After less than a month of operations, the highly anticipated boutique grocery announced it will fold, leaving behind a burgeoning fan base and nearly three dozen employees.
By Matt Skoufalos
It took three years of planning to lay the groundwork for Local Market Collingswood, the first neighborhood grocery store to operate in the borough in decades, and only three weeks for its operators to discover their model was unsustainable.
Billed as a quality-conscious throwback to the neighborhood groceries of old, the store employed a staff of 32, all local residents.
Its concept turned on an eclectic mix of prepared foods, café service, and gourmet groceries as much as the health consciousness of an upwardly mobile populace.
Yet even with a strong showing among early adopters, said co-owner Cathy Smith, the overhead costs of managing “this huge beast” never squared with the sales necessary to sustain its operations.
“I think we created this beautiful model and this beautiful store that would have worked really well in Philadelphia,” said Smith, a pharmaceutical writer and the wife of Local Market co-owner Chris Thomas.
“We just weren’t getting the traffic,” she said. “We never came close to breaking the daily cost of operating it.”
Smith told NJ Pen that although the business had been well capitalized, to continue operating it for even another few months at a break-even point would require an infusion north of $100,000.
Thomas and his partner, co-owner Eli Massar, “didn’t make a penny” while working 16-hour days, Smith said, and each day the business was open, “We were hemorrhaging thousands of dollars.”
“People will have their own theories on this,” she said.
“Would it have worked in three months? Six months? I think it would have. I just don’t think we have the half-million dollars and the stomachs, because then we’re losing our house.”
‘Too big of a beast’
The diverse revenue streams of the Local Market model that its owners believed would stabilize the business – its coffee bar, prepared foods, and grocery – ultimately were too expensive to maintain simultaneously, Smith said.
Worse, she said, abandoning any one of the three would have compromised the whole entity.
“In building a space that required this kind of labor to pull it off, we could modify so many things about the model, but not the space,” Smith said.
“The thing that everybody liked about it was the vibe, and once you killed one of those pieces, we couldn’t remodel it again in a way that made sense.”
Employees were paid $12 to $14 per hour, Smith said, with as many as 16 working at any given time, from the front of the house to the kitchen. Utility costs in the sizable storefront approached the $10,000-a-month mark, she said.
At a minimum of six transactions per hour, she said, the business would have been able to stay afloat; however, “There would be hours going by with no transactions.”
Brand fidelity versus cash on the barrel head
Despite “a really nice following of regulars,” the volume of business necessary to sustain Local Market just didn’t seem likely to manifest, Smith said.
Even with tenants already occupying the Collings at the LumberYard apartments up the block, owners weren’t convinced that they had the ability to sustain operations until such time as the market became fully viable to residents.
“There’s a lot of idealism from the folks that we talk to, and it’s just that more time is such significant money, and we’ve already lost such significant money, that the growth hadn’t been indicative enough that we were going to make it,” Smith said.
“The sad part is we built a brand very quickly in a town that, from what we were told, isn’t easy to please very well,” she said.
The market was slammed with shoppers during its opening weekend; yet even with its shelves half-stocked, the store “hardly moved any of it[s inventory]in three weeks,” Smith said. Promotional efforts, like selling hormone-free, organic milk at cost just to generate foot traffic, weren’t even enough.
“We were figuring out what the people really wanted,” she said. “It’s hard to beat Wegman’s or Aldi, or wherever people were getting their food. Habits take a while to change.”
As beloved as Local Collingswood was, even for such a short time, Smith knows there will be those who analyze the decision to fold its tent.
“If I put myself as an outsider looking in, I think, ‘How did this not work?’” she said.
“Great space, great feedback, people working there who cared about it; it had all the elements.”
Ultimately, Smith said, it wasn’t any one thing that kept the business from succeeding, but the sum of multiple forces converging at once, from a protracted development to encroaching competition.
“We opened as quickly as we could get it approved,” she said. “McFarlan’s signed a deal a couple weeks after we signed ours. The rug was kind of pulled out from under us. We always felt that competition breathing down our necks. As such, we expected a certain return just to break even. We weren’t even close to doing that.
“It’s just a tale of the food business,” she said. “When we signed those bank loans we didn’t think for a second this wouldn’t work.”
Even by halting operations immediately, Smith said, the building is still under lease for another 18 months, leaving conflicting ideas about what to do next.
“Do we just open it as a catering operation? As a sandwich takeout place?” she said. “To just open the kitchen and not have the front of the house open seems weird. It’s too cavernous of a space.”
Smith didn’t discount the idea that a creative solution might help the owners salvage something of the business, but said that the partners were “flattened and dead inside” at the prospect of having to cease operations.
“Our kids left tonight in tears,” she said. “It’s hard for them to see it. The lesson there is to pick yourself back up.”
Smith said that the owners had gathered as much of the staff as they could Wednesday evening to break the news to them in person. Calls went out to others with whom the owners will meet Thursday morning.
In an effort to recoup some inventory costs, Local will sell off its non-prepared foods inventory from noon to 6 p.m. on Thursday. An announcement on its Facebook page offered to refund in full the cost of any gift certificates.