Sunday, October 16, 2011

How to price yourself out of the market in one easy lesson

One year ago, after three years of preparation, fund-raising, and prayers, the Troy Community Co-Op opened shop, reviving the Pioneer Food Market on Congress Street. On October 15, 10 days after a well-advertised birthday celebration for the store, Pioneer Food Market has gone dark again.

The warnings had been issued in the press over the summer. The Co-Op was losing money and weren't sure how much longer they could go on. Not enough people had invested in the Co-Op in the first place. The Co-Op had asked a membership fee well in excess of $100 per person prior to opening the Pioneer last year, perhaps overestimating the consumer base. Not only that, but ordinary items like breakfast cereals, familiar brands like Golden Grahams, for example, were priced higher than they would be at the larger, more established supermarkets like Price Chopper or Hannaford, or even Walmart. Organic foods are always more expensive, but Pioneer was asking customers to pay upwards of $6 per jar of organic peanut butter, for another example.

Troy is regarded as a college town, with three colleges (RPI, Russell Sage, & Hudson Valley) situated in the city limits. It's also a blue collar, working class town whose residents mostly couldn't afford to lay out $100 or better to sign on to the Co-Op. If the Co-Op was serious about working with the community, they would've lowered the membership fee to a much more reasonable level. $20-$30 would be a decent starting point, one would think. $100-$150? Unreasonable, as if the Co-Op expected most of the consumer membership to be comprised of college students & state workers.

Pioneer also had items that other stores just don't carry. There are lesser known brands of soda, for example, that my brother would routinely purchase when visiting. Now, he'd be hard pressed to find someplace that had those same items. Another Co-Op, like Honest Weight in Albany, would be likely, but a mainstream market? Not so much.

So, where to assign the blame? Is it the consumers, for not giving the store an equal opportunity, opting to stick with the familiar, rather than the neighborhood market they've wanted for so long? Or is it the management, for creating unrealistic expectations after a 3-year struggle to get the project off the ground? Or could it be a little bit of both? Pioneer didn't buy a lot of advertising space, but one example of their risky sales approach came when they started taking orders for organic Thanksgiving turkeys at $4.19 per pound. That poster went up about 2-3 weeks ago. I'm not sure if they had any orders placed when the store closed.

Now, it's back to wishing & praying that someone else can fill the space, this time with a more traditional market serving as a neighborhood alternative to the big boys. On the surface, depending on how the closing of Pioneer is played in the local papers, it's just business as usual in downtown Troy, where small businesses routinely open and close within a year or two. However, the work that went into renovating Pioneer, getting it ready, shouldn't go to waste. It's now just a question of who's willing to step up and fill the void.


Samuel Wilson said...

Seems as if Pioneer wanted to cater to the neighborhood it wanted to exist rather than the neighborhood that actually existed. The hard fact is that economies of scale allow the big chains to sell products more cheaply. Another is that not enough Trojans saw Pioneer as an end unto itself whose existence as an alternative to the big chains would justify spending more. Few people today are in a position to make such a choice, and definitely not enough to support such a store in Troy.

Anonymous said...

Of course, it doesn't help that the current administration has gone out of it's way to offer huge tax incentives to chain outfits rather than opting to help local businesses stay open. There's that greed mentality that is so prevalent to the right-wing.

hobbyfan said...

I get what you're saying, guys.

Crhyme: By "current administration", are you referring to the local level and our lame duck Mayor? I do believe that regardless of who is elected next month, it would be in the city's best interests to refill the space vacated not with another co-op, as clearly Troy as a whole wasn't interested, but rather by luring another, smaller supermarket in. I get that parking remains a problem, and will be until the city fathers can figure a solution beneficial to everyone. Tearing down the former KFC and turning that into a parking lot for businesses in the immediate area surrounding it may be a solution, but that may also be open to objections, depending on whom you ask.

Sam: Do you believe that by reducing the initial membership fee, would Pioneer have had a better chance of succeeding? It seems that the populace wasn't willing to fork over $100+ to sign on with Pioneer. A lower fee, as I'd alluded to, might've been a difference maker.