fields Foods opened in January on the near south side, just south of downtown, those of us who’ve regularly shopped at Culinaria at 9th & Olive were envious of the produce selection. Culinaria also noticed, prompting changes in their produce department.

The selection is still lacking compared to Fields Foods, but greatly improved over what it has been.  Glad to see management is willing to change when a tiny upstart opens not far away. It’ll be interesting to see how both respond when Whole Foods opens in the CWE late next year.

— Steve Patterson

The Indoor Mall No Longer Retail King

In the St. Louis region a number of once bustling malls are gone or are on life support, let’s take a look at some examples.

St. Louis Centre

In the 1980s St. Louis Centre was a briefly-popular mall downtown, now it’s a parking garage with sidewalk-facing retail.

Union Station

Union Station came online at the same time, but the retail aspect faded after a few years.  The new owner plans to use the former retail area for meeting/convention space.

Jamestown Mall

Jamestown Mall in North County is still open, though it was closed twice this winter due to low indoor temperature.

After nearly a three-week closure, Jamestown Mall reopened on Friday.

The mall was shut down on December 20 because parts of the building were not properly heated.

The closure did not affect Macy’s, Sears Tire and Auto Center, JC Penney or Dillard’s. (Fox2)

This mall has been on life support for years, in 2011 there was talk of razing most of the mall and building a New Urbanist village on the site.

Northwest Plaza

Originally built as an outdoor mall, enclosed later, finally closed and is being replaced:

The crowds and stores were long gone. Northwest Plaza, once billed as the world’s largest shopping center, stood decaying at one of the busiest intersections in metro St. Louis, done in by new malls in more upscale areas.

Brothers Robert and P. David Glarner announced plans to buy the mall at Lindbergh Boulevard and St. Charles Rock Road and began seeking tax money for most of the redevelopment costs — nearly $50 million. (stltoday)

The site will be known as The Crossings at Northwest.

River Roads Mall

River Roads Mall was razed but only the edges of the site have seen new development. See Former River Roads Mall Site Vacant, the Few New Buildings Aren’t Pedestrian Friendly

Crestwood Mall

Crestwood Mall, later renamed Crestwood Court, closed in July 2013:

It’s been more than a year since Chicago-based developer Centrum Partners LLC introduced plans to convert the dilapidated Crestwood Court mall into an entertainment plaza.

A couple of barricades and piecemeal auctions of mall fixtures have been the only sign of activity in Centrum’s $121.3 million redevelopment plan. That changes tonight, when the St. Louis area’s oldest mall officially closes its doors to the public for the last time. (stltoday)

As far as I know redevelopment plans have stalled. For a few years the mall spaces were leased for local artists at little to no rent.

West County Center

This mall opened in 1969, blighted & razed in 2001, reopened in 2002. Since then a department store was razed and a new outdoor-focused entry was built that includes restaurants and a bookstore. Inside the original high standards from 2002 have been lowered.

And my childhood mall in Oklahoma City:

Forty years ago today Crossroads Mall opened not far from my house, it was the largest mall in Oklahoma.

When I visited in August 2009 all four anchor department stores had closed and many interior spaces were vacant. In 2010 NPR’s All Things Considered did a story on the mall, using my image with permission. See Why The Fed Owns A Mall In Oklahoma City.

At the time I thought Crossroads was dead. Crossroads was sold and the new owners have renamed it Plaza Mayor at the Crossroads. Their concept is a focus on the hispanic population:

OKLAHOMA CITY, Oklahoma (April 25, 2013) – Something big is happening at Crossroads Mall in Oklahoma City, and it may not be what you think. When new owners, Raptor Properties bought the mall in late 2011, the most likely scenario was complete demolition. Luckily for Oklahoma, this original plan has taken a complete 180, and Raptor has partnered with The Legaspi Company to convert Crossroads Mall into Plaza Mayor at the Crossroads.

