Pope’s Variety Wholesalers buys Southeast Raleigh Kroger to establish grocery

08/01/2014 12:00 AM

07/31/2014 1:35 PM

Art Pope’s Variety Wholesalers has purchased the vacant Kroger store in Southeast Raleigh with plans to establish the company’s first standalone grocery in an area that badly needs one.

The company, which owns Roses, Maxway and other discount stores, bought the property on Martin Luther King Jr. Boulevard last week for $2.57 million – well below its assessed tax value of $5.65 million.

Pope, who is the state’s budget director, said Monday that the former Kroger will be divided into a Roses store and a separate grocery. He said his company sees the need for both businesses.

“It is a way to serve our community,” he said.

Pope said his company has added a grocery section to Roses in several locations, but the Southeast Raleigh site will be its first foray into operating a separate grocery store. He says the new model could work well in communities that lack access to fresh foods, but he doesn’t plan to use it in locations where there’s already a grocery.

Southeast Raleigh leaders have been working to attract a new grocer since Kroger closed in January 2013, citing declining sales figures. Many residents of the area don’t have cars and must take multiple buses to shop at the nearest Food Lion stores a mile or so away.

Of 4,000 households within a mile of the old Kroger, 25 percent earn less than $15,000 a year. More than half earn less than $35,000.

City Councilman Eugene Weeks, who represents the area, said he’s hopeful that Variety will fill the community’s grocery needs. He said a new store doesn’t need to be as big as the Kroger and that he’d be comfortable with a smaller store.

“The bottom line is that the community is tired of seeing a vacant building on that corner,” Weeks said. “We need somewhere that people can get fresh veggies and meats and live a healthy life.”

Pope said he doesn’t yet know when the new stores would open.

“We’ve just closed on the property,” he said. “It’s going to be a bit of time before our plans are finalized.”

Developer Craig Ralph opened the 60,000-square-foot Kroger store in 2003, and city leaders hailed it as the first grocer to serve the low-income, predominantly black neighborhood. A few years later, a SunTrust bank branch opened in the shopping center, aiming to provide an alternative to the check-cashing businesses dotting Southeast Raleigh.

But after a decade in business, Ohio-based Kroger announced the store was losing $1.5 million a year. After selling off its remaining inventory, the space went dark in January 2013.

Ralph said the remaining businesses – the SunTrust and a barber shop – have struggled since.

“Everyone is hurting because you don’t have the traffic from an anchor,” he said.

Ralph owns the smaller shop buildings, but Kroger owned its building and parking lot. He says he lined up potential grocery tenants, but the rents they were willing to pay weren’t enough to offset the purchase price. But he thinks Pope’s model will work for the area.

“I’ve always thought there was a market for a dollar store,” he said. “It’s like a Super Target on a smaller scale.”

Ralph expects more development is now on the way, including several vacant lots he owns around the same intersection. Among the possibilities he sees: a Waffle House, a gas station or a coffee shop.

Filling the void

After Kroger left, several community groups tried to fill the void. A few small farmers markets sprouted on street corners. And in May, two churches partnered to open The Galley Grocery Store on nearby Bragg Street.

On Thursday night, the Fertile Ground Food Cooperative plans to kick off its membership drive in hopes of establishing a 10,000-square-foot co-op grocery and community center in Southeast Raleigh. The idea is to have a member-owned shop for locally grown produce sold by workers making a living wage – similar to Carrboro’s Weaver Street Market.

Erin Byrd, an organizer of the group, said it’s too soon to know how Pope’s announcement will affect the plan, although one of the possible co-op sites was the vacant Kroger.

Pope’s company came under fire in Southeast Raleigh last year when the NAACP picketed the Maxway store on Poole Road. The group passed out leaflets accusing Pope of using store profits to support conservative causes and candidates.

Pope countered in a letter to NAACP leader Rev. William Barber that the company employs a staff that is 44 percent black and that it “brings thousands of much-needed jobs to communities throughout North Carolina.”

Danny Coleman, who chairs the South Central Citizens Advisory Council, said residents should put politics aside and support Variety Wholesalers’ plan for Southeast Raleigh.

“I think the vision is right on time, and he’s getting very favorable feedback through the community,” Coleman said. “The private sector is trying to address the needs of the community, and we need to give the private sector a shot at it.”

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