Downtown Grocery Coming To Detroit Lofts?

[Gaspar]

Does anyone know the square footage of the proposed location?

The grocery industry makes it fairly easy to calculate profit within a market tolerance level.  

For instance, QuikTrip stores make a majority of their profit from gas, therefore the items in their store can suffice to return only a moderate margin (even though they seem damn expensive) after distribution and stocking costs.  Everything on the shelves, the soda fountain, the outstanding service, and the yummy sandwiches are there to get you to stop and buy gas to the tune of over 7 Billion dollars a year.

In a small grocery store without the gas offering you have three dimensions to work with:

1. Margin- Grocery stores are low margin, sometimes only a few cents on the dollar.  Therefore they have to sell a lot of 3 Guys Smokin' Razz Bold & Spicy to make a dollar.  They have to stock it, move it around on pallets and pay a dude to make sure the labels are facing the right direction on the shelves.

2. Size/Volume- Grocery stores combat margin by increasing size and sales volume.  The bigger the store, the more product they have the space to display, the more volume they can do in sales.  Whole Foods can sell a heck of a lot more Smokin' Spice than Siegi's.  They can offer a lower price because they have more room to stock, display and distribute the product.  

3. Demographic- Demo effects both dimensions above and dictates price tolerance. If Reasor's is 5 miles away and carries Smokin' Blues competition BBQ sauce for $3.99, and Sheen's Grocery & Porn is downtown but offers the product at $6.00 a bottle.  Some of the demographic will will willing to drive the extra 5 minutes to get a lower price.  If the local demographic is light in numbers and light in income, Sheen's will have to carry discount products and offer discount prices to attract them, this also means lower total margin.

There are also a myriad of other problems that make the concept less attractive. Developing a grocery store downtown is difficult because when you reduce the size (to fit a downtown or infill footprint) you have to increase the margin to make up for the loss in volume.  If you increase the size, you are dealing with very high lease rates as compared to free-standing developed environments, so you still have to increase the margin on product.  No matter how you slice it, you have to either offer standard product at an increased price, or you have to offer off-brand discount product at a standard product cost.  This was much of the complaint associated with the past downtown grocery offerings.  Throw in security, parking, and service capacity (ability for 53' trucks to stage, dock and deliver, and you have a very difficult proposition.  Not impossible, but difficult.

[godboko71]

Does anyone know the square footage of the proposed location?

The grocery industry makes it fairly easy to calculate profit within a market tolerance level. 

For instance, QuikTrip stores make a majority of their profit from gas, therefore the items in their store can suffice to return only a moderate margin (even though they seem damn expensive) after distribution and stocking costs.  Everything on the shelves, the soda fountain, the outstanding service, and the yummy sandwiches are there to get you to stop and buy gas to the tune of over 7 Billion dollars a year.

It's not a chain.

It's more like http://www.themarketatlarimer.com/, only with more "staples."

In addition to grocery (deli meats, fresh produce, dairy, baked goods, basic medicines, beer, soda, etc), think fresh flowers, a chef prepared food line (like Whole Foods), and a coffee bar.

Urban Market. Locally owned. It's a place to eat, get coffee, or buy some toothpaste.

Theoretically.

I think Blake's post tells us how they will make most of there profits. Between the flowers, the prepared food line, and the coffee bar they should be able to make a profit and not be to expensive for a "urban" store.

When I get back to town and this is open I am sure I will use it living just outside of downtown.

[ZYX]

Downtown can't support a grocery store yet.

Trog, that is a tired old argument. So many people say that, and then turn around and say why would I ever live downtown if there's not a grocery store. It's a chicken and egg situation. When this grocery store gets built, you will probably see development immediately around it because people love convenience. It would be nice to have restaurants, a grocery store, and several other retail options all within walking distance. The more options for shopping and other services there are downtown the more people it will attract.

[SXSW]

I like the idea of a local specialty grocer for downtown proper, which has a smaller population and needs to be an urban format (entrance facing sidewalk; little to no parking) as it won't have as many people driving to it.  I also like the idea of downtown having a full-service grocery like Reasor's located in Uptown that would also serve the dense neighborhoods in that area, as well as downtown.  The nearest grocery stores to the (currently) most desirable walkable neighborhoods in the city are Reasor's at 15th & Lewis, Petty's in Utica Square and the Food Pyramid/Whole Foods at 41st & Peoria.  There is a large gap in between those stores (if you can even count Petty's as it's more of a specialty market) that includes neighborhoods like Cherry Street, Maple Ridge and Riverview.  Such a store should be urban but also have an adjacent parking lot behind, to-the-side or underground.  Such a store would be a gold mine for Reasor's which is a local business that could make this their flagship..