The change in paradigm will not attempt to resuscitate this mall into its original form, but rather re-imagine a new vision to take advantage of changing demographics. The partnership has unveiled its new plans to convert Crossroads Mall into the nation’s newest Hispanic cultural and commercial center. This has been a successful model, now seen all over the United States in such markets as Atlanta, Phoenix, Los Angeles and Fort Worth with similar properties.

The driving force behind many of these successful implementations has been California-based realty firm, The Legaspi Company. Raptor Properties has brought that experience and success to Oklahoma by partnering with this firm to oversee the implementation here in Oklahoma City.

Instead of relying on big department stores as the driving force behind traffic, the establishment of a cultural center with weekly programming now becomes one of the first building blocks in bringing families back to the property. This is good news to many cultural and arts organizations constantly struggling to find ways to deliver these types of programs to an under-served population. It is also good news to the Hispanic community seeking opportunities to teach their children more about their cultural heritage. Pilot events since last August have already resulted in a positive response. Each event has produced an average of 2-3 thousand patrons.

Sunday, March 31st, was no exception as the building will be hosted a 10,000-egg Easter Hunt for Hispanic families. The event sponsored by Homeland and Tyler Media was host to over 5000 people. That date also marked the official start of weekly cultural programming, featuring the state’s largest mariachi, Mariachi Orgullo de America.

On March 27th, Raptor announced the acquisition of the building that previously held Dillard’s to house a key element of this new model, the Mercardo. The Mercardo will be a 200+ vendor marketplace designed to serve as a business incubator, offering accessible retail space to a wide variety of products and services.

Other elements that will make the center a new home for Hispanic families will include many commodities focused on the comfort and entertainment of the oldest to the youngest members of these families. Such commodities include increased restroom capacity, increased soft seating including lounges, more restaurants, more play areas and kid’s activities, community services, a health services, financial services, and other non-traditional offerings that would seem out of place in mainstream malls.

Plans unveiled yesterday included architectural rendering of new entrances, a performing arts center, the retail business incubator, and other proposed uses. The hope is that Plaza Mayor will join the list of successful implementations throughout the country, and it is well on its way with 15 new contracts signed since the end of March, and increasing interest from additional national tenants.

From what I’ve seen online this strategy is working. I hope to see in person on a future visit to Oklahoma City.

— Steve Patterson

From Food Desert to Food Oasis, The St. Louis Grocery Market Has Changed

For many years St. Louis’ near south side was a food desert:

Food deserts are defined as urban neighborhoods and rural towns without ready access to fresh, healthy, and affordable food. Instead of supermarkets and grocery stores, these communities may have no food access or are served only by fast food restaurants and convenience stores that offer few healthy, affordable food options. The lack of access contributes to a poor diet and can lead to higher levels of obesity and other diet-related diseases, such as diabetes and heart disease. (USDA)

With the recent opening of the Save-A-Lot in Jefferson Commons and Fields Foods last week, this former food desert is now a food oasis.  St. Louis still has a number of food deserts, but this is slowly changing. Let’s take a look at the near south side.

Jefferson & Lafayette used to have a Foodland, but it closed years ago. On the SE corner an ALDI used to serve the same customer base, but it also closed years ago.  Less value conscious customers have always had to go outside the area for their groceries.  Now the grocery needs of most everyone should be met with two new grocery stores: Save-A-Lot and Fields Foods.

Save-A-Lot

The Save-A-Lot opened in the southern portion of the old Foodland space, now known as Jefferson Commons. I was at the community meeting in May 2012 when it was announced that Save-A-Lot was announced as the grocery store coming to the development, the reaction in the packed gymnasium was mostly disappointment. Save-A-Lot, based in Earth City, is a subsidiary of Minnesota-based SuperValu.

I’m not a huge fan of Save-A-Lot or ALDI’s, but I’m also not too snobby to shop at either, on occasion.  We stopped in to shop at the new Save-A-Lot in December and I was very impressed. Sure, cases of product with the front of the boxes cut off doesn’t make for a special shopping experience. As a label reader, I rarely found an item with a bar code that didn’t contain items I won’t consume (high fructose corn syrup, for example). That said, the fresh greens & other produce was much better than I expected, beautifully displayed at the entry too.

