Grocery store tops many small communities' wish lists

Six months after Victoria's only grocery store shut down, Mayor Tom O'Connor continues to hear from residents mourning its demise and asking if there's any truth to rumors it may reopen.

"I tell people it's beyond our control, that something else could go in there, like a hardware store," O'Connor said. "They say, 'No, please. We want a grocery store.' "

The now-closed Fresh Seasons Market opened in 2009 with the help of city financing, filling a blighted area on Victoria's main drag and supporting other local merchants. Now those dollars — for groceries and other goods — have begun to flow to nearby Chaska, Chanhassen and Waconia.

Grocery stores, something most suburbanites take for granted, are a charged issue for lightly populated communities, where residents regard them as essential but companies see a high risk of failure.

Communities without supermarkets continue to put them at the top of their shopping lists, recognizing their value as economic engines. But getting one isn't easy for small suburbs like Victoria, especially if they're near larger communities with big-box stores.

"It is tough," said Kristi Luger, city manager in Excelsior, where a Kowalski's is being built. It will be the city's first grocery store since the 1980s.

Armed with market studies, East Bethel and Elko New Market are actively in the hunt. Folks in Elko New Market have been asking for one for a decade, according to City Administrator Thomas Terry.

Supermarkets also tend to be good corporate citizens, said Frank Boyles, city manager in Prior Lake. "They let kids from the football team raise money by bagging groceries," he said. "They're the place where you run into your neighbors."

In Victoria, Crossroads Liquor has taken "a bit of a hit" to its business since Fresh Seasons closed, according to owner Paul Schindler. He opened his store across from the supermarket in 2010, choosing the location partly because it was close.

"It brought traffic to town, and that was good thing," he said. "Everyone who has a small business in Victoria has a vested interest in getting that grocery store back online."

Victoria real estate agent Michelle Aspelin agrees. "One of the first questions I get when I show people homes is, 'Where do we go to shop?' " she said.

The city of Farmington, as well as merchants, felt the impact when that community's only grocery store foundered a couple of years ago. Unhappy with its generic merchandise format, shoppers left in droves for stores in Lakeville and Apple Valley.

A subsequent makeover at the supermarket that installed a full-service format and brand-name goods brought grocery shoppers back, boosting sales at surrounding businesses as well as municipal liquor operations, Larson said.

For Elko New Market, the desire for a grocery store is "a quality-of-life issue for our residents," Terry said.

The city recently co-funded a market study with a prospective developer, concluding that it could support a supermarket roughly the size of the Farmington supermarket.

The closest full-service grocery is about 8 miles away in Lakeville and not convenient for Elko's fast-growing population of young families, Terry said. The market study identified three potential sites, some that also could accommodate other retail development.

East Bethel has had a spot picked out for a grocery store at Hwy. 65 and County Road 22 since 2012, said City Administrator Jack Davies. A city market study found that 32,000 cars a day pass through the intersection midway between Blaine and Cambridge.

Northey said having a grocery store has become more important as communities add housing to their downtowns. Excelsior is mostly built-out, but Luger said people move there because of the town's walkability. That feature will be enhanced after Kowalski's opens next spring.

Mike Oase, Kowalski's vice president of operations, said the local chain had been interested in Excelsior for about four years. Even so, Luger said the city might not have gotten the new store had the site's previous owner not stipulated that it be redeveloped with a grocery store. "We were very fortunate," Luger said.

Retail consultant Jim McComb said Kowalski's and Lund's, whose stores are half the size of a Cub Foods, tend to have higher prices but have been able to succeed in smaller upscale communities like Excelsior. "The challenge for a community is the size and demographics of its trade area and matching those with a store it can support," he said.

The ability to compete against larger nearby operators has become more difficult as giant general merchandisers expand their grocery business. McComb said food accounts for more than half the sales at Sam's Club and about one-third at Costco stores.

Robbinsdale, which lost its only supermarket more than a year ago when a Rainbow Foods closed, is taking an alternate route to getting a grocery store. A grass-roots effort is underway to start a co-op.

O'Connor believes the payment is a good investment to help the store reopen. He also said residents have told him they regret not giving Fresh Seasons more business.

"Not enough people went in and spent $150. They'd stop in and buy doughnuts and milk," he said. "I'm reasonably confident it will reopen, and when it does, it will have a different level of support from the community."