FULTON, NY – Local Fulton grocers concerned about competing against a big retailer with deep pockets in an industry with already low profit margins spoke against granting special permit status to property on the city’s east side.
During Tuesday’ public hearing on the special permit for the proposed ALDI’s Food Store at the former Nestle’s site, John Struppler, owner of Struppler’s Sure Fine Market, and John Hart, Save-A-Lot franchisee, each stepped to the podium to speak to councilors and the mayor about the already intense local food market competition.
While Struppler and Hart each expressed a desire to see the former manufacturing site transformed into an asset again, they both asked councilors to consider whether introducing a new store into an industry that already has many competitors operating at such low profit margins is good for the community in the long run.
“With all due respect, I know you guys spend a lot of time running the business of the city and really not too involved with the grocery industry in general, but having spent more than 35 years in the business I can assure you that probably, by putting another store in this market, people are going to go. There just isn’t room,” Struppler told the councilors.
“This isn’t just somebody crying, ‘Oh there’s more competition,'” Struppler explained. “We’ve got competition. We already have two budget floor plans – you have Walmart low pricing and you have Save-A-Lot, and then you have the conventional floor plans like Price Chopper and myself.”
Then he added, “We beat each other to death every day.”
Alluding to ALDI’s ability to out-compete small businesses by virtue of its buying power, and to sustain suppressed pricing due to the company’s size, Struppler called the foreign-owned grocery chain an 800-pound gorilla.
“There aren’t a lot of little grocers left anymore. They’ve been trashed by the big companies,” Struppler said. “Connect the dots. You had Walmart come here, P&C went and eventually KMart went. You’ve got Kinney’s over there in what is a great spot, but you lost the Rite Aid over where the community college used to be and the Rite Aid up the street. We put ice cream places in all over and Sweet Inspirations is gone. Sunshine Produce is gone. That’s my argument – people will go.”
In its January edition, Stores Magazine lists ALDI as the ninth largest global retailer with 2012 sales of $73 million. Walmart is first on the list at $469 million in sales for 2012.
According to a December press release, ALDI plans to invest $3 billion to open 650 new sites across the US in the next five years at a rate from 80 to about 130 stores each year.
Struppler explained to councilors that his customer base radius is already limited by competition from surrounding communities which compress his market area.
“If you head toward Oswego you’re going to lose business to Price Chopper, Walmart Super Center, ALDI, and the Paul’s Big M there,” he said. “You go back the other way to Clay you have Wegman’s, you have BJ’s, you have ALDI, you have Price Chopper, and shortly you’re going to have that Walmart become a Super Center. Clay has formerly P&C’s Tops and Baldwinsville has Tops. So, you leave the Fulton market in any direction – you don’t have to go very far really – before it goes to another market.”
Next to speak at the hearing was Save-A-Lot franchise owner John Hart.
He opened the Save-A-Lot franchise in the Neighborhood Plaza on West First Street about 10 years ago.
“Save-A-Lot has been hurt the past two years because of the bridge being worked on,” he said. “We rely a lot on walk-in traffic. We lost all that because now customers walk down to the other bridge, and Price Chopper is right there. We’ve had a lean past year-and-a-half or so.”
Hart said one difference between his store and the ALDI Inc.’s model is customer service.
“ALDI’s runs a very low payroll, I’ve heard it’s around 2 percent,” Hart said. He noted that at his five stores he spends about 6 percent of the gross sales on employee payroll expenses.
“We have from 22 – 26 employees (in Fulton),” Hart said. “In our meat departments we have several well-paid people. Meat cutters are hard to come by and you have to pay them well.”
The local grocer added, “I could almost guarantee that there will be at least one less grocery store in town if ALDI’s comes to town, and there will be a net loss of employees.”
Hart said his Save-A-Lot stores average size is about 16,000 square feet.
The store proposed at the former Nestle’s site by ALDI Inc. is 17,600 square feet.
Mayor Ron Woodward reminded the retailers during the hearing that the purpose of the special permit was to get the property back into play.
“If ALDI’s went away tomorrow, (the property owner) still needs that zone changed,” Woodward said. “Right now it’s manufacturing so unless you get another Nestle’s in there the property is worthless. You can’t use it for anything.”
Struppler and Hart each said after the meeting that they spoke their piece and would not pursue the matter any further.
“You can’t blame your consumer for trying to save money,” Struppler said.