Keeping Iowa's Rural Groceries Alive Is Critical for Communities

Extension and Outreach supports small-town grocery stores with financial analysis

December 9, 2020, 7:54 am | Duane Johnson

AMES, Iowa – When small-town grocery stores close, rural Iowans lose more than convenience. They can lose their health. Without ready access to fresh fruits and vegetables, people may develop more chronic diet-related conditions including diabetes and heart disease.

The Iowa Department of Public Health reports that Iowa lost more than half its grocery stores between 1976 and 2000. Residents of some towns have mounted heroic efforts to save their only local grocery. The resurrection of Jewell Market is a good example.

Groceries in a cart by kurhan/stock.adobe.com.Some rural stores have reported a boost in sales this year due to the COVID-19 pandemic, but they fear it’s temporary. The business development team of Iowa State University Extension and Outreach has worked to support several small-town groceries over the past year. Here are some highlights of their efforts, from team member Duane Johnson, program coordinator with the Farm, Food and Enterprise Development program with Iowa State University Extension and Outreach.

Marshalltown tornado. Abarrotes Villachuato grocery in Marshalltown was destroyed in a 2018 tornado. The business development team recently conducted a feasibility snapshot for a new larger store. Their financial projections gave a local bank the confidence to approve a $2 million loan.

“The feasibility analysis provided by Duane and his team provided the support we needed to move forward with the financing request,” said Jeff Mathis, market president of Great Western Bank. “Knowing Duane had access to quality industry comparables gave us and the client confidence to back up the business plan.”

Small Town Grocery Consortium. Last December the team got a call from Rich Dutcher, board member for Dayton Community Grocery. He pulled together a group of interested parties from grocery stores in Dayton, Jewell, Manson and Stratford. At an initial meeting the group discussed sharing services and possibly ordering product cooperatively.  

A second meeting a month later drew a lot more people, including store managers and other employees. The meeting became more of a sharing session, with much discussion of operational and financial issues and possible solutions. Discussions continue, Johnson said, as community members consider their options and monitor the pandemic’s impact.

Succession Planning. Family members of another small-town grocery group plan to pass their interest to family members in the next generation. They need a loan to complete the purchase. Johnson is completing a financial analysis and three-year projections. A local lender will review the data and determine the financial feasibility of the project and loan.

“Since grocery stores are such a critical asset to these small towns, I feel it is important to do what we can to keep them open,” Johnson said. “Loss of the grocery store means reduced access to basic food choices, and in particular reduced access to fresh fruits, vegetables, and meat products.”

He added that the closing of a small-town grocery can seem like just another inevitable step in rural decline. But at least two closed stores have reopened in the last year, with one more in the works.

“These communities have shown that if residents are willing to invest the time and money, there is hope for their stores,” Johnson said.

The ISU Extension and Outreach business development team includes staff from FFED and the Community and Economic Development programs.

Johnson can be reached at duanej@iastate.edu

 

Photo credit: Groceries in a cart, by Kurhan/stock.adobe.com

About the Authors: