Kroger's closing devastates a Raleigh neighborhood

Customers who can’t drive unsure where they’ll shop

jshaffer@newsobserver.comDecember 22, 2012 

— At least three times a week, Elizabeth Barber hikes the quarter mile from her senior-living apartment complex to the Kroger on Martin Luther King Jr. Boulevard, stuffing the groceries she buys into the basket of her rolling walker.

She’s 86 with a heart condition, and she leads a small parade of elderly friends for food and supplies: Dorothy Miller, 84, who walks with a cane, and Gloria Small, 78, who rides in a power chair.

All of them live on a fixed income. None of them drives. All of them love and depend on Kroger – the only pharmacy and fresh food seller within a mile.

In January, their favorite store will shut its doors along with another on New Bern Avenue. They are the only Kroger stores in Southeast Raleigh.

Kroger officials report that neither store makes money, despite warnings to city officials, despite managers walking door-to-door to drum up business and despite the neighborhood’s acute need. The store on MLK lost $1.5 million last year alone, said company spokesman Carl York.

“We kept it open a lot longer than we typically would,” he said. “We feel bad about having to close those stores. You can only lose money in business for so long.”

Its departure leaves a far bigger hole than most business closings.

Out of 4,000 households within a mile of the Kroger on MLK, 25 percent earn less than $15,000. More than half earn less than $35,000 – a total that falls short of Raleigh’s household median income by $15,000. Stand in the parking lot for an hour on a weekday afternoon and a dozen shoppers arrive on foot, two dozen more in city-subsidized taxicabs.

This is a store with prices low enough for green peppers to sell at 50 cents apiece, and where instant soup costs 29 cents – less than much of the merchandise sold in vending machines.

Kroger’s exit leaves Raleigh with the problem of how to provide basic necessities for its poorest and most vulnerable residents. That question caused furious debate earlier this month when more than 100 people filled a meeting hall at Martin Street Baptist Church, asking whether Southeast Raleigh got slapped in the face by a corporate giant or fell victim to the same economic downturn that is plaguing all grocery stores.

Meanwhile, walkers such as Barber and her friends are scrambling to find places to buy food. The two nearest stores, both Food Lions, stand more than a mile away.

“We were so glad when they built Kroger, Lord have mercy,” she said. “All I can think about is, we just have to wait. Maybe somebody will come up with something. I can’t walk to Food Lion, I don’t think.”

Light traffic

Ten years ago, the Kroger on MLK opened to great fanfare – placed on a corner that had previously been woods.

Developer Craig Ralph raved about the possibility for further development in the area at the time, “When the largest grocery chain succeeds in Southeast Raleigh, then it won’t be long before the Targets and Walmarts come.”

The MeadowCreek subdivision followed soon after, offering a mix of senior apartments, starter homes and two-story houses. Gregg Warren, president of the Downtown Housing Improvement Corp., said the neighborhood was developed in tandem with the Kroger – roughly a $13 million investment in Southeast Raleigh.

Retiree James Matthews, 67, makes the walk from that neighborhood three or four times a day because he doesn’t have a car. “I think they’re making a mistake,” he said, holding Kroger bags in his hand. “I don’t know how much money they want to make.”

A SunTrust bank branch followed Kroger to Shoppes at Pinehill in 2008, and just this year, it was joined by a branch of Fifth Third Bank located inside the grocery. Construction finished only recently, and community leaders say shutting the store down so soon after the bank’s opening is Kroger’s unkindest cut.

“You’re not going to tell me Kroger didn’t know they were closing,” said Raleigh City Council member Eugene Weeks.

But company spokesman York said Kroger held onto the MLK store for years when traffic wasn’t heavy enough, and spending wasn’t sufficient enough, to keep the doors open. He described a meeting with Raleigh officials several years ago when they made its troubles clear. After that meeting, its managers knocked on doors and visited churches throughout the neighborhood, trying to encourage shopping.