Nice for the immediate area, but nothing to make me hop on a bus every week to shop.

Fields Foods

This new concept is what changes the local grocery market. Years ago downtown developer Craig Heller opened City Grocers to help sell more lofts. Better than nothing, it was an upscale convenience store: limited selection with high prices. When Schnucks opened Culinaria in 2009 Heller wisely shuttered City Grocers.  Fields Foods is also an effort by a real estate developer, Chris Goodson of Gilded-Age, but the similarities end there.

Fields Foods is part of a bigger concept:

The St. Louis Food Hub is a unique social enterprise that distributes, processes and retails foods from local farmers and food producers. Headquartered in the midst of the city’s historic Lafayette Square district, the food hub is a collaborative effort between three businesses that share the same vision.

• Fields Foods is a full-service grocery store specializing in bringing local foods to local shoppers.
• Virtual Food Hub is an online platform where local farmers and those who purchase their products connect to do business.
• Farm to Family Foods is a distributor, processor, and wholesaler of local foods.

Together, these Food Hub companies are pioneering the effort to consolidate a regional food system, setting new benchmarks for food desert remediation and breathing healthy life into urban renewal.

At the opening they talked about opening more Fields Food stores. Perhaps on the near north side?

The Best Choice brand is an affordable line of products from Kansas City based Associated Wholesale Grocers, these products are also available at stores like Save-A-Lot and Straub’s. Fields Foods has a nice salad bar, hot food bar, deli, etc. We were there for the ribbon cutting on Friday and returned on Saturday to shop.

Impact

Fields Foods is larger than Culinaria, so it’s able to offer a wider selection of products. I can see myself taking the short bus ride to shop here once or twice a week.  Others may stop by when driving to/from downtown.

The other store that will be impacted is Local Harvest Grocery, on Morgan Ford at Arsenal. Local Harvest carries a decent selection of organic and local products, Fields Foods will cut into that market. How much isn’t known yet.

When Whole Foods opens at Euclid & West Pine in 2015 it’ll be equal distance to downtown as Fields Foods, so it’ll be interesting to see what happens then. I’ve been frustrated by Culinaria’s selection for years, their recent modifications improved things a bit. Hopefully Fields Foods will be a wake up call to Schnucks that they can’t continue merchandising Culinaria the way they have been.

Future

As mentioned, we still have some areas that are a food desert.  These areas could benefit by having a Fields Foods to provide a source for quality food and employment. I also wonder if the changes in the local market, especially the upcoming Whole Foods, will cause Trader Joe’s to get serious about a location in the city? I don’t like the initial site plan of Midtown Station, but the location would be excellent.

Also, Fields Foods might fail, predicting the grocery market isn’t easy. National chain Wild Oats, before being bought by Whole Foods, opened a second St. Louis area store in Chesterfield.  Despite the affluence of Chesterfield the store failed and closed.  After sitting vacant for a few years, a Trader Joe’s opened in the space.  Local Harvest Grocery opened a 2nd location in Kirkwood in late 2012, but it closed less than a year later.

I think Fields Foods is making a big enough entry into the local grocery scene that some other stores, like Culinaria, will notice. Given the population isn’t increasing, every dollar spent at a new store is a dollar not being spent at an existing store.

I hope Fields Foods propers and opens new locations, each with good pedestrian access.

— Steve Patterson

I Really Wanted a Bowl of Papa FaBarre’s French Onion Soup

The other day I was out taking photos and passed by the Railway Exchange Building that used to have a Macy’s and before that Famous-Barr. It was cold out and I pictured myself inside Papa FaBarre’s having a warm bowl of the French Onion Soup (recipe).

I only are in Papa FaBarre’s a few times, but I had many meals in the St. Louis Room on the 6th floor. The soup was also available there as was a salad bar.

I don’t miss a downtown department store because I’ve never been a fan of the traditional department store retail model. Macy’s closed the downtown store this summer.

For vegetarians that want to make the soup without beef stock here’s a recipe I’ll be making this weekend. No post tomorrow, I’ll be cooking.

— Steve Patterson