Supermart Project in Southeast Fails; Price Club to Open
Gateway Marketplace, heralded as a godsend when it opened in economically depressed Southeast San Diego nine months ago, will soon close because of sluggish sales.
The supermarket, the largest retail operation to locate in the area in more than a decade, will shut “within the next few weeks” and reopen as an expanded, membership-only Price Club warehouse, said Jim Cahill, a member of the Marketplace board of directors.
Purchased at Book Value
Cahill said a tentative agreement unveiled Tuesday calls for the Price Co. to buy out the Marketplace project from the San Diego College of Retailing at book value.
The grocery opened in November at Gateway Center Drive and Market Street amid much excitement among black community leaders, who predicted the project would reverse the trend of businesses ignoring the Southeast community.
Those leaders, who remain upbeat despite the closure, also expressed hope that Marketplace would play a large role in the revitalization of the area by providing jobs and a badly needed supermarket for the community.
Cahill said it was tepid support from local residents that prompted the decision to close the store.
“We weren’t getting the kind of support from the community a store needs to sustain itself,” Cahill said. “We were losing a significant amount of money, and we’re a long way from breaking even.” He declined to specify the losses.
Cahill said a lack of advertising contributed to Marketplace’s poor sales, as well mistakes in the way the building was merchandised, and the large size of the store.
Early on, a dwindling of the crowds that swamped the grocery-warehouse on opening weekend caused owners of the business to revamp their initial operating procedures. When sales failed to meet expectations, the store conducted a survey to find out why people were not returning. It learned that, although the community wanted to shop at Marketplace, the store did not offer enough variety of grocery items.
Changes Weren’t Enough to Break Even
The store improved its stock, changed its layout and added a delicatessen, a magazine rack and check cashing. The changes improved customer flow but were not enough to make the store break even, said Beverly Snyder, marketing director.
The store was launched with a $3.5-million donation from Price Co. Chairman Sol Price, founder of the Price Club discount warehouse chain, and the donation of 6 acres from San Diego.
Price and city officials saw the project as a way to increase job opportunities in the area, which has an unemployment rate twice that of other city areas. The Gateway Marketplace is part of the 62-acre Gateway Center project of the Southeast Economic Development Corp.
The College of Retailing, which owns the Gateway Marketplace, has used revenues generated by the store to finance courses in retail merchandising for its students. Besides their classroom studies, the students receive hands-on training in the store.
Cahill said the Price Club will offer space to the college for at least 10 years and will continue to train its students.
Although Marketplace’s successor, the Price Club, is a membership-only store that will not be open to all residents, news of its coming had some black leaders excited Tuesday.
“I think that a Price Club can provide the job opportunities and economic base we had hoped for with Gateway,” said City Councilman Wes Pratt, whose district includes Southeast San Diego.
“The decision to open a Price Club at that site is going to send signals to other businesses to try to get into the area,” said H. W. Ragsdale, owner of the Anderson-Ragsdale Mortuary. “It’s too bad that the store management hasn’t been able to attract the community as they would have liked to in order to survive. But, since many of the people out here already belong to the Price Club, its being located here is only going to make it more accessible.”
Positive for Community, Students
Jean Colston, director of the College of Retailing, said the new store will be a positive development for the students and the community. Colston said the Price Club has a well-recognized reputation, unlike the previously unknown Marketplace.
“There are a substantial number of members of the community who are currently Price Club members, so the resource to succeed is there,” Colston said. “Chula Vista and (Santee) Price Clubs are overworked, so adding one to this area simply makes it more convenient for the people here who would normally go out there.
“Besides,” she added, “the students will have more training because of the higher volume of shoppers at a Price Club and the better salaries that they’ll be receiving from the larger company.”
At least one black leader expressed concerns about the message Marketplace’s closure might send to other businesses contemplating a move into southeast. The Rev. Robert Ard, president of the Black Leadership Council, said he hopes the closing of the store will not further discourage businesses that were previously hesitant about opening in that area.
“I hope these business owners don’t believe that just because Marketplace failed means they would, too, if they came to the area,” Ard said. “That’s just a big myth.
Says More Members Are Needed
Ard added that the Price Club “will not be successful either if they don’t increase the number of card-carriers they have in the area.” (Price Club membership is limited primarily to business owners and employees of governmental agencies, hospitals and schools.)
Snyder said that regular Marketplace customers may be offered free, one-year memberships at the Price Club when it opens. She said the store has been collecting names and addresses of patrons during the last month and will probably offer memberships to those shoppers.
Also, all 70 Marketplace employees have been guaranteed their jobs, but some may be moved to other Price Clubs.
Marketplace bears a striking resemblance to a Price Club in both its look and prices. The major difference, other than name and ownership, is that Marketplace does not require membership. Also, items at Marketplace are sold in supermarket quantities--not in bulk, which is available at the Price Club.
The students are paid from the rent Marketplace pays the college.
