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Economy & Business

Strong customer base, profit continue to elude food co-op in Old North neighborhood

This article first appeared in the St. Louis Beacon, March 25, 2013 - In spite of the Saturday morning chill, customers began lining up early in front of Crown Candy Kitchen, 1401 St. Louis Ave., awaiting turns to enter the crowded eatery, known for its sundaes, assorted chocolates and "heart stopping BLT" sandwiches.

The crowd there was in contrast to the absence of people a block away at another store that should have been full: the Old North Grocery Co-op. But business there continues to be weak, stirring fears among some that the store might be forced to close its doors by summer. Others are hoping that a combination of aggressive marketing to attract more customers and recruit more volunteers will help the store survive.

The co-op opened its doors in the summer of 2010, with city and state officials pointing to the store as one good response to the food desert issue on the north side. While trying to develop a customer base, the co-op has relied heavily on an initial grant from the Missouri Foundation for Health. Adding more customers has become more urgent because the grant ran out late last year.

The customer base stands at about 200. To join the co-op, members are required to buy an equity share for $10 and pay an annual fee based on a sliding scale. The normal cost of the annual fee is $70, but students and seniors pay $40, while low income residents pay $5.

Looking through receipts from the preceding week, co-op manager Jillian Whitman said the store generated at least $1,300 in sales.

"It’s not enough," she said, estimating that the store needs to take in about $5,000 a week to become viable. Part of the problem, she says, is that her staff of two part-time workers is too small for her to have time to do a better job marketing the co-op to residents in the Old North area.

Whitman says bringing in more volunteers would help free her time to do more to market the store. It is open from 9 a.m. to 3 p.m. on Saturdays and Sundays, and noon till 7 p.m. on weekdays. The store began having Sunday hours about two weeks ago.

Last Saturday morning, part-time worker Joe Ploch had plenty of time to talk because the store was virtually empty. He says pricing is a big issue. "We can compete on produce," he says, pointing to prices of fresh vegetables. But the store’s prices are no match for some other goods. "Our cereal sell for $3 or $4 a box, and that’s not competitive with store brands."

He says that the store has less overhead and tries to keep prices as low as possible, but that some residents might not understand the co-op concept and understand that "we are not trying to fleece the neighborhood."

He adds that marketing and image are other challenges the co-op hasn’t addressed, mentioning instances where African American from the area stick their necks in the door as if to ask if the store is open to everyone. Another issue that’s a drawback is that the store doesn’t stock many products that fall into the junk food category.

"We don’t carry a lot of it," Ploch says, then wonders out loud whether that well-meaning policy is a good one, given the habits and tastes of potential customers. He says the health-food focus is "well-intentioned, but it’s really not paying the bill."

He says the other side of the argument in broadening the types of items the store stocks is the fact that many people turn to less healthy food choices because they might work two jobs and don’t have time to prepare food from scratch.

"In addition, there isn’t a whole lot of population density around here, so you have to work harder to get people to come here," he said. He added that more effort is being made to find out what kind of items people would like to see in the store.

Some residents in some of the neat two-story brick apartments that make up the Murphy Park neighborhood to the south have pretty strong opinions about the co-op.

Identifying area convenience stores by the ethnicity of their owners, Marian Henderson said even those shops are cheaper, folding her sweatered arms against the cold as she stood outside of her apartment near 20th and Madison streets. 

As for the co-op, she said, "I’ve only shopped there once because they aren’t open that much."

Although it is part of the Old North Restoration Group, the co-op is an independent entity with its own board.  Old North executive director SeanThomas is confident the store will survive. The store’s challenge of generating a profit is no different from that of other new businesses, he said.

"I am convinced that there are enough customers who live within a close distance and if the store has enough supplies on the shelves and affordably priced, this store should be able to sustain itself. The other challenge the store has is continuous marketing, not just a one time thing."

Whitman, the co-op manager, echoes that comment. She said time and resources to sustain an effective marketing campaign are key reasons the store has yet to become economically viable.

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