Today’s post is by Feliciano Vera:

“We should hold a wake, y’know.  I mean, the body is still warm and everything.  May help with closure,” read the text from my friend.

Word about the closure of the Urban Grocery and Wine Bar at the Downtown Phoenix Public Market spread like wildfire last Friday.  Occupying nearly every casual conversation I had over the weekend, the news nearly derailed work originally scheduled for the week – how do we save the market?  What happened?  Who was to blame?

I never pretended to have the answers, other than to say consistently that it looked more like a tragedy of poor communications and a minor bit of mismanagement rather than anything malicious.  The Urban Grocery was created to fill a real need for fresh food and produce downtown.  The last market that existed in the downtown core was a Bayless, located on Roosevelt between 3rd and 5th Streets, and had burned down before it could ever leave an imprint on my memory.

When the Urban Grocery opened two years ago, it meant that I had groceries available within walking distance of home.  Perhaps more importantly, it represented a bold departure from conventional retailing models.  Ask any retail real estate broker why we have never been able to attract a market downtown, and they will all respond with the same answer – not enough rooftops.  Anchored to GIS-driven catchment areas that provide easy, formulaic locational solutions, way too many communities have been left without access to the basics required for everyday living, including downtown.

What the Urban Grocery proposed was nothing short of an audacious idea.  It proposed that a grocery store embed a set of social values into its operational model, and support local farmers and merchants while facilitating the growth of a local economy.  If there was a defect in its business model, it was probably the same defect that triggered the community outcry at its closure: its potential customers had to seek it out.  We weren’t beaten over the head with spam emails, loyalty cards, or junk snail mail telling us about its latest specials.  We didn’t even get a local version of the “Fearless Flyer” to tell us what was in season.  It relied on our goodwill to support it as an enterprise.

This setback has as much to do with the inertia of our own habits as it does with the Urban Grocery’s marketing.  But if we are to resign ourselves that the idea cannot succeed, then we run the risk of giving up on a broader enterprise.  We run the risk of resigning ourselves to the commodification of community that seems to underlie most critiques of places like CityScape – and yes, I have my own personal nickname for that place.

I propose that we take a hard look at the business case for a grocery downtown – because it is there.  We need to analyze the operational deficiencies and successes of the Urban Grocery model, adapt, and overcome.  Because we should all remember that downtown Phoenix was the sole bright spot for retailers throughout the recession – receipts grew downtown while collapsing everywhere else.

Besides, getting scraped up a bit is part of the learning process.  After all, part of being sustainable is being able to pay the bills and make a bit of money in the process.

Photo credit: The Urban Market and Wine Bar. Photo by Joe Perez.

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10 Responses

  1. matt says:

    This was a business failure, plain and simple. You noted the poor marketing. But there were so many more failures than just marketing.

    The place was not open at times convenient for many people who are gainfully employed. T-F from 11a-8p? I work during most of that time, and I am not going to leave my office at 3p to go grocery shop. It is not uncommon for me to leave at close to 8. That left weekends to grocery shop at the Market. There was no way I was going to go there on Saturday with the thousands of gawkers milling about and making the farmer’s market there social outing of the week. I was there to grocery shop not taste-test local hummus. That left Sunday, and the Market was closed on Sunday. I like to support local business, but you have to be available when I need you. Unfortunately, Safeway and Bashas remain the only groceries anywhere near downtown that are actually available when I need them.

    The Market also seemed to have issues with stocking what I needed. This was far from an actual full grocer. And even when I went for the specialty items they did carry, they always seemed to be out of stock of what I wanted when I wanted it.

    Finally, the layout made little sense to me. The place was already small, but nearly half was devoted to the wine bar and the inside dining area. That area should have been devoted to carrying more items. I mean, if you are a grocery then be a grocery, and if you are a wine bar then be a wine bar, and if you are a deli then be a deli. There was seating outside and in the coffee area for people who wanted to eat their sandwich. The other seating just sacrificed space that could have supported the actual grocery business, which is what I thought the point was.

    In the end, the outcry demonstrates that there is a desire for something in downtown although I’m not sure it for a grocery store. The Market was not a grocery; it was a specialty market that did not know how to advertise. Some of the people confuse me because they express desire for a grocery, but they actually seem to want a local business where they can hang out. For that, there are many coffee shops and bars they can frequent. I don’t see how anyone who is seriously wanting a grocery store is that upset about the Market closing.

