How Can Rural Grocery Stores Survive?

From Minnesota Alumni Magazine Summer 2016

The U is working with grocers to figure that out.

By Greg Breining

Photo: Tom Bislow of T.J.’s Country Corner in Mahtowa. Tom and his wife, Joanne, founded the store nearly 40 years ago and specialize in homemade sausage. Their motto is “Our wurst is best.” - Photo: Mark Luinenburg

Squeezed by thin profit margins and competition from big discount stores, small-town grocers are threatened with extinction. According to a new University of Minnesota survey, 62 percent of rural grocers intend to exit the business within 10 years. Most of them do not plan to pass their stores to heirs and have limited prospects for selling their businesses.

The result may be the continuing loss of grocery stores through much of rural Minnesota, says Kathy Draeger (B.S. ’89, M.S. ’93, Ph.D. ’01), statewide director of the University Extension Service’s Regional Partnerships, which conducted the survey. That would leave the rural poor and elderly who can’t drive without access to fresh food—and small towns with one less vital social hub. “You lose these community assets at your peril,” says Draeger. “Once a grocery store is gone, it is really hard to get it reopened.”

The University’s keen interest in small-town grocers began with a bus ride to Manhattan, Kansas, for the Rural Grocery Summit in 2014, says Karen Lanthier, the Extension Service’s assistant director for its Sustainable Local Foods program. “That bus trip down to the summit was a really great opportunity for our staff to better understand some of the challenges that rural grocers were facing.”

Most small-town grocers are privately owned “mom-and-pop” stores, says Draeger. Nearly half occupy buildings more than 50 years old, with aging coolers and other infrastructure. More than one-quarter have customers who live more than 30 miles away.

Rural grocers are fighting a pervasive trend. A study by the Federal Reserve Bank and Wilder Research released in April underscores how severe the problem is: Minnesota ranks seventh worst in the nation for the share of its residents with no grocery options close to their home. That's about one-third of the population, with rural and poor urban areas hardest hit—and it’s getting worse.

“The changing of agriculture over the last generation and a half has contributed to rural depopulation. I think that’s part of why we are seeing fewer grocery stores,” says Draeger. As farm population shrinks, rural residents drive farther. Many who live in small towns work in regional centers such as Alexandria, Austin, or Grand Rapids and take their shopping dollars with them.

“They pick up their groceries there rather than shopping at their hometown grocery store,” says Draeger. Between 2000 and 2013, Greater Minnesota lost 14 percent of its grocery stores, according to the Center for Rural Policy and Development in Mankato. The greatest losses occurred in northwestern and northeastern Minnesota.

Small grocers and communities are trying various strategies to keep the local grocery viable. “One grocer I know has a table at the front, and his store is the meeting and the gathering place for the community, especially for the older folks,” says Lanthier. Some stores have built their business by catering to burgeoning immigrant groups. Bergen’s Prairie Market in Milan specializes in Norwegian and Micronesian specialties—from fish balls for Norwegian farmers to octopus for a growing South Seas islander population.

Extension’s Regional Partnerships recently conducted produce handling, storage, and display workshops in five rural groceries. They also created a quick guide to produce, says Draeger, “like a cheat sheet on a magnet that sticks right on your produce case so you can see—kale needs to be misted, asparagus needs to be set in water, don’t put your potatoes in the sunshine.”

They’re also trying to identify hurdles that might stand in the way of bringing fresh food directly from farm to grocery stores and markets. “Our hope is that we can find the information and the places where we can start building that farm-to-rural grocery,” says Draeger.

Draeger, who lives in Big Stone County in far western Minnesota, isn’t ready to surrender to the big box discount grocery stores. “At this point, I’m still on the front line of keeping our rural grocery stores vital. The best thing we can do is keep the grocery stores that we do have.”

MINNESOTA ALUMNI MAGAZINE, Summer2016

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