When grocer Ed Pearson learned recently that one of his customers was traveling to East Greenwich to buy a particular brand of gluten-free bread, he took action. Soon the product appeared on the shelves of his Warren store.
“We’re at the size where we can do that,” said Pearson, founder and manager of The Market at Cutler Mills. “It doesn’t hurt us at all.”
In fact, that type of customer service is a matter of survival for the relatively new organic food store.
In an industry with paper-thin profit margins and relentless competition from not only traditional supermarkets but warehouse retailers, too, Pearson is making a go of it, with his independent market anchoring a revitalized mill complex in town.
The store he founded in a former metals fabrication shop in May 2006 has the feel of a Whole Foods Market, but on a smaller, more personal scale. “We have every department,” Pearson said. “It’s just compact.”
The produce is locally grown; bakery items are made from scratch on site; the café in the front of the store features a separate play area for toddlers.
Excluding Whole Foods outlets in Rhode Island – which are typically 40,000 square feet – the 8,000-square-foot Market at Cutler Mills is the largest organic and natural food store in the state, according to Pearson.
A former consultant for Whole Foods, Pearson said comparisons to the organic food supermarket chain don’t match up in other ways besides size.
“They’ve moved away from their roots a little bit,” he said. “We’re trying to be more community-oriented.”
To that end, The Market at Cutler Mills hosts charity events and holds promotions such as senior discount day on Tuesdays. (Pearson says the senior discount has increased sales by 10 percent on that day.)
The market attempts to live up to the standards set by the organic and natural food segment of the marketplace. Pearson said most produce should either be locally grown (produce comes from Wishing Stone Farm in Little Compton; plants come from Sylvan Nursery in Westport) or be labeled organic. In addition, Pearson avoids items made with high-fructose corn syrup.
Bill Greer, spokesman for the Food Marketing Institute in Arlington, Va., said markets like this face their share of obstacles. According to the institute’s figures, the market share of independent grocery stores nationwide has decreased from 16 percent to 10 percent in the last decade in the face of ever-growing competition.
Nevertheless, Greer said, the organic food segment is a growing niche where some independents have been able to find success. The key, Greer said, is knowing the customer.
“The consumers are changing and growing more diverse in today’s marketplace,” he said. “The independent retailers have the advantage of being more nimble, making changes in their operation.”
So far, it’s been a struggle for The Market at Cutler Mills, but much of it has little to do with the competition. Pearson, who also owns the Coffee Depot, a coffee house on Main Street, opened the organic market with two partners, spending $750,000 to remodel the site, which had been a car dealership.
One partner soon left the business, and then a legal dispute between Pearson and the remaining partner forced the closure of the market in January. At the time of the closing, Pearson said, the business owed about $140,000 to 50 vendors.
Soon, three new partners, Marshall Williams, Tom Bates and Matt Kravitz, stepped in and opened the market as a new business in April, paying back most of the vendors.
Because of ongoing litigation with the former partner, Pearson decided to step down as an owner, serving only as a manager for now.
He even agreed to working for minimum wage until the store is profitable, with the understanding that he’ll be offered an ownership stake eventually. Despite 12-hour days, seven days a week, Pearson said he hasn’t taken any pay yet. He calls it a good-faith gesture to the new partners.
“They took a huge risk,” Pearson said.
Indeed. The Food Marketing Institute says it’s typical that of every dollar of revenue brought in by a grocery store, only one or two cents becomes profit.
Pearson breaks it down this way: 55 cents of every dollar of revenue goes to purchase products; 25 cents goes to labor (The Market at Cutler Mills has 23 employees), and 18 cents goes to fixed costs, leaving 2 cents. “And that’s if you’re doing well, without any blips,” he said.
The market’s owners are banking on the location to help make the business successful. The revitalized Cutler Mills contains more than 30 businesses, and Pearson said there’s a feeling that Warren is an up-and-coming place.
“It’s happening here,” he says. “You can just feel it.”
Additionally, Warren has no other market. Town residents must go to Barrington or Bristol to do their food shopping. And the closest organic food store of any size is Whole Foods in Providence.
When word spread in town that the market was reopening in April, some residents couldn’t wait, particularly those who trekked to Whole Foods. “People were knocking on the door every day,” Pearson says. “They’d tell us how awful it was driving to Providence.”
The owners declined to release sales figures, but Pearson said the store has been hitting projections and should break even by the year’s end.
Still, there are difficulties. Right now, the store has a core base of 400 to 500 customers, not enough to guarantee financial stability. “It hasn’t reached critical mass yet,” Pearson says.
And changing people’s shopping habits isn’t easy. Marshall Williams, one of the owners, said even his mother-in-law still goes to the supermarket in Bristol because she’s comfortable there.
While many potential customers might be concerned about higher prices at the market, Marshall and Pearson maintain that most are comparable to the nearby supermarkets.
And Pearson is already claiming one small victory. He recently noticed that one of the local supermarkets added to its offerings of organic food and cleaning products. He attributes that to the presence of The Market at Cutler Mills.
“If nothing else, we’ve created a reaction of some sort,” he said.