    I’m looking forward to someone coming in and making a better version of a grocery store.

  2. Ashley Mulhall says:

    I think the closing of the Urban Grocery has a lot to do with the success of the Downtown Public Market. Many of the items they sold are also available right outside direct from the producers. The public market has grown leaps and bounds since it first opened.

  3. Will Novak says:

    “The Market was not a grocery” this quote is spot on, I agree with everything Matt said.

    I’d love to see the Downtown Market be pushed in a direction more like Reading Terminal in Philly, Pikes Place in Seattle, the LA Public Market, Soulard Market in St Louis, etc.

    Down the road I’d love to see that inverted L shape of parking lots (or the lot across Pierce to the South) that surround the Market building turned into a full time Indoor/Outdoor market (a building with garage doors that can open when its nice). Then the current Market building could be converted to a Restaurant specializing in meals cooked from the Markets produce.

    The Market ought to have more of presence from the Hispanic and Native American populations as well. Go to any big city market and what do you see? Unique localness. Our market was mostly just white folks selling stuff to other white folks. It seems to me people visiting from out of town would love the opportunity to buy fresh Indian Fry Bread, watch tortillas be made, and really get a flavor of the Southwest. Reading Terminal in Philly has a large Amish population which makes it interesting and charming, LA’s market has many booths operated by recent Asian and Latino immigrants cooking and selling their native specialities.

    • Emerson Fry Bread is among the regular food truck vendors at the outdoor markets, and the regular merchants outside include a tamale vendor and a tortilla maker. Could there be more Hispanic and Native American presence? Absolutely, but let’s not disregard what’s already there.

  4. Kerry says:

    Cleveland’s West Side Market (http://www.westsidemarket.org/) is the best example of the integration Will Novak cites. The outside is vegetable and fruit stalls, run by new immigrants, families who’ve been at the market generations, and some farmers. It’s cheaper than the grocery story, which pulls in a lot of business. Inside are specialty meats, fish, dairy, prepared foods and bakeries. It’s both a new-business incubator and sometimes the last place to get old-style grandma food. There’s a sit-down restaurant, a Middle Eastern/European specialty grocer, a hot-dog stand, and a very popular creparie/coffee stand.

    You can get Eastern European specialties like pierogis and blood sausage, home-style Mexican, falafel, and new favorites like fancy cupcakes.

    Only problem is the market is an institution that claims roots back to 1840. It’s hard to import that old-style, pre-WWII shopping experience into an automobile age city like Phoenix.

  5. john couleur says:

    While i dont agree with all of Matts comments, i agree in his basic point, it was a business failure. I am anxious to see how Bodega 402 does. As a for profit business it will not carry much of the baggage that the Public Market did

  6. Feliciano Vera says:

    All interesting comments, with some revealing insights into why the market wasn’t as successful as it could have been.

    Good, bad, or otherwise, I am still of the opinion that the Urban Grocery should be viewed as a version 1.0, with significant upgrades for the next version. There are approximately 675 new rental residences either in construction or planned for development over the next twenty-four months within a four block radius of the current site. Demand will increase for grocery options within that geography as well.

    Our task, I believe, is to distill a business case for a new grocery that meets the double and triple bottom line goals set forth by CFC. I don’t believe that is an impossible task.

    In the meantime, we would also do well to develop a template for business incentives that is a) tailored toward fine-grained reinvestment and small businesses; b) capable of being adopted at the municipal level without state enabling legislation; and c) sustainable.

    As for Adrian’s new bodega, all I have to say is that in addition to being a great attorney and nascent grocer, I hope that he starts up a mariachi trio sometime soon, because he can bang out a corrido like no one else I know on Roosevelt.

  7. Phx Planner says:

    I’m going to weigh in here because this is an extremely important topic and a very good post.

