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Last month, Chicago, population 2.7 million, launched a study on the feasibility of opening a municipally-owned grocer to get more fresh foods and spur economic development in a number of mostly low-income neighborhoods.
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Chicago, which has lost six groceries on its South and West sides in the past two years alone, aims to take advantage of a new $20 million state fund designed to address what are known as food deserts across Illinois.
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The departing stores in Chicago have cited poor margins and crime among reasons they have pulled out, prompting the Chicago Tribune’s editorial page to argue that the city won’t have any better luck than savvy national retailers.
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Ameya Pawar, a former Chicago City Council member and now senior adviser at Economic Security Project, a liberal nonprofit that supports things like a guaranteed income, says cities have long run complicated businesses like airports and just because private companies have given up on some parts of the city doesn’t mean the city government should too.
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“A grocery store is a high-volume, low-margin business. We understand that, but it isn’t rocket science,” Pawar said.
ERIE, Kan.—As Chicago studies whether to become the first big city to open a municipally-owned grocery store, it will be looking to places like this city of 1,000 people for tips on how to do it.
At the moment, things aren’t going especially well. Erie Market, which the city took over in 2021, is losing money almost every month amid stiff competition from a Walmart
15 miles away and a Dollar General
across the street. The store has slashed prices, cleared the shelves of expired items and put in a salad bar to try to bring more people through the door.
But leaders aren’t giving up.
“Without a grocery store, what are we going to do? It would kill this small town and it’s hard enough to keep it alive as it is,” said Erie City Council member Jason Thompson, a Republican who owns a trash-hauling business.
Erie is among a handful of cities across the U.S. that have taken over or started up grocery stores as a way to stave off decline and make it easier for residents to get access to fresh foods. All of them are small, but that could soon change.
Last month, Chicago, population 2.7 million, launched a study on the feasibility of opening a municipally-owned grocer to get more fresh foods and spur economic development in a number of mostly low-income neighborhoods.
Chicago, which has lost six groceries on its South and West sides in the past two years alone, aims to take advantage of a new $20 million state fund designed to address what are known as food deserts across Illinois. Studies show that lack of access to fresh foods can have big impacts on health outcomes and rob neighborhoods and entire towns of economic vitality.
The departing stores in Chicago have cited poor margins and crime among reasons they have pulled out, prompting the Chicago Tribune’s editorial page to argue that the city won’t have any better luck than savvy national retailers.
Ameya Pawar, a former Chicago City Council member and now senior adviser at Economic Security Project, a liberal nonprofit that supports things like a guaranteed income, says cities have long run complicated businesses like airports and just because private companies have given up on some parts of the city doesn’t mean the city government should too.
“Communities and people in those communities deserve to survive and thrive. And, you know, that might mean accepting an operating loss for a grocery store,” said Pawar, whose group will be working with the city on the economic feasibility study, including a planned trip to places like Erie to see how things work.
“A grocery store is a high-volume, low-margin business. We understand that, but it isn’t rocket science,” Pawar said.
A fully city-run store like the one in Erie is only one option the study will look at, said Umi Grigsby, Chicago Mayor Brandon Johnson’s chief of policy. The city could also partner with local nonprofits or private grocers, and solutions could look different in different parts of the city. “The goal for us is how the city can fulfill unfilled promises in underserved neighborhoods,” she said.
In Erie, where grain processing is big business and a small park with metal sculptures of dinosaurs is a main attraction, the challenge turned out to be bigger than officials expected.
Less than 10 miles away, the even smaller city of St. Paul, population 600, has run a successful city-owned grocery for about 16 years.
Rick Giefer, who was mayor when the grocery store opened in 2007, said the town hadn’t had a grocery for 20 years and was facing a threat of losing its high school. City leaders thought a grocery would help keep the population in town, and they reasoned that if they could sell water through a municipal entity, they could also sell food.
James Voorhies, who has run St. Paul Supermarket with his wife, Kelly, for about 10 years, says the business supports itself, including paying for new equipment. The city, he says, “really doesn’t have to do anything—they just oversee it.” The high school remains, partly because it was able to switch districts.
Erie isn’t there yet.
When Erie took over its grocery store in 2021, things went fairly well for the first year, said Jamie Janssen, Erie’s city clerk. The store made a profit for five of the first 12 months and lost only $18,000.
But some of the initial enthusiasm for the store, which residents had supported in a poll, started to wane, and as Covid-19 eased, more people started shopping again at the Walmart
in Parsons, about 15 miles away. Erie Market lost $132,000 in 2022, with only one profitable month. The store, across the street from a Dollar General
, also failed to capitalize on its fresh vegetables and meats, letting those sections start to look drab and some merchandise go out of date, Janssen said. The losses have continued this year.
In July, Erie Market’s manager retired, and Janssen volunteered to take over. She worked to beef up the freshness and presentation of the fruits, vegetables and meats. “It makes such a big difference,” she said.
Next, she had the staff deeply discount or toss older products on the shelves—leaving some looking bare, but giving customers more confidence in what they were buying. She started advertising discounted specials on Facebook, like a batch of ice cream she accidentally overordered in the summer and Hostess snack cakes as lunchbox stuffers going into fall.
She worked with her wholesaler to cut the margin on all 4,000 products in the store to around 15% from around 30% in August, hoping to boost revenue with more volume. After polling customers for ideas, she added a salad bar. “It’s been a big hit,” she said.
She also plans to move the soda machine out from behind the meat counter, so customers can pour their own drinks, easing lines on busy lunch days like Taco Tuesday.
“We’re doing everything we can to bring people through the door,” she said.
Janssen said the goal is to narrow losses to under $100,000 this year—out of the city’s total budget of $6 million—and keep improving from there.
Meantime, customers like LeNoir Rowland, an 85-year-old retired local teacher, do their regular shopping at the store and go to the Walmart only for things like toilet paper. She stopped in recently for fresh meat, strawberries, a bagged salad, milk, a pumpkin and vanilla ice cream, which she shares with her dog, Max.
“I think it can be very successful,” she said. “Right now it’s kind of a stocking problem, but it takes time.”
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