The Gem City Market did not expect to make money in its first year of operation, but the food cooperative ended up losing far more money than originally projected.
The COVID-19 pandemic took a major toll, but there were other issues related to rising prices and a major road reconstruction project in front of the store, located along Salem Avenue
“Opening the Gem City Market during an historic pandemic and record inflation would have been fatal to so many new grocery stores,” said Carrie Scarff, vice president of the Gem City Market board. “Because the Gem City Market is community owned, the community rallied behind the store to ensure it survived, sticking with us, even during initial stumbles. It’s a real testament to the power of cooperative ownership.”
Sales are trending up, but the store needs more people to shop there, even if they only make small purchases or do not visit all that frequently, said Dennis Hanley, the market’s interim general manager.
“We need our community to support this store — no doubt about it,” he said. “Vote with your dollars.”
The Gem City Market opened in May 2021 after years of work by organizers and community members to bring their vision to life for the member-owned food cooperative.
The full-service market at 324 Salem Ave. brought fresh foods to an area in Dayton that some people called the worst food desert east of the Mississippi River.
The store, which was met with much fanfare when it opened, continues to receive rave reviews from many community leaders and members. But the market had a difficult first year.
In the fiscal year that ran from May 1, 2021, to April 30, 2022, the Gem City Market lost about $758,000, according to net operating income information shared during the market’s annual meeting on Sept 29.
That was much higher than original projections, which estimated that the store’s losses would be between $300,000 to $400,000.
Board members say it’s important to note that the first-year profit and loss statement included capital investments required to open the store, which were in addition to the income and expenses of the store’s sales and operations.
The market expected to lose money in the first two years of operation.
The store now should break even sometime in 2024, said Hanley, who added that it could be profitable sooner than that if community members choose to shop there more frequently.
Most new businesses take about three years to financially stabilize, he said.
The market opened during uncertain times due to the pandemic, and inflation also has been a challenge that has impacted all grocery establishments, even Walmart, said Scarff, the board member
Many Gem City Market shoppers now visit the store daily, but they weren’t doing that during the pandemic, since many people tried to stay at home as much as possible, she said.
The reconstruction of Salem Avenue also has temporarily removed the sidewalk in front of the store, making it more difficult to get there on foot, and the road work also makes it more difficult to access the parking lot.
Scarff said some motorists are avoiding Salem Avenue altogether because road work has caused traffic congestion and reduced the lanes of travel.
This means there’s fewer motorists passing by the store who might otherwise decide to stop in, she said.
The Gem City Market is averaging about 390 shoppers per day, and the number has been climbing.
Hanley said he would like to see the number of daily shoppers double.
Market’s sales increased nearly 42% between January and May of this year, he said, and they’ve been holding steady since then. The market expects traffic and sales to increase in the fall.
“We’re not trying to make millions,” Hanley said. “What we’re trying to do is to be a sustainable food retailer.”
Gem City Market has some of the best prices around on a variety of products, and patronizing the store helps West Dayton and keeps money in the community, supporters said.
“If you don’t come in every day, every week, you just come in once a month, or every two weeks, that’s good enough, that’s going to make us thrive,” Hanley said. “But if you don’t, it can’t survive, it can’t thrive. We need you.”
Hanley, who has 47 years of experience in the supermarket industry, was hired when the market “ran into a rough spot” and it needed more operational expertise, said Amaha Sellassie, president of the Gem City Market board.
He has been leading the market since January, when the last general manager left.
“The first year of opening a market has its ups and downs and it’s a huge learning curve,” Sellassie said, later adding, “We can build the store we want to have, that we can be proud of and that can meet our unique needs.”
The market also had to deal with pricing and inflation challenges and it also ran into issues with payments related to the Special Supplemental Nutrition Program for Women, Infants and Children (WIC). The market hopes to have the technical issues fixed within the next year, management said.
Scarff said the first year of the market was a success in many ways.
In addition to providing fresh produce, meat and dairy products to West Dayton neighborhoods, the store has become a community center and asset, she said.
Nearly three-fourths of Gem City market patrons are Black or biracial (71%), and eight in 10 shoppers live in the trade area, which covers large swaths of west and northwest Dayton, according to information shared during the annual meeting.
About two-thirds of market patrons live in households with incomes below the area median, and about a quarter pay for their purchases using the Supplemental Nutrition Assistance Program (formerly called food stamps).
The Gem City Market just launched a “We Gotcha” program that will give people who use food stamp benefits 50% off on their purchases.
The program will continue as long as it has funding, which comes from donors. Other planned initiatives also will seek to boost foot traffic and sales.
Rosetta Johnson, a home health aide, often visits the Gem City Market several times a week with her client to pick up meals and groceries.
She said many seniors live in the neighborhood, but they had nowhere to go until the market opened up.
“I love it,” she said. “I am so glad they put this market here.”
Johnson said she thinks once the Salem Avenue rebuild is finished, the market will see a significant increase in foot traffic.
Charlene McDonald, her 75-year-old client who lives near the store, agrees.
“There’s a lot of seniors around here who don’t have transportation,” she said.
McDonald said the market has the nicest and most friendly staff, and it regularly has very good deals.