    Grocery stores are a fundamental ingredient as important as transit and sidewalks – you really don’t live in walkable urbanism unless you can buy groceries without a car (and not be a member of the Lycra Mafia or a hardcore fixed-gear dude willing to bike 2 miles in 110 degrees for a head of lettuce)

    Regarding the “tools” discussion, I think we need to get the CDCs like PDIC and Raza involved. The U.S. Treasury Dept. has a few programs that may be helpful – New Markets Tax Credits and Health Food Financing Initiative. These and other competitive grant programs require a strong justification (e.g. Food Desert mapping , social equity, economic revitalization etc.)

    We are keeping a focus on these implementation opportunities to use our planning projects as leverage, but we need all the help we can get, so I encourage the continuation of this conversation.

    • Feliciano Vera says:

      I was wondering when someone was going to bring up the CDCs (Community Development Corporations), and more specifically, the CDFIs (Community Development Financial Institutions).

      Both types of entities bring important tools to the table, but are ultimately accountable to their investor pool. The most prominent investors in both entities are national banking corporations that have CRA obligations – with some prominent exceptions.

      The challenge remains the same: making a comprehensive business case that investments in such businesses as grocers within the downtown core make sound sense from a financial perspective, in addition to all of the other social benefits.

      Let’s be clear about a few things, lest we get back into rampant critique of the Urban Grocery’s failed business model:

      1) We have few local capital providers with decision making authority that are based in the Valley (let alone Phoenix);

      2) We have fewer lending/investment officers that have an understanding of urban infill markets;

      3) We have even fewer lending/investment officers with have an appetite for underwriting small to medium sized business loans in an urban infill market; and

      4) The Phoenix market has been largely red-lined from institutional investors for the last several years.

      I would argue that within this context, beating up on the Urban Grocery’s failings is akin to beating up on Solyndra. Sure, there were defects in the business model, but when you are pioneering, you shouldn’t be surprised by failure.

      The challenges outlined above are real, and extend beyond the universe of cash businesses like the Urban Grocery, restaurants, or retail outlets. They were faced by firms seeking investment and lending for residential real estate development and mixed use development during the last cycle, under investment and lending conditions nearing hyper-liquid states.

      At present, the fundamentals of the downtown Phoenix environment are strong, as outlined in my original essay; consequently, as the market begins to thaw, we should find access to capital to be marginally easier for those businesses and projects which have strong sponsors and compelling stories.

      But the fact remains that we need to work to convince folks with the purse strings that investing in the core is a good thing. The Sustainable Communities Working Group TOD Fund is a good start, but we also need to make sure, as Phx Planner points out, that we have small scale investment in local businesses as well if we are to create the kind of community infrastructure we seem to espouse.

      I recall that when PCDIC was undertaking its initial capitalization, the Phoenix New Times convened a panel with Richard Florida which included then Councilman Greg Stanton and Kimber Lanning. Kimber made a forceful case that is still relevant, in her critique of the City of Phoenix’s decisions to invest in the Sheraton Hotel and the Convention Center. She said, if my memory serves me, that the impact of the City’s $300 million dollar investment in the Convention Center, while real, would likely be multiplied to a greater degree if the investment were broken up into 300 $1 million dollar investments within the downtown core.

      She had a point, and it remains relevant to this day: we need to continue to promote small scale investment because those investments provide the small scale detail and intimacy which many of us crave. More importantly, those small details, and hidden business gems, whether places like the Rum Bar, Matt’s Big Breakfast, or Bunky Boutique, or co-working spaces like co+hoots, are constituent components of a creative economy. They are as necessary (and perhaps more so) as the wet and clean lab spaces provided on the Bio Science Campus or the fiber running down Central Avenue through the old Phoenix Newspapers, Inc. building.

      The reason we don’t have financial facilities which focus on such small wonders is straightforward, and symptomatic of the broader problems faced by capital markets during the 2008 collapse: they require work to underwrite, and are consequently less “efficient” in producing returns on capital. Bankers and financiers are as susceptible to the herd mentality as anyone, as we well know. If it doesn’t fit into conventional wisdom about a market, then the project or business has a harder time attracting capital.

      Daylight’s burning, and we have a lot of conventional wisdom to challenge.

      That’s plenty of work for us all, folks.

  8. Stacey Champion says:

    Brilliant comments, Feliciano. I think continuing and expanding on this conversation is vital, and I look forward to seeing more fruits of our combined community effort in the coming years. And yes – Kimber’s comments were spot on. Can you only imagine…?

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