Community Notebook > Supermarket Scandal

Missing Markets
By Tree McElhinney . Photos by Megan McQuade

When Cold Spring Mayor Anthony Phillips needs to buy groceries, he and his wife Debbie often walk the three blocks from their home to the village grocery store, a Foodtown that recently opened at the site of the former Grand Union. Like many residents in this tiny Hudson River municipality, the Phillipses enjoy being part of a community where people live, work, and shop within a square mile.

So when the Grand Union burned to the ground a little over a year ago, the Mayor said, the village was devastated. “You’re used to having everything easily available, and then suddenly it’s gone, and you have to drive 10 miles to get basic necessities.” Over the 16-month period it took to rebuild the store and secure a contract with Foodtown, villagers made do with driving to the nearby towns of Fishkill and Beacon to do their shopping. A shuttle bus was set up for the village’s senior citizens, who normally pushed grocery carts the short distance between the store and their housing complex. But as Cold Spring resident David Rothenberg wrote in these pages in March of last year after the fire, the mood of the village had darkened. “Everyone is in some kind of mourning for the market, not a spectacular or up-to-date place with all the latest trendy foods, but a place that had most of what we needed, easy to walk to one or more times a day.”

At a time when many small to mid-sized grocery stores throughout the Hudson Valley are being replaced by giant supermarkets located on busy thoroughfares away from town centers, the village of Cold Spring was fortunate to find a food chain willing to set up shop in a 7,000 square-foot building. Other Hudson Valley communities, however, have not been so lucky.

In 2001, the Grand Union once located in the historic downtown district of the Orange County village of Warwick went out of business. The decision to close the store was made by Vermont-based C&S Wholesale Grocer, which acquired 185 Grand Union stores through bankruptcy a year earlier. The company converted some stores to GU Markets, but sold the leases for the majority to businesses such as Hannaford Bros.—for which C&S is a distributor—and CVS Pharmacy. The lease for the Warwick store, like that of nearby Greenwood Lake and the Ulster County town of Woodstock, was purchased by CVS.

Like the Mayor of Cold Spring, Warwick’s Mayor Michael Newhard believed his community of 6,400 was transformed by the sudden loss of its grocery store.
“Losing the food market because of the decision made in some headquarters in Vermont was negative for the quality of life,” said Newhard recently. “Twenty-two percent of our population is made up of senior citizens. In terms of a viable and sustainable community, the availability of food and groceries in the village center is essential.”

In February, backed by two former village Trustees and a citizens group called It’s Our Town, Newhard had unveiled an “urban renewal plan” that called for a change in zoning density that would permit another grocery store to lease the Grand Union site while allowing CVS to build next to it. When CVS rejected the deal, Newhard announced that the village government was prepared to acquire the property from its owner through condemnation proceedings and redevelop the property on its own.

Newhard said “the village government considered using the heavy hand of eminent domain” because the 20,000 square-foot site of the former Grand Union was the only village building suitable for a grocery store. “Our intention was not to eliminate CVS, but to partner with CVS and try to figure out some way we could be successful together,” he said. “We wanted them to build a new store next to this building so that Emmanuel’s Marketplace [a successful privately owned supermarket in the Ulster County town of Marbletown] could take over the old building.”

But while Newhard and his supporters viewed the plan as vital to the welfare of the community, opponents insisted the village should leave the development of property to market forces and not infringe upon the rights of CVS to open a store based on a legally purchased lease.

“Food is very costly to move and they need big stores to be profitable, and that’s it in a nutshell,” said longtime village resident Stan Mocarsky, who described himself as the “most strident” of Newhard’s opponents. “Grocery stores are leaving small communities because they are not serving them anymore. Big stores are serving the community. Too many people stuck their nose in legitimate private business, and private business resolved what is an economic, not a social, issue.”

