Hanging in there

Clark's Market encouraged by landlord's plan

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— Tom Clark, owner of the Clark's Market independent grocery chain, acknowledges that earlier this month he had grown discouraged about his store in Steamboat and was even rethinking the store's future. But all that turned around, he said this week, when his landlord came up with an aggressive plan to attract more stores and services to the Curve Development shopping center on Steamboat's west side.

Asked Feb. 16 if there was a possibility his Steamboat store might be closing, Clark said: "Frankly, that decision has not been made. We cannot confirm that. The store has not performed up to our expectations. We're taking whatever steps we can to change that. While closing the store is always a possibility if it does not perform, we have not made that decision yet."

Clark was decidedly more optimistic on Feb. 21. He said he had received a strong sign from Curve Development principle Byron Chrisman that he intends to turn the largely vacant shopping center around.

Steamboat Springs has two other grocery stores Safeway on U.S. 40 near the intersection of Pine Grove Road, and City Market, part of the larger King Soopers chain, in Central Park Plaza. Clark's is an independent store that receives its groceries from Associated Grocers.

As the Curve Development's anchor tenant, Clark's Market figures prominently in Chrisman's goals for the small shopping center. However, he acknowledged this month that he is struggling to attract new tenants to the vacant retail spaces in the shopping center. The other tenants besides Clark's are Arctic Liquor and Steamboat Cleaners. Depending upon how the vacant space is configured, Chrisman said he could add between five and nine additional tenants.

Chrisman said he has marketed the commercial space at $20 per square foot, a number he feels is fair. But several prospective tenants have told him it is too high, without ever making a counteroffer.

After trying to lease the empty space unsuccessfully for a year, Chrisman said he decided to take a new approach.

"Finally, I decided to offer six months of free rent, and after that, gradually escalate the rent over a two-year period until it's where I think it should be."

The only fee new tenants would pay Chrisman during the first six months of occupancy would be $3.75 per square foot for common area maintenance, he said. That fee covers such expenses as water, sewer, taxes, snow removal and parking lot lighting.

Clark said that in addition to boosting the number of businesses in the shopping center, he and his team need to continue improving in all phases at the store.

As part of his effort to turn things around, Clark changed the management.

Former manager Mike Kennedy was transferred to Crested Butte and Lloyd Krull was promoted from within the company to manager in Steamboat.

Clark said one of Krull's biggest strengths is customer service. He's encouraged that Krull's family seems to be genuinely enthusiastic about living here.

"That's the first step for us," Clark said. "I think that will carry over. That's one of his strengths."

Clark said Krull was previously the assistant manager at the Aspen store and then worked for 18 months as the manager of the Clark's Market in Blanding, Utah.

Clark said it's important for his Steamboat store to improve in all areas, including product, pricing, advertising and customer service.

"All retail businesses struggle with customer service issues," Clark said. "I can't tell you we don't have a store where we wish we did a better job."

Clark makes no secret of the fact that his Steamboat store is not making money. He won't talk in quantitative terms about how far the store has to go before it becomes profitable. But he said the grocery business is one that depends heavily on volume.

The Food Marketing Institute reports that nationwide in 1999, grocery stores operated on a gross profit margin of 26.4 percent. However, after they deducted expenses such as payroll, utilities, taxes and licenses and others, they were left with a net operating profit of 1.6 percent.

"Really, when you run on margins that low, you've got to have volume," Clark said. "You're making a penny or two a lot of times. In order for us to ever have a hope of making money, we have to have more volume."

The rate at which products turn over also is a key statistic for grocery stores.

Independent grocers such as Clark's on average turned their entire grocery inventory over 12.2 times a year, according to the Food Marketing Institute. That compares to 15.8 times a year for grocery chains and 16.8 times for warehouse stores.

Clark said when his firm did its market analysis of Steamboat, it pinned much of its hopes on the future growth of the city on its west side. In addition to more households, Clark believes people need the availability of more commercial services on the west side. That needs to happen if people aren't going to drive across town to shop at other stores, he said.

Clark is optimistic Chrisman's easy lease terms will turn the shopping center around and attract more service businesses, which will in turn attract more customers to his grocery store.

Chrisman said he needs to see some positive change by mid-summer.

"I'm talking to at least three stores and possibly a fourth right now," he said. "I'm somewhat optimistic the center will be two-thirds leased by mid-summer."

Clark says he believes if he can hang tough, his store will be a success.

"The west side of Steamboat is where the growth is going to go in time," Clark said. "But it's going to take a few years. The players that are involved have to be committed."

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