Self-serve grocery store helps feed small Minnesota town

EVANSVILLE, Minnesota — When Alex and Caileen Ostenson moved from the Twin Towns to Evansville, Minnesota five years ago to be closer to family, the local grocery store had recently closed after more than seven decades in business.

The nearest town with a supermarket is 20 miles away.

So, in early 2020, the couple began brainstorming ideas that would allow them to operate a store in the city of 600 about two hours northwest of Minneapolis.

“We had just heard from a lot of people, ‘It would be nice if we had a grocery store in town. That’s something we really miss,'” Caileen recalled. “It’s a staple. It’s a cornerstone of a community.”

So, with the help of local donations, the couple transformed a main street storefront into a self-service grocery store.

They believed the concept would save on staffing costs, provide 24-hour access, and convince the community to invest in a local grocery store.

The couple grew up in west-central Minnesota before leaving for school and jobs in the Twin Cities.

“I’m not from a grocery background. I’m not from a business background either. So we did as much research as possible,” Alex said.

Alex is a trained diesel mechanic, but enjoys solving problems. So he turned to technology to make running a grocery store possible.

“We have traditional hours, three days a week. We’re here Tuesdays, Thursdays and Saturdays. Other than that, those are our membership hours,” he said.

The couple stock the shelves on Wednesday, when the bulk of their grocery order arrives.

“We’ll be coming to check the order and stock the shelves, but outside of our normal days it’s been great as we’re able to have a good work-life balance,” Alex said.

Anyone can shop on the days the store is open, but people who purchase a $75 annual subscription have access to the store anytime. There are also six-month and three-month subscriptions.

These members can use a phone app to open the door, scan groceries, and pay. There’s also a key fob option and a scanner on a counter for those who aren’t comfortable with their phone.

“Being able to find a cost-effective solution that works, with a pretty low margin for groceries, that was kind of the key,” Alex explained. “Once we found out that kind of sealed the deal, we were going to give it a try.”

The technology registers everyone who comes to the store and tracks their purchases. The store also has security cameras, and theft hasn’t been an issue, Alex said.

Main Street Market opened just over a year ago, and Alex says finances are viable, although the couple are not yet on salary.

Late last year, Alex received a scholarship through the West Central Initiative Foundation, and the accompanying $30,000 annual stipend enabled him to leave his full-time job to focus on developing and expanding the self-service grocery model.

Some large urban grocery stores are trying variations of the same concept, and Amazon has opened a handful of contactless grocery stores across the country.

Rural grocery stores have been disappearing for decades. Profit margins are slim, and many store owners surveyed by the University of Minnesota said high operating costs were a challenge.

In rural communities, the self-service concept could mean the difference between buying local groceries or driving miles to a regional center.

“I really hope we learn something and can see if this is a model that could be replicated in other communities across the state,” said Kathy Draeger, director at scale from the State of Regional Sustainability Partnerships at the University of Minnesota.

The survey of rural Minnesota grocers released by the university in 2020 showed that 80% of store owners had no plans to transition to future ownership, and nearly half feared their store would be closed in five years.

“I think there are still issues with who our next generation of grocers will be and how we continue to make this business model work in small towns,” Draeger said. “And that’s why having an innovation like the one we’re seeing in Evansville and being able to test and pilot an innovation like this could be a way to continue to transfer ownership of those stores.”

The goal was to sign 50 memberships in the first year at Main Street Market in Evansville, but Alex Ostenson said he achieved that goal in the first week. This community support has been essential.

“Growing memberships from the start, that’s what partially funded our first inventory. So that helped us a lot from the start,” he said.

Karen Howell and her husband were among the first to buy a subscription to Main Street Market. She doesn’t mind paying the $75 annual fee because the local store saves a lot of the 40-mile round trip to Alexandria for groceries.

“We don’t do all of our shopping here because they can’t carry everything I might want to buy,” Howell said. “But we try to support them in every way we can because we’re so proud to have them here.”

Howell is president of the Evansville Art Center, just down the street, and she thinks a grocery store is a must for a busy main street in a small town.

Brandon Borgstrom agrees. He is the administrator of the local retirement home and is part of a community development team.

Borgstrom and his wife regularly use their subscription.

“It’s fine to go get milk, eggs, bread, or it’s Sunday afternoon and you’re sitting down to dinner, and you realize you don’t have cream of mushroom soup for the green bean casserole you’re going to make, just those little things that add up,” Borgstrom said.

On a few occasions when supply chain issues left the nursing home short of needed food items, Borgstrom said the nutritionist filled a cart at Main Street Market.

The Ostensons recognize they have to overcome the perception that a small grocery store will be expensive, with limited choices, so they’ve worked hard to keep prices low.

“A lot of people who are (customers) for the first time in the store, they realize, ‘wow, these prices are way lower than I expected,'” Caileen said. “We try to make sure we stock up on the basics. And then grow up and go from there.”

Customers can suggest new items on a chalkboard near the checkout. The store sells locally roasted coffee, locally produced honey and butter from a nearby creamery. They also sell locally grown seasonal produce and plan to expand future locally produced food offerings.

Alex has a vision for this concept. By next year, he plans to be ready to open a second store in a nearby town, and he wants to create a way to share what he’s learned, convince others that this idea can help a small town to save or replace the local grocery store.

Draeger of the University of Minnesota is watching with interest what is happening in Evansville. She thinks this idea could help keep local grocery stores running in the rural landscape.

“It builds the overall resilience of our food system when we have a diversity of types of grocery stores, regional chains, small town grocers, other types of food access points are important,” a- she declared. “And we need to maintain the resilience of our food system. If COVID hasn’t shown us anything else, it’s that we really need to think about our resilient food systems.”

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