Competition, falling populations take toll on small-town grocery stores

SWISHER - 'My electric bill is $600 a month,” said Fred Shelton, 83, who has operated Shelton's Grocery in Swisher with his wife, Evelyn, since 1969. 'There's no way in hell that I can afford to pay it,”

'My wife doesn't want to move, so we stay here. We're working for nothing and we're losing money.”

The Sheltons are not alone. Small Iowa communities are losing their grocery stores at a rapid rate as changing shopping patterns, rising utility bills, minimum purchasing requirements and a variety of other factors take their toll.

In fact, the number of Iowa grocery stores with employees - as opposed to single-proprietorships - has dropped from just more than 1,400 in 1995 to 653 in 2013, according to the U.S. Census Bureau's County Business Patterns database. Although the pace of the decline has slowed in recent years - 867 in 1998, 734 in 2000 and 678 in 2008 - the direction would appear irreversible.

'We regularly get phone calls from people wanting to know how to start a small cooperative grocery in their community,” said Brian Depew, executive director of the Center for Rural Affairs in Lyons, Neb. 'There's intense community interest in the topic, primarily as a result of grocery stores closing in many rural communities across the Midwest.”

Fred Shelton took over the grocery store at 65 Second St. SE in Swisher on April 1, 1969. He had worked at the Wilson & Co. meat processing plant in southwest Cedar Rapids for more than 14 years when the owner of the store talked him into buying it.

'It was feasible at that time to operate a grocery store. Now, I think it's impossible,” Shelton said.

'If I want to buy Coca-Cola, it costs me $15 to get the truck to stop in front of my store. They sell it to me for much higher than they sell it to the big stores.

'I'm better off to go buy it from a big chain store. I can buy it cheaper than what they charge me for it off the truck.”

Tim Greenwood, the second generation of his family to operate Greenwood's Grocery and Catering in Farley, said wholesaler's minimum purchasing requirements force him to take a loss on the sale of some items.

'Most everything is palletized, and there's no room to store pallets in many small stores,” Greenwood said. 'I buy several cases of Miracle Whip for $4 a jar. If I could buy it by the pallet, I could get it for a dollar-a-jar off.

'It's really a loss leader. I lose about a dollar a jar, but I still offer it because customers expect us to carry it.”

His father, Eldon Greenwood, a veteran returning home from World War II in 1946, purchased the two-aisle grocery store where he had worked before going into the service. The elder Greenwood retired in 1980 and his children continued to operate the store and expand it to include catering and deli with lunch specials.

Greenwood's Grocery and Catering, 112 First St., attracts customers from Epworth, Dubuque and other northeast Iowa communities.

'We have our own homemade brats that we've offered for decades,” Greenwood said. 'Our sausage and rope sausage has had the same seasoning recipe for as long as I can remember - probably 50 years.

'A lot of bars, taverns and restaurants use our ground chuck for their hamburgers.”

Longtime Farley resident Tom Schemmel, 75, said Greenwood's always has been good about getting him specialty meats.

'They have a deli and if I want to get something to eat quick, I can run down there,” Schemmel said. 'It's just about as cheap to get a sandwich, cut it in half, and my wife and I can share it.

'I'm really glad Greenwood's is there. At my age, I don't want to have to drive 40 miles to and from Dubuque on Highway 20.”

Greenwood said attracting new customers is one of the challenges he and other small-town grocers face.

'You need to get them into your store or they will go to Wal-Mart or one of the big supermarket chain stores,” he said. 'When they visit our store for the first time, often because a neighbor told them about us, they're surprised at what they find here.”

Shelton credits the support of individuals and businesses in Swisher for keeping his doors open when his tax adviser and others have urged him to call it quits.

'Joe Marks, who lives about a mile east of town, did a lot of the improvements in the store,” Shelton said by way of example of the support he has received. 'When I wasn't feeling very good, he took me to the doctor.

'Joe has been a tremendous help to me. If it wasn't for him, I probably would have closed.”

Shelton also cited the owners of the Kava House Cafe in Swisher for providing additional cooler storage space when needed.

That community support is critical to the survival of small grocery stores, according to Lois Wright Morton, professor of sociology in the Iowa State University College of Agricultural and Life Sciences.

'Retailers need the loyalty of the small-town residents - and not just grocery stores,” Morton said. 'Hardware stores have faced and continue to face the same challenges.”

Morton said the closing of grocery stores in rural communities is especially hard on elderly residents who are no longer able to drive.

'Rural residents over 70 years of age are more dependent on the local grocery store and depend on others more for transportation for grocery shopping,” Morton wrote in 'Starved for Access,” a 2009 ISU research study she co-authored with Mary Jane Oakland, Ella Bitto, Mary Sand and Beth Michaels.

'As grocery shopping and transportation options become less available in rural communities, the rural elderly are the ones who will be most affected.”

Population decline in rural communities and changing shopping patterns directly affect the potential customer base for a local grocery store.

In 2000, the average population needed to maintain a grocery store was 2,843, according to the Center for Rural Affairs. By 2005, the necessary population had risen to 3,252.

A lack of job opportunities in rural communities is leading more rural residents to work in larger communities. That affects shopping patterns as workers are more likely to shop where they work, rather than continuing to buy their groceries and other items from rural retailers.

'I have people tell me, ‘For heaven's sake don't close. We don't know what we'll do when we need something like a can of beans or soup,'” Shelton said. 'They're friends and good people, but they have families who need to cut costs.”