Atlantic City Supermarket PDF

Atlantic City Supermarket | April 2015 Feasibility Study

1

Feasibility Study

April 2015 Stockton University

Prepared for:

Fema Long Term Recovery Mark Strohoefer Thomas Fesen

Prepared By: Rachel D’Angelo

Grace Mazur Caitlyn Ruffalo

Florencia Nievas

ATLANTIC CITY SUPERMARKET


2

Table of contents 1. EXECUTIVE SUMMARY………………………………………………………………………………………….…1

2. INTRODUCTION………………………………………………………………………………………………..……….2

3. BACKGROUND……………………………………………………………………………………………………………..2

A. Geography………………………………………………………………………………..…………………...2 B. Wards………………………………………………………………………………………….………………….2 C. Transportation………………………………………………………………………….…………………2 D. Demographics……………………………………………………………………………….………….....3 E. Tourism ………………………………………………………………………………………….……………...3 F. Target Market………………………………………………...………………………….………………..3 G. Future Plans for Atlantic City………………………………………………….………………4

4. SITUATION ANALYSIS………………………………………………………………………………………….....4

A. Competitive Landscape……………………………………………………………….…………….4 B. Food Desert……………………………………………………………………………………….……….….5 C. Tourist Destination Status……………………………………………………………………....5 D. Perception of Crime…………………………………………………………………………………….5 E. Food Stamps………………………………………………………………………..………………………..6 F. Cargo Transportation Routes…………………………………………………………….......6 G. SWOT Analysis……………………………………………………………………………..…………….7 H. Similar Cases………………………………………………………………………………………………….7

5. RECOMMENDATIONS………………………………………………………………………………………………8

A. Store Layout…………………………………………………………………………………………………..8 B. Companies That We Suggest………………………..………………………………………..9 C. Land Suggestions…………………………………………………………………………………………9 D. Marketing Strategies…………………………………………………………………………………..9 E. Differentiation……………………………………………………………………………………..…....10 F. Branding………………………………………………………………………………………………………..10 G. Incentives for Supermarkets……………………………………...............................10

6. SERVICE LEARNING CHALLENGES…………………………………………………………………..11

7. RECOMMENDATIONS FOR FUTURE PROJECTS………………………………………...11


1

1. EXECUTIVE SUMMARY Atlantic City has a historic past of culture and entertainment. Throughout time,

millions of visitors have enjoyed the city as a quick getaway from their every-day lives. Today, while the city continues to attract 26 million visitors per year, 40,000 local residents struggle without access to a full-service supermarket. Atlantic City is a food desert.

The rectification of this issue would improve the quality of life for residents, while encouraging the development and infrastructure of the city as a whole. The purpose of this study is to discuss which supermarket would best serve the population of Atlantic City and a plan of action for all parties interested.

Atlantic City can offer supermarket chains a community that desperately needs their goods. As the only one-stop-shop in the city and surrounding areas, the supermarket would enjoy patronage of Absecon residents, as well as tourists and daily commuters. Competition wise, Atlantic City has a large quantity of bodegas that offer a limited selection of marked up goods. We believe that with the right plan, layout, and management the chances that a supermarket will thrive are very high.

It is significant for investors to understand that they must cater to the population in order to best serve the market. Similar cases have shown that supermarkets succeed when focused on the needs of the community and use them as an outline for the marketing strategy. Some challenges for a potential supermarket include: picking the right location and determining the size and layout of the supermarket.

Through our research, we recommend that rather than having a large chain supermarket, smaller chains, such as a PriceRite or C-Town, would suit the residents and tourists alike. We believe that a successful supermarket would be smaller than 20,000 square feet as well as have multiple entrances to accommodate drivers and pedestrians. The supermarket would provide the population with affordable store-brand and brand name products, plus offer delivery services appropriate for the older and disabled community.


