Island Market shows viability of local ownership
BIRD ISLAND — Rural grocery stores do not have to go the way of the iconic red barn and disappear one by one from the Main Streets of small towns.
The community of Bird Island (pop. 1,042) is 11 months into its venture to show how a rural grocery store can remain viable under a local ownership model, and it has caught attention. The community hosted more than 40 visitors on Tuesday — including small-town grocers from as far as North Dakota — to look at ways for rural grocery stores to remain resilient in the face of today's economic challenges. Sponsored by the Southwest Regional Sustainable Development Partnership and University of Minnesota Extension, the all-day event had the Island Market in Bird Island as its star.
Previously part of the Maynard's Foods chain of stores, Bird Island's grocery store was slated to be closed one year ago after efforts to find a buyer had proved unsuccessful.
"People decided we can't let that happen,'' said Bob Diekman, an independent insurance company owner in Bird Island. "The store in town is the heartbeat of the town, any town.''
He is now president of the board of a limited liability corporation — put together by a group of six community-minded investors — that purchased and operates the store.
The Island Market opened Oct. 1 under its new ownership. An 11-month run is too short of a time frame to make any bold predictions, but the early signs are encouraging for the store's future, according to the new owners.
The store appears to be cash flowing, Diekman said. A lack of detailed sales records from previous years makes it hard to fully evaluate the financial performance, he explained.
The new owners set a goal of increasing sales by 10 percent. To date they are running 13 to 14 percent above the previous year, according to Susan Peterson, who along with her brothers Kevin Sheehan and Brian Sheehan, are among the original investors.
They have greatly expanded the store's inventory, possibly doubling the overall selection available, according to Diekman. It means that Bird Island residents continue to enjoy access to fresh produce and other foods.
And, they have provided Bird Island residents with a greatly upgraded store. New lighting, new flooring, a complete change in paint and color scheme, and upgraded coolers are among the most notable improvements in the first year.
"We've not taken any money out of the store," Diekman said. "The income is thrown back into the store."
Diekman said the desire to maintain access to nutritious foods in the community was on the minds of the investors when they originally approached the owners of Maynard's about purchasing the store. He noted that senior citizens comprise a large segment of the town's population, and driving to big-box grocery stores 30 miles down the road is an issue for many.
But Diekman pointed out that the investors were largely motivated by their appreciation for the economic importance a grocery store represents to a small town. They only had to look around at the dying Main Streets of other small towns to know, he said.
"And it all starts when you lose your grocery store,'' he said.
One of their worries going into the venture was whether local residents would patronize a small-town store in competition with the big-box retailers down the road. There was discussion that "loyalty in a small town isn't what it used to be,'' said Diekman of the early conversations among the investors.
They are finding reason to believe that such loyalty still exists.
Peterson discovers proof of it nearly every time she shops. Almost invariably, someone will come up and give her a hug, telling her how much they appreciate having the grocery store in town, she told the attendees of Tuesday's event.
Diekman said the investors also decided to offer three classes of shares in the LLC to drum up community support through investment. The offering was mildly successful, he said.
He credits community support for making the venture possible at all. "It wasn't just us. It was really a community project,'' he said.
Professionals in the community — including an attorney and accountant — are among those who still offer free services to the store.
Diekman said they also continue to remind local residents about their stake in the store. Lose a grocery store, and your home is now worth 80 percent of what it was, he said.
"Everybody has a vested interest in it,'' he said of the message to the community. "We just have to get that out to the public. They have to support their hometown.''