Case Study: River Valley Market Finding a Home Between a Rock and Hard Place

River Valley Market: Northampton, Massachusetts
Year Founded: 1999
Year Opened: 2008
Retail Square Feet: 11,000
Number of Members: 3,250
Equity Investment: $150 per household
Number of Staff: 75

The journey to River Valley Market’s opening day this April in Northampton, Mass. is truly a saga, one that highlights a community’s tenacity and earnest desire for a food co-op in a town where prime real estate locations are booked up through and through. However, their challenges are shared by many food co-ops around the country where market areas look favorable for co-ops, but in the places it makes sense to locate, have nothing available and/or sky high real estate costs. In River Valley Market’s case, it was both.

Throughout their process, River Valley Market engaged the services of professionals to do feasibility and market studies. They even did it before they incorporated as a co-op. Research showed that the co-op idea was viable and the market considered strong, sophisticated and competitive. “There was an early decision to use professional services and not rely on local volunteers to try to figure things out,” said Rochelle Prunty, who started in 2001 as River Valley Market’s general manager. In a town with such enviable demographics, it was a wise decision. Finding the right site and location was a nuanced and complicated job.

Soon after Prunty came to the co-op, River Valley Market found what they believed was the perfect site, but the deal fell through. Plan B, on the same street, had potential, until they learned about a deed restricting grocery retails. Plan C, in a highly sought retail center would have worked if the site’s landlord would have felt comfortable giving the startup a long-term lease. Plan A reemerged with a different developer, and fell through again. Plan D made the co-op consider a different town altogether. “There was a lot of competition to get retail locations. Property owners used retail chain stores to help raise prices. Being a startup was not very marketable in our real estate environment,” Prunty said about the frustrations they encountered. Not only that, picking a less-than-ideal spot due to impatience wouldn’t have been smart in the long run, either.

Where they ended up building the co-op is on the same street they originally wanted to be on but farther to the north. River Valley Market was able to lease the property, a former rock quarry; because it was a site not yet zoned for commercial real estate, giving them a little more negotiation leverage. “We were between a rock and a hard place,” Prunty said, about the many years search for a site, “And the rock started to look good.”

Market studies supported putting the co-op there, but it was not an easy decision because building a store from the ground up was a risky and expensive proposition for the startup. “We looked at going smaller to cut the budget, but it didn’t make sense to lower our sales potential, given the development costs,” Prunty said. With the help of New Market Tax Credit financing that brought millions of dollars into the project, they were able to make it work. “The market study was essential for getting the New Market Tax Credits, especially from someone like CDS’s Pete Davis who has such a good reputation in the industry.”

So many potential sites and feasibility and market studies later, they’re finally open for business, and Prunty said they are on track to meet their sales projections. Not only that, she believes their co-op is well-positioned to build community, as everyone hoped, and participate in greater retail synergy in their area. The natural beauty of the quarry contributes to what she called a “non-mall” atmosphere that’s a real pleasure to shop because it’s natural, friendly and personable. It feels good, Prunty said. At long last River Valley Market found the right place.

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By |September 30th, 2008|Categories: Case Studies, Solutions|Tags: |

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