2

2. INTRODUCTIONFEMA Long Term Recovery has partnered with a service-learning team from a

Strategic Marketing class at Stockton University to conduct a supermarket feasibility analysis for Atlantic City, New Jersey. Currently, the lack of a one-stop supermarket creates tremendous adversity for local residents and city employees. These individuals must rely on bodegas for access to food staples and supermarkets outside the city limits for periodic grocery trips. This study aims to measure the feasibility of a supermarket in Atlantic City and recommend a plan of action for all parties interested. 3. BACKGROUND

A. Geography Atlantic City is located in southeast New Jersey, on the Absecon Island. It

borders Absecon, Brigantine, Pleasantville, Ventnor and West Atlantic City. The total land area covers 10.75 square miles where approximately 2,624 acres are developable; the remaining acreage consists of water and wetlands. The city offers a 3.4 mile long sand beach, lined by a boardwalk. The layout of the city consists of a grid system with an average size of 350 feet by 550 feet. B. Wards

Atlantic City is subdivided into six wards. The fifth ward is the most populous and has more population density per square mile. The fifth and sixth wards have a larger white and Asian population and feature a higher per capita income. The lowest income levels can be seen in the second ward. C. Transportation

Fifty percent of the Atlantic City population does not own a car. Most residents use public services, walking or cycling as their transportation methods of choice. New Jersey Transit offers 13 local, regional, and interstate bus routes that stop, depart, or arrive in Atlantic City from a centrally located terminal at 1900 Atlantic Avenue. The local routes serve the essential role of allowing city residents to reach suburban destinations, plus gain access to employment, shopping, educational, and medical locations within the region. An alternative to New Jersey Transit buses are 13 seat buses called Jitneys. These buses have four fixed routes throughout the city and offer a cheap and convenient way for residents to travel.


3

There is rail service available through New Jersey Transit that offers trips between Philadelphia and Atlantic City, with stops at Absecon, Egg Harbor City, Hammonton, Atco, Lindenwold and Cherry Hill. Greyhound provides longer distance services for tourists and residents. Buses usually leave and depart Atlantic City from the Atlantic Avenue Terminal. These buses are often the preferred way to visit the city for tourists coming from New York City, Philadelphia, Baltimore, and Washington, D.C. D. Demographics

Atlantic City’s population consists of 40,000 local year-round residents and 15,920 households. The average age is 36-years-old and 12.7% of the population consists of senior citizens. The median household income is $26,000 per year. It is estimated that 34.3% of the population live under the poverty level. The unemployment rate is 12.4% and varies throughout the year. The fluctuation is due to the seasonal leisure and hospitality industry, which employs 37.3% of the population. The population density is 3,680 people per square mile. E. Tourism

Atlantic City continues to be a tourist destination for many people despite recent casino closings. It is estimated that 64% of visitors are between 30-years-old and 64-years-old with an average annual income of $71,000. The typical Atlantic City visit starts on a Friday and usually lasts 1-2 days. F. Target Market

1. Primary market: Atlantic City Residents: Most of the residents of Atlantic City are low-income families. These

families often have laid-off breadwinners, family members who earn low wages or members who have seasonal or temporary jobs. As previously stated, most residents do not own cars and use public transportation. Residents would benefit from supermarkets that offer perishable groceries at an affordable price.

2. Secondary Market: Tourists and Commuters These two sectors of the market are sectioned together due to common

characteristics. Both tourists and commuters stay for short periods of time. They will most likely visit the supermarket to pick up essentials, forgotten items, or snacks. Since population trends fluctuate, it is hard to predict the number of tourists and commuters that would patronize the store. Also, the diverse incomes of this secondary market make it hard to cater to specific needs.


4

G. Future Plans for Atlantic City: The future of Atlantic City looks bright. Within ten years, there are plans to

increase the population of Atlantic City by 10,000 residents. Atlantic City is working to earn status as a sustainable city, ultimately making it more resilient against storms. Diversification of the economy is the key towards a better future. A plan of action includes the development of businesses other than casinos. With the increase of local businesses comes new jobs; it is forecasted that the average annual income of locals will increase from $30,000 to $50,000. New parks and housing developments will be built to accommodate the projected increase of the population and make Atlantic City a more attractive place to live. 4. SITUATION ANALYSIS

A. Competitive Landscape The placement of a supermarket in Atlantic City would create competition with

bodegas; bodegas are small independently owned convenience stores that often mark up the prices of the goods being sold. Bodega owners are known to shop at wholesale retailers, break-up bulk purchases and sell per unit at a premium. These stores sell ethnic foods and goods as well as snacks and food essentials.

Bodegas are also not conducive to a good neighborhood atmosphere, for they have been described as “eyesores.” These stores have become meeting spots for residents and often are linked to noise complaints and petty crime.


