Scuttlebiz: Different grocery stores close for the same reason


Pop quiz time. Which grocery store is most likely to go out of business?


A) A nearly brand-new upscale market in a high-traffic “lifestyle center” at the nexus of two major thoroughfares

B) A 30-year-old traditional supermarket serving a mostly lower-income clientele in the heart of an urban neighborhood

C) All of the above

In Augusta, the correct answer is “C.”

This past week, Whole Foods Market Inc. announced the shuttering of its 2-year-old store in the Washington Crossing shopping center on Washington Road at Interstate 20. Just a week earlier, Kroger Co. announced it would shutter its longtime location on 15th Street near downtown Augusta.

Whole Foods’ last day is Feb. 22; Kroger’s is Feb. 28. While both stores appeared to have a loyal – albeit demographically divergent – customer base, neither was large enough to allow the stores to keep the lights on.

In the case of the much-older Kroger store, the Cincinnati-based grocer’s Atlanta district leadership decided it was finally time to issue a do-not-resuscitate order on the 40,000-square-foot location whose financial health had been deteriorating for years.

I strongly suspect it was the company’s altruism, not its earnings, that kept the Central Square shopping center store open as long as it was. As far as grocery companies go, Kroger has been a great corporate citizen in metro Augusta. And its downtown store is widely known as the only full-service market in a nearly 2-mile radius of urban Augusta.

Despite its lackluster performance, the company likely felt community pressure to keep the store open, just as the property’s owner – the MCG Foundation – feels pressure to replace Kroger with another supermarket to ensure inner-city Augusta doesn’t become a “food desert.”

That’s why a grocery store already is part of the foundation’s long-term redevelopment plans, which aim to turn the property into a more attractive gateway for Augusta University’s Health Sciences Campus. Central Square became part of the foundation’s portfolio when the estate of Augusta radio magnate George Weiss gifted the property in 1997.

The shopping center’s main problem is that business falls off substantially once the sun sets and most central business district workers head home to the suburbs. In an industry where profit margins already are razor thin, a dearth in evening traffic would pose a problem for any supermarket. It’s also no surprise that many downtown dwellers would rather take a quick drive across the border to “nicer” stores in North Augusta.

Had the foundation not kept Kroger’s short-term lease fixed at the 1980s-era price of $6 a square foot (the average U.S. urban retail rent is more than three times higher, data firm CoStar says) the store likely would have folded years ago.

You can be sure Whole Foods was paying much more than $6 a square foot for its 41,000-square-foot space at Washington Crossing. Lease rates at that center aren’t available, since Whole Foods is technically its first vacancy since it underwent massive renovations more than two years ago.

But at the Washington Walk shopping center just down the street – a development that also has been recently expanded and renovated – small storefront spaces are going for $32 a square foot.

So as much as the sustainability-obsessed, community-minded Whole Foods would have liked to keep the doors open in Augusta, it was forced to close for essentially the same reason as Kroger: Not enough customers.

The Austin, Texas-based company’s same-store sales have been slipping in recent quarters, and the Augusta store was among nine it chose to put on the chopping block last week. One doesn’t need an MBA to surmise that if Augusta had been a stellar performer, No. 9 would have been in some other city.

One final point to ponder: Both stores might have been victims of poor timing.

It’s possible Whole Foods simply wasn’t around long enough to gain traction in the market. I believe that had the store opened in 2004 – when the whole organic food movement was beginning to take off – instead of 2014, it would be one of its upscale competitors, either The Fresh Market or EarthFare, closing its doors instead (not that I would wish that on either company, just to be clear).

Conversely, I believe that if Kroger had opened a downtown store a few years from now, instead of 30 years ago, its sales would be buoyed by the college students and middle-class millennials who are increasingly populating urban Augusta.

So until the central business district gets a new grocery store – which is something downtown development officials say they constantly target – inner city Augusta will remain a food desert. At least from a grocery standpoint.

RESTAURANTS, ON THE OTHER HAND: The Downtown Development Authority says it is continuing to work with a “fast casual” chain on a downtown location. Executive Director Margaret Woodard told board members this past week that an announcement could come in as soon as three to four months. Stay tuned.

FIRED UP ABOUT DOWNTOWN: Last week I mentioned the recent opening of the Olde Town Diner, the eatery in the Greene Street building formerly occupied by the Whistle Stop Cafe, which was gutted by a fire in 2011. Olde Town Diner’s owner Fred Daitch, better known for his International Uniform business, called to let me know he’s working on securing a tenant for his building at 1243 Broad St., which was recently vacated by Escape Outdoors.

