Pritzker initiative to provide $20 million for struggling independent groceries

[March 06, 2023]  By Zeta Cross | The Center Square contributor

(The Center Square) – A new initiative aims to devote taxpayer resources to reinvent small grocery stores in Illinois.

In his State of the State address last month, Gov. J.B. Pritzker announced the $20 million Illinois Grocery Initiative to provide taxpayer funding to reinvent and reinvigorate small, independent grocery stores in rural communities and poor urban neighborhoods.

Sean Park, program manager at the Illinois Institute for Rural Affairs, told The Center Square that people in small towns and disadvantaged neighborhoods cannot shop for basics like fresh produce and meat without taking two buses or driving 25 minutes to the store.

“They are shopping at the local liquor store or the gas station or the dollar store for their food," Park said. "It’s unhealthy. And it is not an economical way to spend food-assistance money."

When a community is too small to support a regular chain supermarket, a different business model for the town grocery can be the solution, he said.

In 2018, nine months after a long-established grocery store closed, Park got a call from Winchester, Illinois, in Scott County, which has a population of 1,700. When he got to town, Park was expecting to meet with a handful of people. Eighty people showed up at a local church for his presentation. Two young fathers, the city attorney and an agriculture lender told Park that there was no place in Scott County to buy grapes and bananas.

“That is what I consider a food desert,” Park told them.

He explained why the old grocery went out of business, and showed them how they could open a new store that would be financially viable. The grocery business is tough with razor-thin profit margins, Park said. One financial roadblock for small, independent groceries is high energy bills.

“Fifty-year-old refrigeration systems are really common,” Park said.

In one rural town, the electric bill for a tiny store went from $2,800 to $6,000 in one month, the owner told Park.

“That puts a guy out of business pretty quick,” he said.

He said he'd like to see some of the taxpayer funds from Pritzker’s program used for forgivable loans so store owners can make energy-efficient upgrades.

“I’d like to see the bulk of the money go to struggling small businesses," Park said.

When the only grocery in town shuts down, the first thing a town does is try to bring in an outside store, Park said.

“They get told ‘no’ right away. For the profit they need out of it, the big stores can’t do it,” Park said.

To make a grocery work in a small town or a disadvantaged neighborhood, the model needs to be changed from a profit-making business to a service business, Park said.

“What we do is set up what I call community-owned stores,” Park said.

They can take different forms, and some are municipally owned, but there is no parent company demanding a profit that they take out of town, he said.

“The profit is not the thing,” Park said. “We just have to cover the bills.”

In 2018, Park got a call from some farmers who wanted to see a grocery store come back to their town. Park helped them set up a multi-owner LLC so they could build a store and hire a manager.

Winchester has opened Great Scott! Community Market, a community-owned grocery that has replaced a store that went out of business. When the COVID-19 supply chain problems left chain groceries with empty shelves, the store had meat and produce for sale because they source some of their food from local farmers, Park said.
 

Community groceries are run more like school boards, Park said. Everyone is welcome to shop, but people are encouraged to buy memberships for a one-time investment of $100 or $200. By becoming members, people get a sense of ownership, including appointing a board and voting on decisions. They also hire a manager. Because the grocery business is a very hands-on business, a lot of jobs are created, including stock boys, meat cutters and cashiers.

Another benefit is that the dollars people spend in the store stay in the community.