5

Throughout the years, bodegas have thrived in Atlantic City by taking advantage of low-income families who often have no other choice but to purchase their overpriced goods. Atlantic City welcomes a full-service supermarket to allow competition for bodegas; the intention of the city is to force the bodega owners to lower their prices. Although some bodegas may not survive, it is predicted that bodegas that offer ethnic goods and have a loyal following will continue to do well.

Currently, there is one supermarket in Atlantic City, located on 1501 Atlantic Avenue, called Save-A-Lot supermarket. This supermarket was opened on May of 2012 and has been doing well in the area. It offers deals on store-brand items and consists of 18,000 square feet. This supermarket employs armed security guards and has a large amount of cameras in order to prevent theft. During the week, there is a farmer’s market located on 1200 Atlantic Avenue. The farmers market offers a variety of fruits, vegetables, baked goods and homemade crafts. Some farmers accept WIC and Senior FMNP vouchers. B. Food Desert

Food deserts are areas where at least 20% of families are at or below the federal poverty line and where a third of the families are more than a mile away from a supermarket, in urban areas, or 10 miles away in rural areas. Based on this, Atlantic City can be defined as a food desert and is eligible for special plans, programs and incentives. Save-A-Lot and the farmers’ markets have helped to slightly lower the demand for discount groceries. However based on the above criteria, those who do not fall within a mile of the Save-A-Lot’s radius still live in a food desert. C. Tourist Destination Status

Contrary to popular belief, Atlantic City is not recognized by the New Jersey Government as a tourist destination. Due to this, tourists cannot be counted as part of the population when it comes to government issues. This affects the city in terms of requesting funds for government related jobs, grants and activities. This issue also skews many reports and research studies, as conclusions are reached by using the local population and do not take into account the annual influx of tourists. D. Perception of Crime:

Crime is not a threat to residents and tourists in Atlantic City. However, there is a perception that Atlantic City is ridden with danger. This assumption is not supported by actual data. For example, the total number of crimes in 1977 was 4,391. That number rose to over 16,000 within ten years, fell to about 9,000 in 1999, and eventually decreased to a little fewer than 3,000 in 2014.


6

In the 1980s, the majority of the crimes committed were from petty larceny. For instance, robberies due to casino visitors leaving doors unlocked. Most of the perception currently comes from a lack of understanding. Those who are unfamiliar with “city-life” are quick to judge the city as dangerous because residents hang out on street corners. Atlantic City not only has improved its safety precautions, but officials are actively updating technology as well as bringing in cameras, advanced police software, etc. The city needs a public relations campaign - one that educates potential visitors about its current offerings and safe environment. E. Food Stamps

Much of Atlantic City’s local population uses food stamps in order to meet the nutritional needs of their families. Supermarkets considering a location in Atlantic City should be prepared to work with the government in ensuring that customers will be able to use their SNAP and WIC benefits. In order to be eligible to provide consumers with this service, supermarkets must sell food for home preparation, consumption sell on a continuous basis, and offer three varieties of products within the following categories: meat, poultry or fish, bread or cereal, vegetables or fruits or daily products. Another method of qualification would be if more than half of the dollar amount in total retail sales comes from the sale of eligible staple foods. F. Cargo Transportation Routes Atlantic City is located on an island connected to the mainland through a series of bridges. In order to limit the amount of traffic in residential neighborhoods, tractor-trailer crossings are allowed in three bridges: the Atlantic City Expressway Bridge, the Albany Avenue Bridge, or the bridge located on Route 30


7

F. SWOT Analysis

Strengths Weaknesses Opportunities Threats

Demand by local residents

Not designated as a tourist destination by the state

Conditions are set for a successful supermarket should the right strategy and leadership be put in place

Misperception of crime

21 million adults located within 120 miles of A.C.

Less than 50% of residents have cars

Government incentives (food desert)

Negative perception of Atlantic City by outsiders

New mayor and fresh vision

Fluctuating population throughout the year

Supermarket delivery, unique layout, innovative store design.