Daitch said he is bullish on downtown and has been aggressively buying vacant commercial and residential properties throughout the central business district. He says he currently has five properties under contract.

“I can’t stand to see boarded-up buildings,” he said.

Which is why he purchased the old Whistle Stop Cafe building. Daitch says he struck up a casual conversation with the former owner, Hanson Carter, during a downtown event and ended up writing him a check on the spot for the building at 573 Greene St.

But the deal Daitch though was a steal nearly made him squeal. Aside from rebuilding the entire interior, he discovered the sewage lines needed to be replaced, which required him to bust up the foundation. That was when he discovered a second foundation had been poured over the top of the original, creating 16 inches of concrete to jackhammer through.

In the end, the $6,000 building ended up costing $180,000 to renovate. But Daitch said it was worth the effort.

“It’s now the most fireproof building in the city,” he said.

ON A ROLL: This past week, Emerson Electric Co.’s ASCO valve manufacturing plant in Aiken County announced it is getting $8 million worth of upgrades that will add a new production line and 86 more employees.

I’ve never been to the plant, but last year I met a very nice ASCO employee at a luncheon. She acknowledged the 40-year-old facility largely operates under the radar compared to other manufacturers because its products aren’t “sexy.”

She’s right, I suppose. There’s nothing sexy about solenoid valves, valve manifolds and angle body piston valves – unless robots are your thing.

But ASCO’s products certainly have industry sex appeal, according to New York-based Persistence Market Research Pvt. Ltd., which said in a recent report that the solenoid valve market is expected to see “huge profits” during the next five years as manufacturers find more applications for the highly reliable and compact valves.

By the way, just a day after the ASCO announcement, another Aiken manufacturer, The Carlstar Group LLC, a global producer of specialty wheels and tires, announced a $6.9 million expansion that will create create 43 new jobs. The Tennessee-based company makes Carlisle tires and Cragar rims, the latter of which I think look pretty darn sexy on a ‘69 Chevelle.

THE NAME’S BOND … GENERAL OBLIGATION BOND: When local governments take out a loan, it’s usually “go big or go home.”

Columbia County announced it sold more than $80 million worth of general obligation bonds this past week to pay for the $60 million project package approved during the November election, which includes a 2,000-seat performing arts center, new parks and a new library in Grovetown.

More than 25 investors snapped up the bonds, according to a county news release, which also said it is the only Georgia county outside metro Atlanta to have two triple-A ratings (one from Moody’s Investors Service and the other from FitchRatings). Standard & Poor’s Ratings Service gave the county an AA+ rate.

A general obligation bond is debt that a government borrows using the taxability of its citizens as collateral. So the high ratings suggest the credit agencies have the utmost confidence in Columbia County taxpayers’ ability to foot the bill and its government’s ability to make payments on time.

County residents seem to be pretty confident about the debt; 71 percent of them voted “yes” on the November bond referendum.

FOLLOWING THE ATKINS PLAN: I recently heard that “for sale” signs have been removed from the Fibrant LLC (formerly DSM Chemicals) plant in east Augusta, which company owners have targeted for closure by year’s end.

So I called on Scott Atkins, the guy whose names were on the signs, and found out that he’s not only no longer marketing the property, but that he’s also no longer with Meybohm Commercial Properties.

Atkins, one of the market’s top commercial and industrial real estate agents, said he decided to to take over his father Tony’s company, Atkins & Associates, which he has rebranded Atkins Commercial Properties as of Jan. 1.

The brokerage grew out of the Trotter, Brown & Simpkins firm that Tony joined in 1972 and bought out in 1978. Scott went to work for his father in 1998 but decided he wanted the experience of working for a larger company. So he joined Meybohm in 2006 shortly after earning his Society of Industrial and Office Realtors (SIOR) designation.

Scott said he decided to take the reins of his father’s company “after a lot of prayer and long discussions” with his wife Senn. The new company’s phone number and website are the same as the old one, but expect to see a revamped look to its signs on warehouses, factories and other industrial buildings around the area in the coming months.

Oh yeah, about that Fibrant facility – Atkins said the company decided to temporarily back away from marketing the property while it worked through what he described as “environmental” issues. I can imagine there would be a few of those at a 50-year-old chemical plant. I guess we’ll just have to wait and see.

Reach Damon Cline at (706) 823-3352 or