Grocers find rural niche

Small-town groceries adapt to remain successful in changing times

Jill Schramm/MDN Shawn Vedaa looks over the produce section in his store, Velva Fresh Foods, Feb. 26.

VELVA – Velva Fresh Foods fills a niche with its fresh produce, store-cut and ground meats and store-baked breads. The small-town, independent grocery continually looks for ways to stay competitive so Velva-area residents have a nearby source for the food they put on their tables.

“I think these stores can survive,” owner Shawn Vedaa said of the single-owner groceries that are estimated to number about 82 in the state. Finding a way to be successful has been a learning process, though.

“We just had to look at things differently,” Vedaa said.

Velva Fresh Foods recently added Hot Stuff Pizza to encourage traffic into the store. Vedaa is looking into the potential for other services, ranging from a UPS drop-off to greeting card sales. Already offering home delivery on Wednesdays, Vedaa said the store might want to expand the service.

“If people are getting used to getting things online, maybe we need to start delivering more,” he said. Like many store-front businesses, groceries are feeling the impact of online shopping.

“It’s going to be a factor in the industry forever, I would think, or until people decide they don’t want to lose their small-town grocery store,” Vedaa said. “The new generation has to decide if they are going to be happy buying everything online or if they want to have a swinging door to go through. The online stuff – it really takes a lot away from the shopping experience and, of course, the jobs that are lost by it.”

Vedaa also has been contemplating the advantages of building a larger store, with space to add new lines of business, such as picking up hardware now that the local hardware store has closed. The expense is a hurdle, though, and requires a promise that the business will continue well into the future.

Vedaa, who grew up working in his father’s grocery in Stanley, purchased the Velva store in 2003. Vedaa has sought to regularly upgrade and keep his store modern, both for his customers and to ensure the business is in position to pass along someday to the next generation of ownership.

“I think if the younger generation wants to do this, there’s opportunities for them,” he said.

Lori Capouch, rural development director with North Dakota Rural Electric Cooperatives, said the REC development center wants to help rural communities keep their groceries thriving. The center conducted a survey about four years ago that identified 137 groceries in towns of 2,100 or smaller in the state. Since then, the number has dropped to an estimated 123 groceries.

“The other trend that’s just fascinating is that 10 percent of our small town owners are some sort of nonprofit model. They are doing that because they can’t afford to pay employees. They might be able to afford the manager but beyond that, it would be volunteers,” Capouch said.

The center reports about 14 groceries are community-run as nonprofits or cooperatives. Another 27 rural groceries are operating under multi-store ownership, including eight connected with Leevers. In some cases, there are local grocers who own multiple stores within a region. That leaves an estimated 82 stand-alone, independent groceries.

The REC development center took an interest in rural groceries after it began getting calls from grocers looking for grant funds to replace failing coolers or simply for operations. There were enough calls that it became apparent rural grocers in the heartland were struggling, Capouch said.

“Our ultimate goal is to change the way food is distributed in rural areas. It seems it may be a bit inefficient,” she said.

Capouch said nontraditional stores that carry groceries, such as Menards, are taking 43 percent of the market share once dominated by traditional suppliers such as Super Valu or Spartan Nash.

“As they do that, it’s affecting the efficiency of our traditional suppliers that care about delivering food to our own local areas,” Capouch said. It’s also affecting the ability of rural grocers to get products. Some grocers report going to big box stores to purchase inventory because it is their least expensive source of providing food for their communities.

“They are working really, really hard some of these grocers just to keep food available,” Capouch said. “We want to make that easier for them.”

Solutions might include rural groceries banding together to purchase in bulk, she said. It might involve utilizing the post office as a grocery distribution arm. Finding ways to improve the sustainability of rural grocers and increase affordability to consumers is important to avoid the expansion of “food deserts,” in which people must drive more than 10 miles to obtain groceries, she said.

John “Jiggs” Dyste, president of the North Dakota Grocers Association, said changes in small-town groceries were gradual until World War II. In the early years, small towns often had multiple groceries. Velva had three. Dyste said his hometown had 250 people and three grocery stores and a butcher shop at one time. That changed to one full-service grocery for 650 residents in the early 1970s.

“Improved transportation was a main reason for the demise of towns and reduction of the number of stores,” Dyste said in an email. “Better cars and roads allowed customers to go farther in a shorter amount of time. Eventually consumers would bypass smaller towns and go to ‘regional shopping centers,’ which would be towns like Carrington, Velva, Lisbon and Langdon. In a few years those towns were replaced by the larger regional centers such as Fargo, Minot, Bismarck and Grand Forks.”

The rise of retailers such as Walmart and Target, where consumers could buy groceries and other products in one stop, put even more stress on the small-town businesses.

“Rural grocery stores are now under pressure from a new form of competition, which is the large out-of-state companies that are opening business in many of the rural towns of North Dakota – stores like Dollar General and Family Dollar and convenience stores like Casey’s. This dilutes the amount of spending in the trade area and will stress the local stores that do not have the resources to survive with less sales,” Dyste said.

Vedaa said businesses in rural communities, including groceries, must support each other because there’s a ripple effect when any loss occurs.

“Any business that exists here in Velva that keeps people here is a benefit to me,” he said. “It’s very important that we all work together to keep the dream alive.”

Dyste said there is much small-town grocers don’t have control over, including population shifts, school consolidations and the regionalization of essential services such as medical care and everyday needs such as auto service and farm parts. However, they can know their customers wants and needs, provide quality products and embrace technology, he said. Successful grocers are those who have been progressive and have focused on supporting their communities, he added.

“Rural grocers have faced many obstacles throughout the years,” Dyste said. “Those who figure out who their customers are and what they want will continue to be successful.”