Officials in Southeast Raleigh recall a different history.

Activist Octavia Rainey said she and others in the community met with Kroger to suggest the store engage more strongly with residents and try to brand themselves as a neighborhood grocery. But she never heard Kroger was struggling in Southeast Raleigh.

Then-Councilman James West, now a Wake County commissioner, said Kroger contacted him to discuss strategies and never followed up afterward. But the idea that Raleigh received notice rankles him.

“I thought they were doing fine,” West said. “I don’t remember them coming to me saying they were struggling.”

A ‘food desert’

Ralph, who owns a shopping center at MLK, said sales are soft everywhere – not just in Southeast Raleigh.

Aside from Walmart, Kroger is larger than any other grocer in the country, and with a unionized labor force, its costs are higher. Kroger closed a store in Wakefield Commons, one of Raleigh’s most prosperous neighborhoods, in 2011. And in a departure from other instances where Kroger has closed a store, the company says it’s willing to allow a new grocery to take up the empty space on MLK, where it still maintains an ownership interest.

The market has grown more competitive, with stores packed closer together. Even after closing two stores, Kroger maintains 14 in the Triangle – not a huge presence.

“It’s nothing indicative of the neighborhood,” Ralph said. “You can’t continue to slice the pie that thin.”

Phil Lempert, a California-based retail analyst also known as the “supermarket guru,” said Kroger has a history of being responsible to the neighborhoods where it opens its stores.

As a large chain, he said, it can afford to keep some stores open if they’re marginally profitable or even losing money, especially if those stores serve an obvious community need.

It might have a market with 100 stores where a dozen fit that bill without doing much damage, he suggested. But if that number goes higher, the profitable locations can no longer bear the burden.

“Kroger does not decide to leave a market just off the cuff,” Lempert said. “They give a lot of thought to it. They’re very concerned about who their shoppers are, and where their shoppers are.”

But when neighbors met Monday to talk about what comes next, nobody talked about sensitivity to Southeast Raleigh. They talked about the area becoming a “food desert” – a community with no nearby access to fresh, healthy food – in the wake of Kroger’s departure.

And though it may hold low-income residents, the area around the MLK Kroger also include two universities, 14 public schools and a golf course community, said meeting organizer Corey Branch, who ran unsuccessfully for City Council last year. A demographic that diverse should be able to support a grocery of some kind, he said.

York wasn’t sure.

“I think that’s a real community problem,” he said. “I think that was a problem before we got there, and it will be a problem when we leave.”

Too far to walk

The MLK Kroger might seem foreign to a Raleigh shopper from another neighborhood.

You can buy oxtails there, but not at the store on Six Forks Road only a few miles away. There’s a large display of malt liquor in 40-ounce bottles, also unavailable on Six Forks. A handmade wanted poster is tacked to a tree in the parking lot.

A persistent knock on the Southeast Raleigh store is that it wasn’t stocked well enough for anybody to do weekly shopping. The aisles are filled with bargain bins offering 10-for-$10 specials, the selection somewhat random. It’s not a store where you can find leeks, bok choy or portobello mushrooms.

At last week’s meeting, Kia Baker from Raleigh’s Inter-Faith Food Shuttle said the produce often looks wilted and unappetizing. She can look elsewhere for soy milk or whole-grain pasta, she said, but many shoppers in Southeast Raleigh don’t have the option.

At the same time, some question whether neighborhood support for Kroger was strong enough.

“Part of the reason we’re losing the Kroger is we didn’t shop at the Kroger,” said state Rep. Yvonne Holley, addressing the crowd at Martin Street Baptist. “You’d go in and get your little quick stuff.”

The hope around MLK is for a new grocery. Ralph says he is talking with three of them, and he’s optimistic.

In the senior housing around the back, Barber and her friends hope for a replacement. At 86, a mile and some change will wear down the wheels of a walker.

Shaffer: 919-829-4818

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