Kroger closing: Nokomis, IL

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storewanderer
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Kroger closing: Nokomis, IL

Post by storewanderer »

https://www.wandtv.com/news/nokomis-kro ... 51d8e.html

Only grocery store in the town...

Not a great situation.

Too bad they couldn't try to flip it to the Ruler Foods format.

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Re: Kroger closing: Nokomis, IL

Post by pseudo3d »

The store looked to be about 10,000 square feet and definitely aged. The store is part of the Central Division, which stretches well into Missouri (Rolla), despite being closer to Dillons than any of Central's warehouses. Some of Kroger's more recent closures tend to lean heavily into cutting off Kroger if they only have one store in town, even if it is (on the surface) profitable.

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Re: Kroger closing: Nokomis, IL

Post by BillyGr »

Seems like a situation where something else (like an IGA) might work out to be an option to take over the spot, rather than a bigger chain.

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Re: Kroger closing: Nokomis, IL

Post by kr.abs.swy »

An expert on Nokomis, Illinois, I am not ...

Per the Wikipedia page, the population has declined by about 20% since 1980, to around 2,100 people. So they're definitely on the small side to have a chain supermarket, and the trends aren't good.

I wondered if this was a story where the Dollar General came to town and siphoned off just enough sales to make a formerly marginally viable store un-viable. But per Google Street View, that Dollar General has been there since 2007.

Best guess: this store was marginally cash flow positive, but Kroger has decided that a store that small and that out-of-date (it's hard to tell, but it doesn't look like it's gotten much more than a coat of paint for decades) is a bit, shall we say, off-brand. They determine that there isn't adequate ROE on a remodel, so they decide to shut it down instead. Even if it was cash flow positive, they weren't making that much money out of a store of that size in that small of a town.

Or maybe the lease is just up and, again, it doesn't make sense to go forward.

But I didn't even know that Nokomis, Illinois, existed before I saw this thread, so take this all with a grain of salt.

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Re: Kroger closing: Nokomis, IL

Post by storewanderer »

This reminds me of the Safeway in Lovelock, NV. Small town with declining population.

It also probably didn't help that this Kroger was "off the highway" (again like the Safeway in Lovelock). I suspect many folks driving through Nokomis, IL did not even know there was a Kroger there since it wasn't along the main road.

The thing with Kroger is given its prices historically were pretty good, I would think the people in the town would shop there. They are certainly competitive with Dollar General on packaged goods.

IGA, etc. formats should work but it is really hard to compete with Dollar General on price for packaged goods. And not enough demand/room to do an extensive volume of produce, meat, bakery/deli (probably doesn't even have those).

It is never good when a town loses its only grocery store.

There is a very similar small Kroger in Carrollton, IL. Also in White Hall, IL.

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Re: Kroger closing: Nokomis, IL

Post by BillyGr »

kr.abs.swy wrote: January 14th, 2021, 4:53 pm An expert on Nokomis, Illinois, I am not ...

I wondered if this was a story where the Dollar General came to town and siphoned off just enough sales to make a formerly marginally viable store un-viable. But per Google Street View, that Dollar General has been there since 2007.

Or maybe the lease is just up and, again, it doesn't make sense to go forward.
Possibly even a combination - being an older store, it's possible that they had a longer lease at low rates (similar in a way to many Kmart locations). So, the Dollar General may have been taking sales for some time, but if the lease was cheap enough they were still able to do OK, where having to do a new one (at one would suspect a higher rate) would make it become unprofitable.

I suspect that Dollar General is just a "normal" one (not the Market type), but at least that's better than no food option in town at all.

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Re: Kroger closing: Nokomis, IL

Post by storewanderer »

BillyGr wrote: Yesterday, 4:39 pm
Possibly even a combination - being an older store, it's possible that they had a longer lease at low rates (similar in a way to many Kmart locations). So, the Dollar General may have been taking sales for some time, but if the lease was cheap enough they were still able to do OK, where having to do a new one (at one would suspect a higher rate) would make it become unprofitable.

I suspect that Dollar General is just a "normal" one (not the Market type), but at least that's better than no food option in town at all.
Dollar General drives a hard bargain to existing businesses in these rural towns. They come in and are a huge upset to the independent grocer who has been in business for the past 50+ years. They literally take 75% of the independent grocer's center store business almost overnight. Especially these independents in the west who are forced to deal with wholesalers like Unified (or Supervalu/UNFI now) who does little to nothing to help the store compete on price or get them promotions on center store items. Dollar General has a sharp mix and sharp pricing. Terrible store conditions but that doesn't matter much, it is about getting what you need at a price you can afford without having to drive 30 miles to get it in these rural locations. Dollar General has less of an impact on chain grocers who have better promotions but still has an impact.

Dollar General with its national contracts sells items like soda, bread, etc. at everyday prices lower than the vendor cost (who is charging the independent a high price, since it is a remote delivery and a small volume delivery) invoices the independent grocer for these items.

What is interesting is Family Dollar seems to be far less effective at this than Dollar General. On the surface their mix looks the same and pricing seems to be similar, so I am not sure why they are so much less effective on grocery sales.

So the Kroger in this town probably lasted longer than an independent would have lasted, unless there are some wholesalers there in IL that run stronger promotion programs.

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