Kroger closing: Nokomis, IL

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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Best guess: this store was marginally cash flow positive, but Kroger has decided that a store that small and that out-of-date (it's hard to tell, but it doesn't look like it's gotten much more than a coat of paint for decades) is a bit, shall we say, off-brand.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: January 15th, 2021, 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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Re: Kroger closing: Nokomis, IL

Post by retailfanmitchell019 »

storewanderer wrote: January 16th, 2021, 11:57 am 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.
I think AWG is the strongest wholesaler in that part of the country. They acquired Affiliated Foods Midwest a few years ago.
There are plenty of Albertsons in small Montana towns that have lasted very long, being the only store in those areas (they got these stores from Buttrey)
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Re: Kroger closing: Nokomis, IL

Post by Bakeragr »

It seems like the Kroger Central division, in my experience, keeps these small-town locations open as long as they can until it requires them to do some updating. They run these stores until the wheels fall off. Literally. There's only two Kroger Central locations left in Missouri, on the west side of St. Louis, in Troy and Rolla. I have not been in the Troy location (which probably does quite well because that area is growing), but the Rolla location is very close to the Central Missouri Gerbes (Dillon division) locations, and I would assume more of their shoppers are familiar with Gerbes as opposed to Kroger. They hear Gerbes ads on the TV and radio. It doesn't make any sense that it is in the division it is.
If you look at the location map for Illinois, I believe that the stores they have scattered around Central and Southern Illinois are a leftover of stores that they kept when they pulled out of St. Louis and other Illinois cities in the 80's. They do not seem willing to invest in the stores, and when they fall apart, they close them. In the last decade they closed two others on the Missouri side, in Louisiana and Warrenton. Both stores looked ancient and were in poor condition.
I shop at the Gerbes stores in Central Missouri, and they have been updated and remodeled, for the most part. They closed one of their three stores in Columbia a couple of years ago, which didn't make sense, but I think Hy-Vee was totally dominating them across the street. If they'd have spent a little money to update it, I think they would have still done well, because their prices typically beat Hy-Vee and even Walmart. I don't get their store renovation budgeting.
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Re: Kroger closing: Nokomis, IL

Post by storewanderer »

The Troy Kroger is a pretty large store and was probably remodeled around 2008. Maybe it was expanded at some point. It wasn't a bad store, and I was surprised with it (I went there after Rolla and Warrenton both of which I was thoroughly impressed with; not just the condition but the quality of the operations in general). The Rolla Kroger is a Superstore era model but it is a dump. Both of those looked to be doing some volume. The Warrenton store was very small, very old, and didn't look to be doing much volume; I am not surprised it closed.

That store Dillon's closed in Columbia didn't seem to be in great condition and Hy-Vee really rolled over them there. Dillon's also pulled out of Springfield, MO (5 stores I think) not long after Hy-Vee built one store there (Dillon's had a store across the street from the Hy-Vee). Dillon's also never replaced Joplin after it was destroyed in the tornado though they ran a freestanding pharmacy for a couple years so it appeared as if they were at least considering rebuilding, then ultimately did not. Dillon's seems to be contracting in MO in general. Conversely in Topeka, Hy-Vee built on the site of a former Albertsons (demolished it I assume) and in that market Dillon's spent a lot of money expanding and renovating its existing stores around the same time Hy-Vee showed up. In Topeka, for some reason-maybe due to a store swap with AWG where Dillon's picked up stores in Topeka around the same time, Dillon's put up a fight against Hy-Vee. Unlike in Columbia where they shut down the store across from Hy-Vee and in Springfield where they just bolted from the town entirely. Dillon's is a little confusing- I find their product freshness to be above average for Kroger and very above average for the regions they operate in. I don't understand why they pull out of any markets- they should be the strongest player in any market they are in as they have the best freshness and strong pricing. As you point out they are cheaper than Hy-Vee and have better produce and meat (probably not better bakery and deli though, and certainly not better center store mix).
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