Whole Foods Co-op in Duluth plans for second storeTo say that Whole Foods Co-op in Duluth has grown since it moved to its new digs in the city’s East Hillside in 2005 would be an understatement.
By: Candace Renalls, Duluth News Tribune
To say that Whole Foods Co-op in Duluth has grown since it moved to its new digs in the city’s East Hillside in 2005 would be an understatement.
Its membership has tripled, from 2,500 members to 7,500 members. Its annual sales have grown from nearly $5 million to $14 million.
“We’re doing very well,” said General Manager Sharon Murphy. “The more owners we have, the more customers we have. And we’re open to the public.”
Business at the member-owned cooperative founded in 1970 is so good that they’re looking to branch out.
They like their busy location at 610 E. Fourth St., which they own and remodeled to be highly energy-efficient. They don’t want to move, though there’s little room to expand.
So they plan to open a second store the same size or larger. Where will be decided in about a year, and they expect to open it in two years.
They’ve received requests to open their second store in Superior, Hermantown, Cloquet and Two Harbors, as well as in other neighborhoods in Duluth including West Duluth and Lincoln Park.
“We have a wonderful central location, but Duluth is so long and skinny,” Murphy said. “It’s a long way for people to come.”
Co-op member Katie Berg lives less than a mile from the current store. But she’s all for a second store.
“I think it’s awesome,” she said as she left the co-op last week with two bags of groceries. “I love coming here. It’s smaller, but it’s nice. I think if they open a second store it probably would do very well.”
She thinks a location in Hermantown or by Miller Hill Mall would do especially well. People have errands up there, so a Whole Foods Co-op store would be a convenient additional stop, she said.
Lori Malander of Esko isn’t a co-op member but shops there once a month.
“Their stuff is so fresh and tastes so much better than what you can get in the grocery stores,” said Malander, who would love to see the second store in Cloquet or Superior, where she does a lot of shopping.
Site study underway
All those possible communities are being considered in a professional site study underway to determine which are most capable of supporting a co-op offering whole and organic foods from regional producers. The cooperative is owned by members who make a one-time $100 equity stock investment.
The study is the first step in the process to establish a second store, Murphy said.
The store is expected to have at least 7,000 square feet of retail space. That’s more than the current store’s 6,700 square feet. But it probably would have less office space and be one story, compared to the current two-story building.
Costs won’t be known until an exact site is picked.
“If we don’t purchase the building, it would be less, because we wouldn’t have that big capital chunk,” Murphy said.
The total cost for the current store was $5 million, including the cost of the property, remodeling and buying equipment. The member loans that helped pay for it are paid off, while the mortgage is being rapidly paid off, Murphy said.
They’ll leverage that equity to finance the second store with new member loans and other loans, she said.
Narrowing possible sites
Whole Foods Co-op has set some requirements for its new store. It must be in a commercial district at least two miles from the current store. It must be on a bus route, highly visible and easily accessible with a large parking lot and room for trash bins, composting and recycling, and a separate area for truck deliveries.
“We would like to put it in an area where some (member) owners are already,” Murphy said. “And we want to make sure it’s a neighborhood that wants a co-op.”
Lincoln Park — which is about two miles away and lacks a grocery store — has neighborhood groups lobbying for it. Among them is the Lincoln Park Fair Food Access project, a neighborhood-led effort working to increase access to healthy food in Lincoln Park. As a result of partnerships it has formed, there’s now a weekly farmers market at Harrison Community Center, and a community garden has been established.
“The opening of a second Whole Foods Co-op market in Lincoln Park would clearly be welcomed as a part of those solutions,” said Pam Kramer, executive director of Local Initiatives Support Corporation, which is part of the project.
The University of Minnesota Duluth area, though less than two miles away, also is being considered.
Mark Lambert, who’s behind the BlueStone Commons development on the eastern edge of campus, is encouraging Whole Foods to locate there. The large upscale housing development for students that’s under construction will include a retail complex along Woodland Avenue.
“He talked to us several times about going in there,” Murphy said. “But that’s barely a mile away. That’s really close. But we’re not ruling anything out.”
The results of the site survey by marketing research specialists Dakota Worldwide of Minneapolis are expected in August, with recommendations for three to five communities.
“From there, we’ll start to narrow it,” Murphy said, noting that they’ll not be ready to work with real estate agents on specific locations for some time.
Opening a second store became part of the cooperative’s strategic plan a year ago, three days before the June 2012 flood caused their new, large retaining wall supporting part of the parking lot to collapse.
“The flood threw us for a loop,” Murphy said, noting that the damage hurt sales.
So they were nervous when they announced plans for a second store at the annual October members meeting. The co-op hadn’t yet recovered from the flood. And the parking lot was still a couple of weeks away from reopening.
But the reaction was positive. Members liked the idea.
“It’s been gradual, but sales are back up,” Murphy said. “We’re having strong growth again. We’re looking for a good year.”