When Dave’s Markets announced it was closing its Collinwood store April 30, stranding seniors and other customers, there were two stories the community immediately started to tell itself.
The first was that Dave’s had too many low-income customers, resulting in declining sales and revenue worsened by the pandemic.
The second was that Dave’s rent was too high and the building needed major repairs, which made it unsustainable. It’s true the roof leaks, and the landlord confirmed in an interview with Cleveland.com he increased the rent by 50% from $168,000 to $252,000 a year.
It’s also true that it’s a predominantly low-income area. According to the Cuyahoga County Board of Health, 46% of residents who live within a half mile of the store are below the poverty line and 49% of residents don’t own cars. Yet Dave’s has been serving low-income customers for years, so what’s changed, really?
The landlord, Montlack Management, told Cleveland.com they’d do anything to keep Dave’s if the grocer would sign a long-term lease, including keeping their rent the same and helping with building repairs.
So, if rent and poor people are not the main reasons Dave’s is closing, then what’s going on here?
In press releases, Polensek said the Saltzman family cited numerous reasons for the closure, including “low sales volume; drop in revenue; decrease in customer base; and, the fact that people’s shopping habits have changed with the advent of ‘dollar’ stores and online sales cutting into their bottom line. They were also hurt by the COVID-19 pandemic and never fully recovered.”
All of this may be true without being the driving reason. Dan Saltzman, President of Dave’s, told Polensek and Mayor Bibb in a City Hall meeting that Dave’s made a strategic decision to consolidate its efforts at its Euclid store. “What [Dan Saltzman] tried to make clear to us was that they make money on volume,” Polensek told Cleveland.com. “And [they’re not turning enough of a profit] unless they have a lot of customers coming through that door.”
Tellingly, Dave’s even turned down the city’s help. “The decision had already been made,” said a Bibb spokesperson.
Omar ElhagMusa, senior lender with the community development finance agency IFF, who previously worked for the Finance Fund and helped bring a popular Simon’s Supermarket to the city of Euclid, said the writing was on the wall and people should have seen it. County property records suggest he may be right – the Euclid Beach store had not had an overhaul since 1997.
“They made a decision not to invest in that store for years,” said ElhagMusa. “That was a business decision. The operator looked at it and said, ‘This is not for me. [Customers] have to eat, so they’ll have to hoof it to where I am [in Euclid].’”
The heart of the neighborhood
Dave’s touts itself as “the heart of the neighborhood” and has long anchored Cleveland communities, but it’s been consolidating for several years. In 2019, Dave’s closed its East 40th and Central store as well as its Payne Avenue store, and it opened a 55,000-square-foot hub at East 61st and Chester in Midtown. Similarly, the grocer expanded and renovated its Shore Center in Euclid, where it will soon send its Collinwood shoppers courtesy of a neighborhood shuttle bus.
When Dave’s Euclid Beach closes, for the first time in its history, the urban grocer will have half of its stores in the suburbs. Cleveland needs more grocery store openings, not more closings. I’m not here to slander Dave’s–I’m a Dave’s shopper, and I appreciate the grocer’s investment in our neighborhoods. But according to the County Board of Health, as many as half of city residents live in a food desert, defined as an area that’s more than a half mile from a grocery store.
Polensek himself acknowledged in a recent interview with Ideastream that he’s been worried about the Euclid Beach store closing ever since the Shore Center location in Euclid opened. So, why were city leaders caught off guard?
The response to help abandoned shoppers has been tepid at best. The shuttle is putting a bandaid on a bullet wound and Polensek’s railing against the landlord may be true but it doesn’t offer a solution. In the conversation with Ideastream, Polensek said he’s meeting with the Bibb team to address the root problem.
What’s truly needed is more creative thinking and systemic solutions, said Morgan Taggart with FARE (Food Access Raises Everyone), an organization that helps address food deserts in city neighborhoods. “It’s like, ‘Now you’re leaving, what can I offer you?’ By that point, it’s too late,” she said. “There’s not a forward-facing strategy. It’s going to take working outside the current market model. Stores may need operating support. Food should be a public good, but we’re relying on the market.”
As Polensek noted, the Dave’s closure leaves the Collinwood area without a full-service grocery store. (There is a Save a Lot, Simon’s and the East Side Market, but they’re all 1.5 – 2 miles away.) This lack of food access disproportionately affects low-income residents and communities of color. It is linked to health disparities, including obesity, diabetes, high blood pressure, and even lower life expectancy.
