Last month we wrote about the importance of a grocery store to a small town’s economic base, ability to attract new residents and meet the needs of current residents. We also highlighted strategies communities are using to keep grocery stores operating in their towns. This month we discuss challenges rural grocery stores face and ways to meet those challenges.

Meeting Minimum Buying Requirements – For many rural grocery stores, meeting minimum buying requirements set by their distributor is the primary barrier to operating a sustainable store. In Petersburg, Nebraska, the local store was falling short of the $9,000 weekly minimum required to avoid a 5 percent surcharge on their order. The penalty cost the store $30,000 a year, enough to make a difference between being profitable and not.

To meet the challenge, the store owner leased a nearby grocery store and combined the order for both stores to avoid the penalty. Entering into cooperative buying agreements with nearby stores or even with area institutional buyers such as schools, restaurants and nursing homes can help a rural grocery store reach a weekly buying requirement. Some small redistribution efforts have also sprung up with one area store taking orders from other stores and redistributing the order each week.

Competing with Big Chains – Large chain stores in nearby urban areas offer tough competition for rural grocers. Customer surveys reveal that price and selection are the leading reasons people select a grocery store. Small rural grocery stores can have a difficult time competing on either.

However, rural stores can compete on the next four most important factors for consumers – customer service, store cleanliness, convenience and supporting local business. Store owners who are willing to stock items at a customer’s request and who look for cooperative buying arrangements to lower prices can also make strides to overcome the price and selection advantage large stores may have.

Access to Fresh Produce – Small stores relying on weekly deliveries from a single distributor can find it difficult to stock fresh fruits and vegetables. Turning to local and regional sources of produce can bring fresh vegetables into the store and also support local producers. However, stores having trouble meeting their minimum order may be reluctant to divert any of their purchases away from their main distributor.

Store owners should also consider hosting farmers markets in their parking lots. Markets can actually serve to bring more business into the store. They help draw customers who might not otherwise come to the store. Farmers markets can also help the store become more attractive and competitive.

High Energy Costs – The electricity needed to operate large cooling units along with lighting, heating and cooling a store is a significant business expense. The grocery store owner in Alma, Kansas, used an innovative strategy to capture the heat generated by refrigerators and freezers and recycle it to heat the store. Federal grant sources to support energy efficiency and renewable energy in rural communities offer a resource to address the challenge. The Rural Energy for America Program provides grants to businesses for energy efficiency and renewable energy investments.

The next time you shop for food, consider going to your local grocery store. Not only do these businesses supply food for rural residents, they also provide jobs and keep dollars circulating in your community. This makes both the residents and the community itself healthier.

Contact: Brian Depew, briand@cfra.org, or Steph Larsen, StephL@cfra.org with questions or comments. Additional information can be found at www.ruralgrocery.org.

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More information, resources and news at www.cfra.org/renewrural/grocery.