Progressive Grocer Independent

APR 2016

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April 2016 | Defining the Independent Market | 39 were lucrative to a supermarket, one would already be in operation. However, Andrew Revy, CEO and partner of Constantino's Market, in Cleveland, sees it a bit diferently. To him, an underserved market doesn't mean it's an unproftable market. Rethinking Store Size "Te thinking that if business would thrive there, retailers would already be there, is not really true," Revy says. "It's really the model that exists that precludes it. We are seeing a trend of retailers going back to smaller store formats and re- alizing that they really serve the population's need." Te movement in recent years had been to open large- format stores that required a lot of land for both the store and parking lot, but that type of model doesn't work in urban areas, or in rural areas with limited populations. Constantino's opened its frst store in downtown Cleveland 11 years ago, with a second store opening four years ago in the city's University Circle area. Te company has also announced plans to open a third location, in Cleveland's Tremont neighborhood. Te stores range in size from 12,500 square feet to 15,000 square feet. Tey also carry an average of 12,000 SKUs, fewer than half of what a typical large suburban store may carry, Revy notes. "Te average household buys about 360 SKUs per year," he adds. "Most people buy pretty much the same things, with some variance week to week. It's really about knowing our business and knowing what 12,000-14,000 SKUs we need." Catch-22 When the frst Constantino's opened, Revy admits it was a bit of putting the cart before the horse, but before the area could grow, it needed amenities. People had started to move back into the city, but critical mass hadn't yet been achieved because there was no nearby grocery store. "We decided to take the risk and open," he recounts. By the time the company was ready to expand, the food desert conversation had become widespread. Te Universi- ty Circle community had been without a grocery store for more than 60 years; however, it was the cultural hub of the city and had a range of demographics that indicated good growth potential. Revy turned to the federal government for some fnancing. He hired a grant manager to help guide the company through the long and cumbersome process of applying for CED-HFFI money. "Te grant application itself was 180-plus pages," Revy notes. "It's daunting, and there's a lot of informa- tion that needs to be put into it, not the least of which is personal fnance information, company information, but also demographic information. So it's a lot of work." Federal grants aren't meant to fund the entire project, but instead ofer a small slice of the pie; most of the fnancing must already be in place when a candidate applies for a grant. Te money may also come with some strings attached. For instance, Constantino's received a jobs-based grant requiring that 75 percent of the store employees be low-income when hired. Revy must fle quarterly and yearly reports to prove he's meeting "Small, independently owned grocery stores are critical to the sustainability of these small towns. They are anchor businesses." —David Procter, Kansas State University CONSTANTINO'S MARKET Operating in downtown Cleveland, the company plans to open its third location within the next year.

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