Op-Ed: The Death Of A Family Grocery Chain

Even the mega stores are a little nervous in the current recession as more family-operated businesses go under and the majors begin pairing off less profitable units.

As I walked around the store, I couldn’t help in feeling a little sad at its closing. The owners did everything they could to make the supermarket work - but in the current economy, it was not enough, and its expansion efforts took place at the worst time possible. Rego’s in Northeast Ohio was a family-owned regional chain. It had survived several recessions, and in the last few years took a leap of faith and bought additional locations when Finest Supermarkets abandoned Greater Cleveland. The shops were new and large, but their national owners didn’t read the marketplace all that well in Cleveland, Ohio - it simply didn’t make enough money for them. So they left. As the current recession closed in on the American economy, business as well personal loans dried up. This made it very hard for all businesses to operate on a day-to-day basis. A lot of stores couldn’t get credit, and could not pay their vendors, nor meet their operational expenditures. Nor were the banks willing to give them additional funds to keep the business going - because like the stores, they were going under as well. Another roadblock were rising rents and slimmer-then-usual profit margins caused by the need to compete with larger national chains moving in. Thus shops like Rego’s raised their prices in attempts to meet their financial obligations and payrolls. The thinking was that by offering better quality than the national chains, customers would see the value in shopping at their locally-owned stores. Problem was, as more people found themselves laid-off, or working reduced hours, they no longer had the funds to purchase a little better product. Rego’s Fresh Markets became a victim of a bad economy, drying-up of operating loans and the closing in of national competitors who could buy in larger bulk, and thus get a better wholesale price. Rego’s mistake was simply in bad timing of its expansion program - and taking on more of a debt load than they could chew financially. But Rego’s isn’t the only ’local’ chain to cut back by closing stores - or worse - going out of business completely. The same thing is happening to ’mom and pop’ stores and regional operations around the country. Try ’Level’s Food Centers’ and ’Harvest Supermarkets’ in Fort Worth, Texas. They lost their businesses due to their connections to another bankrupt grocery concern that drove them under. Then there is the Schwegmann chain of grocery stores in New Orleans, Louisiana - a family-owned business for 127 years folded after buying a rival chain of supermarkets, than struggling to manage its debt load. At Brown & Cole in the Pacific Northwest, the emergence of Walmart’s opening in the area are blamed for doing that chain in. However, national and larger regional operations are taking stock of the profitability each individual unit returns as well. Now more than ever, the nationals are pairing down the number of stores they operate. They will either attempt to lease or sell less profitable locations to smaller chains - or simply close them outright if no buyers can be found. Either one is a mega chain, or is one that simply goes out of business. Other larger concerns biting the dust include Sweetbay Supermarkets, Basha’s Supermarket, Lucky Grocery Stores, P & C Food Markets, Fresh Market, JayC Food Stores in Indiana and Albertson’s, as well as many more chains and stores I haven’t got the space to mention. Where possible, store chains that attempt remain in business, shift staff to more profitable locations - but most end up laying their employees off entirely, and simply shutting down. That devastates the economy of families affected and the regions in which they live. According to Washington D.C., the economy is expected to get worse before it gets better. With GM and Chrysler in danger of bankruptcy, its effects on the areas that surround their plants will be negatively endangered as well. As a matter of fact, a domino effect is essentially happening right now. It is not just the regional grocery chains that are cutting back locations or going out of business, many other establishments in other industries are suffering the same fate. In getting back to Rego’s Fresh Market, at its height, it had seven stores - in a short time, it is down to two. There are some rumblings that the last remaining stores are in danger of closing themselves - victims of a sour economy and the dominating effects of major grocery chains moving into their individual territories, and of course, the laying off of the North American worker in general. In essence, with fewer competing chains and individual stores, the cost of products and services will begin to climb even as the economy improves due to the lack of competition to stabilize prices. In other words, one will eventually find themselves buying from only one particular national chain - or none at all. Just ask Kmart.