[Conan71]

Downtown can't support a grocery store yet.

Can't support an 18,000 sq ft arena, a bike shop, full service pizzeria, ecclectic gift shop or t-shirt store either.  What's your point again?

[ZYX]

Can't support an 18,000 sq ft arena, a bike shop, full service pizzeria, ecclectic gift shop or t-shirt store either.  What's your point again?

Exactly! I mean was anybody even at that Lady Gaga concert last night? Downtown is dead. I hate it. It's boring. There's nothing to do.

[Red Arrow]

For instance, QuikTrip stores make a majority of their profit from gas, therefore the items in their store can suffice to return only a moderate margin (even though they seem damn expensive) after distribution and stocking costs.  Everything on the shelves, the soda fountain, the outstanding service, and the yummy sandwiches are there to get you to stop and buy gas to the tune of over 7 Billion dollars a year.

I've heard it's the other way around, they sell gas to get you into the store to buy milk, beer, sandwiches, etc.  I have nothing to back that up with though.

[Red Arrow]

Somewhat higher prices at downtown stores are part of the urban lifestyle according to previous threads discussing urban vs. suburban/rural lifestyles.  The urbanite chooses to pay for the convenience and proximity of things to do.  One of the compensating features is not needing personal transportation.  Although personal transportation is still needed in cities like Tulsa, if you go to the big urban model like NYC, Boston, Phila, Detroit, etc I think the model works.  It comes down to what you want and how much you can/will pay for that life.

[DowntownDan]

I think the idea proposed where it would be not only a basic grocer, but also have prepared food and a chef, is a good idea.  I don't think downtown can support a full grocery store right now, but if it doubles as a lunch spot for downtown workers, or a place to get a quick bite before a game or a show, I think it would make the operation profitable even if the grocer side gets less business.  Maybe even have a small wine bar to cater to the night crowd.  I think it is a good stopgap while downtown is growing its residential sector.  

[Cats Cats Cats]

Can't support an 18,000 sq ft arena, a bike shop, full service pizzeria, ecclectic gift shop or t-shirt store either.  What's your point again?

The existance of a business doesn't mean that it makes money.  It doesnt mean that they are making a lot of money either.  A business can slowly bleed money for years before the owner gives up.  In fact, i could run a business losing money for quite a while.  As long as you have a credit card and a cash flow you can continue to do business.  Also, the places you listed are destinations for people to go.  I don't know of another bike shop near there.  I don't know of another max retropub.  I can point to several grocery stores people in midtown would go to before downtown.  And no, the bok center isn't going to pull tons of business for a grocery store.

[Cats Cats Cats]

I've heard it's the other way around, they sell gas to get you into the store to buy milk, beer, sandwiches, etc.  I have nothing to back that up with though.

They don't build a huge building with refrigerators to get you to come buy gas.  The money is when you come inside.

[ZYX]

I've heard it's the other way around, they sell gas to get you into the store to buy milk, beer, sandwiches, etc.  I have nothing to back that up with though.

This is correct. My sister used to work at a gas station while she was in high school, and said that they were lucky to break even on gas, and that they made all their profit inside the store.

[sgrizzle]

This is correct. My sister used to work at a gas station while she was in high school, and said that they were lucky to break even on gas, and that they made all their profit inside the store.

Yeah. The only places making a profit on gas is Shell and those "real gas" places that charge you 10-15c over quiktrip prices, but even their profit is pretty slim.

[ZYX]

The existance of a business doesn't mean that it makes money.  It doesnt mean that they are making a lot of money either.  A business can slowly bleed money for years before the owner gives up.  In fact, i could run a business losing money for quite a while.  As long as you have a credit card and a cash flow you can continue to do business.  Also, the places you listed are destinations for people to go.  I don't know of another bike shop near there.  I don't know of another max retropub.  I can point to several grocery stores people in midtown would go to before downtown.  And no, the bok center isn't going to pull tons of business for a grocery store.

I don't believe this store is targeted at people living in midtown. It think it is intended to be more of a small market/pick-up restaurant for the people living and working downtown. Not many people will do their full shopping there, more likely just stuff to make dinner or to last 1-3 days.

[Cats Cats Cats]

I don't believe this store is targeted at people living in midtown. It think it is intended to be more of a small market/pick-up restaurant for the people living and working downtown. Not many people will do their full shopping there, more likely just stuff to make dinner or to last 1-3 days.

Obviously.  But people like to pretend like it's the same as a restaurant or specialty store.