Taggart said it’s a very worrying trend. Grocery stores have long been moving out of the city, but independent operators like Dave’s have been filling the gaps for the past 30 years. If Dave’s begins shifting away from neighborhood stores, it could be like dominoes falling in Cleveland, exacerbating food deserts. The grocer has previously said the Shaker Square store could be at risk if the shopping center does not get a new owner who’s able to fix it up.
“Now what we’re seeing is huge consolidation in retail, because they need to have scale in this space,” said Taggart, citing the rise of online ordering, especially during Covid for those with internet access and the means to afford it. The region’s online-ordering market will have another major player soon–Kroger is planning a fulfillment center in Oakwood Village.
“Dave’s really does seem to be pivoting to address the changes in the grocery market. I’m not sure what that means for other neighborhood stores. All these externalities really do make the business model very challenging overall,” said Taggart.
All of the food experts I spoke with said the city has to “get creative” with attracting and retaining grocers in the city.
Simon’s Supermarket in Euclid is one example. Roger Sikes of the County Board of Health helped recruit Simon’s to open the store in 2017. At the time, the local grocer was only operating one other store: its original location at E. 152nd and St. Clair at the Five Points Shopping Center. In 2017 and 2018, the entrepreneur then opened three stores: one in Euclid, one at Church Square in Fairfax, and one in Buckeye. The Buckeye store replaced a Giant Eagle that had pulled out of Cleveland.
Sikes said the Euclid store was successful because there was a community organizing effort to listen and address community needs, and because Simon’s owner pays attention to customers on an ongoing basis. The store got funding from the county and from the Finance Fund’s Healthy Food for Ohio program, but at the heart of the deal was an operator who worked with the community.
“We can absolutely have quality grocery stores in low income and working class neighborhoods, but it takes a collaborative space where residents and grocers are listening to each other,” Sikes said. “When the grocer respects the neighborhood, invests in the community, and makes meaningful efforts to relate to the neighborhood, that can help stabilize the business.”
“Yes, [grocers] can survive, but they may need subsidies to survive,” he added, citing the need for government, nonprofits, philanthropic partners, and the community to get involved. “And ongoing leadership. They need to demonstrate to residents that they’re accountable.”
But sometimes, even a subsidy isn’t enough. The creation of Dave’s Markets on Chester was heavily subsidized, with $17 million in New Market Tax Credits, along with low-interest loans and grants at the city, county, and state levels. In the urban grocery store world, it’s well-known that startup costs can be a big barrier. Still, for Dave’s Euclid Beach, the offer of help was not enough, perhaps because the decision had already been made to consolidate and focus on more profitable stores.
ElhagMusa, the lender with IFF, disputes the idea that grocery stores should need ongoing subsidies to survive. The biggest expenses are the buildout, and the next is labor, he said. If the operator has done his or her homework, they should be able to make the numbers work based on their customer base. Take Simon’s as an example. It was the relationship with the community that kept it going.
“Simon’s had a lot of [community] help,” said ElhagMusa. “All these seniors were like, ‘Baby, I got you.’ They knew how hard it was to open a grocery store so the community really owned it. He listens to the community and what they like to buy. Other larger big box stores don’t have that kind of community ownership.”
Ismail Samad is a chef and local food entrepreneur who just moved from Boston to his hometown of East Cleveland to open a food business incubator. His past experiences include working for Daily Table, a community grocery store, and Commonwealth Kitchen, a community food business incubator in Boston. “Relationships happen at the speed of trust,” he said. “To get trust from someone for something that is your lifeline—which is food—that takes time.”
Simon Hussain of Simon’s grocery store said that he’s able to run a successful store in Cleveland because he knows his customers, has a family-run company where he knows most of his employees, pays attention to what people want, and gives them a good quality product at a good price.
“Inner city is not like a piece of cake, but we’re okay doing it,” he said. “Sometimes owners don’t know how to run inner city stores. People want the most basic stuff. We’re in the store every day and we see what the customer needs and we try to promote what the customer needs.”
Since Simon’s opened, Sikes said there have been some challenges with the store, and the relationship with the community hasn’t been perfect. “The quality has been challenging, and that’s been a problem for some residents,” he said, citing the need to create an ongoing dialogue to try to foster accountability.
Samad said sometimes, when a grocer is already thinking about pulling out, that trust gets frayed. “If a grocery store doesn’t work, it’s not an indictment of the business, the model has to fit the community,” he said.
Lee Chilcote is executive director of The Land.