San Diego Retail Venture Offers Training, No Profit

San Diego County Business Editor

An unprecedented San Diego retailing experiment began Saturday with the opening of Gateway Marketplace, a grocery-warehouse store that is the largest retail operation to open in Southeast San Diego in more than 10 years.

The completion of the nonprofit, 55,000-square-foot store caps several years of effort by city officials to attract a supermarket to the low-income and predominantly minority Southeast area. Situated in the Gateway Center redevelopment area near the junction of Interstate 15, California 94 and Market Street, the store employs 125 people, two-thirds of whom are youths who live in the immediate area.

The long-term existence of the store is not guaranteed, however. Store officials say Gateway Marketplace must operate at a break-even rate after one year or it will be closed and dismantled. The store's management has set a goal of $10 million in sales its first year.

If, on the other hand, the concept is successful, the store may be "replicated" in other cities, store officials said Friday.

San Diego Mayor on Hand

City officials obviously see the success of the store as a key to Southeast's revitalization. Mayor Maureen O'Connor operated one of the check-out cash registers briefly Saturday morning after taking part in ribbon-cutting ceremonies also attended by former City Councilman William Jones.

The store owes its existence to a $3.5-million donation from Price Co. Chairman Sol Price, founder of the successful Price Club discount

warehouse chain. The store is owned by Gateway Marketplace Inc., a nonprofit corporation.

Gateway Marketplace also is getting ongoing operational guidance from past and present Price Co. employees. Several of Gateway's management-level personnel are on one-year leaves of absence from Price Co., marketing manager Susan Smyth-Ponce said.

As one might expect, the no-frills store bears a striking resemblance to a Price Club, both in its look and low prices. As at Price Clubs, the products stacked in the aisles, freezers and shelves are often left in the boxes they were shipped in, with just the tops cut away.

Array of Merchandise

Like Price Clubs, the store sells an array of merchandise from toys, automotive goods and clothing to appliances, consumer electronics and drugs.

"We're taking what we learned at Price Co. about low-cost, efficient handling of merchandising and applying it here," said Jim Cahill, a Price Co. spokesman.

The main difference is that Gateway Marketplace is open to the public and is not a membership-only chain like Price Club.

Moreover, Gateway Marketplace is half the size of a typical Price warehouse and its items come in typical supermarket sizes--not the giant, wholesale-sized items often seen at Price Clubs.

Owned by College

The market shares its building with the nonprofit San Diego College of Retailing, which owns the 12-acre property. Rents paid by the store, figured as 1.5% of gross sales, will support the school.

The 29 students, most of them from minority backgrounds, attending the four-year school will emerge with skills enabling them to run a range of retail operations from department stores to supermarkets, Cahill said. Most will put their classroom knowledge to work at Gateway Marketplace.

Sol Price was approached by the city for help in starting a retail center after other major supermarket chains refused to consider the area, Smyth-Ponce said.

Gateway Marketplace is part of the 62-acre Gateway Center project of the Southeast Economic Development Corp. The center also includes several industrial buildings. A medical office building is also under construction in the center.

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