Monday, August 5, 2013

Family Market: Why it Closed

I know I'm a little behind the curve on this one but I was on vacation for two weeks so please forgive me. As we all know just 19 months after its opening, the Family Market the long awaited replacement for the beleaguered Safeway in Long Reach has closed. There are numerous reasons and theories behind its closure, ranging from Health Department Complaints to unpaid rent. What it boils down to is that it's impossible (or darn near) to run an independent Grocery Store that size. But how will Long Reach come back?
When the Family Market opened in February of last year, it was hailed as the Village Center's rebirth. The poorly stocked Safeway that offered overpriced expired foods had worn out its welcome and was no longer a good anchor. The plethora of vacant storefronts in the Village Center served as proof for this. Given the very diverse demographics of Long Reach, a Grocer was needed that catered to this.
When it was announced that the Family Market, a new independent International Grocer was replacing Safeway, Long Reach celebrated what they thought would be a proper anchor to their Village Center. The vacant storefronts that plagued the Center during the final months of Safeway's tenure had begun to be leased out. So what happened to the Family Market? Why did it close?
I can tell you in one word; Cash. The Owner simply didn't have enough of it. Although he had run Grocery Stores in the past they were smaller and the expenses were no near that of a 55,000 square foot space. The rent, the amount of stock needed, labor costs, utility costs, insurance, maintenance, these are all things that require a lot more cash on hand, something that any soul Proprietor would feel overwhelmed and burdened with when taking over this venture. 
The amount of cash it takes to start a business like this is staggering and the amount needed just to keep it chugging along is even more so especially given how long it takes to pay off loans and debts. It could take a good solid decade before such loans are paid off and the Business is profitable. All the while additional investments must be made and the cash to do so must be on hand.
When the Family Market opened, it appeared that the owner had "just enough" cash to put the operation together. The amount of stock in some of the more General Grocery Departments were not on par with that of a store that size. It did however have lots of Asian, Hispanic, and Indian foods that most Grocers (including Wegmans) did not have and their prices were in line with the demographics of Long Reach. Not only that, websites such as "Yelp" and "Foursquare" had given the Market rave reviews.
The space however was just too big. There were parts of the store that never opened. When Safeway occupied this part of the store it was mainly used for prepared foods. It had a creepy eerie feel to it. Eventually the owner had planned to turn this into a food court. Now that the Market has closed, this plan will never come to fruition. 
Another thing to keep in mind is the haste in which the Family Market opened. Safeway closed in November 2011 and in February 2012 the Family Market had opened. Given that the last renovation of the space was done in the mid 1990s, costly repairs would be in the near future.
As 2012 wore on, the high cost of running the Family Market and the lack of cash on hand began to show on the operation itself. More and more isles were void of stock and a general lack of upkeep began to keep would be customers from shopping there. Reviews began to acknowledge that something was going terribly wrong. 
In 2013, things continued to worsen. The store appeared very dimly lit and departments such as Seafood, Deli, Bakery, and Frozen Foods has been closed and sanctioned off. The only part of the store that was "open" was the non perishables and those shelves were quite bare. On the entrance doors there was a lone cardboard sign that read "We are Staying Open." I talked to the owner on the phone regarding the situation and he told me that they were making upgrades to the refrigeration system in the entire store and that it would be up and running in full capacity within the next couple of weeks.
Well here we are now and that has happened. Despite Safeway (who sublet the space to the Family Market) has evicted them due to unpaid rent stemming from day one and Health Department complaints stemming from the fact the store had been run on a generator instead. This would explain the poorly lit store and the fact that so much of the store was closed off. All of these problems stem from lack of cash. The owner however, has stuck to his guns and believes that the store will reopen soon and they're "renovating and restocking" however in order to reopen he must come up with $300,000 in unpaid rent and $55,000 in additional fines. That's a lot of cash and like I said, the failure of the store was due to lack of cash. How will he come up with that much money? I don't know either.
Moving forward, I do believe that an International Grocer is right for Long Reach. I had hoped that while still in business, the Family Market would sell itself to chain such as H-Mart. H-Mart has a business plan that's a proven success. The one in Catonsville is small however it's very crowded. H-Mart would have the adequate cash flow to fund proper renovations to the vacant Family Market Space and pay its rent on time even when the business is getting on its feet. Although H-Mart is mainly an Asian Grocer but given the large space in Long Reach, it could diversify its selection to include Latino, Indian, and African Foods. I hope an international chain similar to H-Mart can come to the rescue and soon.