Newhard’s plan came to an abrupt end when two incumbent trustees, who would have given the plan a likely majority on the five member board, were ousted in the March election. And although Newhard narrowly beat his challenger, he maintains that his attempt to save the village’s grocery store was necessary. “It was an unusual step, but I felt and still feel it was a step about protecting our investments, and that is my job.”

And according to It’s Our Town co-chair Bob McGrath, those who supported Newhard’s efforts are still trying to get some type of market established. “Right now we are in a wait-and-see mode,” McGrath said of the citizens group which is talking to CVS about subleasing approximately 3,000 square-feet of the building. “It’s not going to be much of a market, but we are looking at different options and there are some people interested.”

But what about market forces? Can smaller grocery stores survive in communities that big box stores have targeted for expansion? According to Emmanuel Gerondaras, the owner of Emmanuel’s Marketplace, it is getting increasingly difficult.

Even if CVS had accepted Newhard’s deal and agreed to lease the store, Gerondaras said he would not have been able to open a branch of Emmanuel’s Marketplace in the village of Warwick.

“The whole cost of the attorney, purchasing the lease from CVS, and purchasing the property from the current owner would have been totally impossible,” he explained. “In the supermarket business, there is a maximum one can pay for a square-foot. We are not super giants that can do things with lawn chairs and other bigger markup items… we don’t have that gravy. We have a maximum dollar per square-foot, and, obviously, that could not be met.”

Another factor that smaller grocery stores have to contend with is gaining the endorsement of their distributors.

“With anything more than 5,000 square-feet, an owner or landlord wants a big player such as a wholesaler to guarantee the length of the contract so that they know they are going to have a business and not an empty store down the road,” Gerondaras said.

Gerondaras said that his distributor, the Minneapolis-based SUPERVALU Inc., one of the nation’s largest food retailers, would not endorse his proposal to expand in Warwick. Given that demographics include a plan for a 55,000-square-foot Hannaford superstore to open across from an existing ShopRite located on Route 94 just over a mile outside the village, he said, the distributor would not guarantee a 25-year lease downtown.

But of the 15,000-square-foot former Grand Union site now occupied by CVS in Woodstock, Gerondaras said he “could have done something very nice,” something the town and his distributor could have supported.

“It was too bad,” Gerondaras said of the lost opportunity. “The leases on the Grand Union stores were cheap, one to two dollars per square-foot, and for CVS it was a smart business move. They have pockets so deep they were able to acquire chunks of the former Grand Union, bidding on more than 20 sites, versus me who can only bid on one store.”

Some residents of Woodstock, who like Phillips and Newhard believe a grocery store is an essential part of the community, are not giving up. Through organized picketing and demonstrations, they continue to promote a boycott of CVS.

“I think we are making a difference,” said Toby Heilbrunn, a former town board member and current district candidate for the Ulster County Legislature, who has been largely responsible for leading the protest against CVS. “If we succeed in shutting them down, the next step will be to speak to a small supermarket like Emmanuel’s.”

In the meantime, Gerondaras said he is in negotiations to expand his business in the Orange County town of Goshen, which also lost its grocery store to the C&S acquisition of Grand Union. And this time, he said, CVS will not be a problem because it is already in the plaza. “Again, the owner wants the wholesaler to guarantee the project. We will do our homework and look at the numbers and hope it will be fruitful.”

But as small grocery stores like Emmanuel’s make an effort to stay in town, offering service and quality in lieu of competitive pricing, a question arises: Will communities continue to support them despite the increasingly cheaper prices available only 10 miles down the road?

In addition to the discount giant food stores, like Hannaford Bros. and Price Chopper that have opened in the Hudson Valley, customers are being lured away by the likes of Wal-Mart and Sam’s Club, super stores that have expanded into the food business, dropping prices even further. And while many people say they support their local grocery stores when buying everyday items such as milk and bread, market trends show that the same people tend to frequent larger stores when doing bulk shopping.

The appeal of the village grocery store as both a social hub and convenient place to shop for the evening’s dinner certainly remains, but its long-term fate seems uncertain.