Decreasing trends in tourism

Affordable and effective public transportation

Police staffing during busy summer months

Investments in the city will most likely increase the population in the near future

Bodegas

Low Income Levels

G. Similar Cases

Currently, there is a Pathmark in Harlem that is successful. It opened in April of 1999 and was the first full-service supermarket in Harlem in three decades (Pristin, 1999). It has drawn 30,000 customers a week, stated Harvey Gutman, a Pathmark spokesman (Pristin, 1999). Only about 10% of the customers arrive by car, Mr. Gutman said, suggesting to the company that most come from Harlem or the Bronx (Pristin, 1999). Last year, Extell Development purchased the Pathmark in East Harlem; the building, at 142-96 East 125th Street, is under a long-term lease with Pathmark and includes approximately 300,000 square feet of residential air rights and over 450,000 total buildable square feet with inclusionary housing bonuses (Clarke, 2014). “The site has been a valuable asset to East Harlem since it was developed in the 1990s and we believe it will continue to benefit the community for many years to come” Victor Sozio, a property representative, explained (Clarke, 2014).

In 2013, the Pathmark on Mount Ephraim Avenue in Camden New Jersey closed (Terruso, 2014). A year later, a PriceRite was established in the same location; PriceRite was the first supermarket to move into Camden in 40 years (Terruso, 2014).


8

The store is owned by Ravitz Family Markets, a family-owned business in operation since 1968, which also plans to open a ShopRite in 2016 on Admiral Wilson Boulevard in Camden (Terruso, 2014). Jason Ravitz described the PriceRite store as “a hybrid of Aldi and Costco, with low prices and bulk items” (Terruso, 2014). “Shoppers bring their own bags or pay 10 cents a bag a cost, Ravitz said, that would go toward keeping prices low” (Terruso, 2014). The opening of PriceRite also marked a change for Camden residents who have lived in a food desert. The store hired about 100 full-time and part-time workers, more than 70% of who were Camden residents (Terruso, 2014). This lowered the city's unemployment rate, which is now about 17% (Terruso, 2014).

5. RECOMMENDATIONS A. Store Layout

We recommend that the supermarket be 20,000 square feet or less. In order to accommodate for pedestrians, as well as drivers, the supermarket should have two entrances, one at street level and another towards the back, accessible via parking lot. We suggest that the supermarket be self-serve, with meats and deli items, pre-cut and packaged. Warm deli cases should be put near each checkout with hot, ready to go items, like rotisserie chicken and pasta.

The store should run on a Just-In-Time inventory system, stocking just enough to meet demand without having to use up store space for storage. The supermarket should stock excess merchandise on top of its aisles, much like Costco and Staples do. The backroom should be solely used for food preparation, management offices and deli and meat slicing.

In order to keep the store secure, we suggest investing in an excellent security system, equipped with high technology security cameras and theft detectors. Additionally, we suggest having a locker system, where an employee behind a desk


9

takes the customers’ bookbags and purses and places them in a cubby. The customer then receives a number belonging to a cubby hole where the items were placed. Customers should only be carrying their wallet inside the store. Once the purchase is done, the customer simply returns the number and receives their belongings back. There should be at least two armed guards, one at each door during all business hours, and one night custodian. B. Companies That We Suggest

Supermarkets chains, such as C-Town or PriceRite that have a history with opening supermarkets in challenging areas should be approached. We recommend that Atlantic City stay away from big corporate supermarket franchises, as these organizations usually have many rules in place – those that do not allow for the customization that Atlantic City’s market needs.

Private investors, entrepreneurs and small business owners should also be contacted. The unique marketing challenge may be attractive to investors, and the appeal of serving a community in need can help entrepreneurs get funding from banks.

C. Land Suggestion

We recommend that investors seek privately-owned land in a centralized location near the Jitney route. We have heard of similar supermarkets that have been in negotiations with community organizations for a long time, and the process has been extremely slow. Opening a business is complicated enough; if the people of Atlantic City are top priority, then they should not continue to suffer the consequences of a food desert due to lengthy negotiations. D. Marketing Strategies:

1. Finding the right investors: In order to make the plans for a supermarket become reality, the right

investors must be reached and be fully on-board with customizing a supermarket to fit Atlantic City. They must have an optimistic view of Atlantic City’s future and be fully aware that the crime perception is false. In exchange, Atlantic City must provide investors with the guarantee that the supermarket will be successful even though there are those that have failed.

2. Marketing to the Primary Market

The new supermarket is going to enter the market at a time where there is high demand. A small advertising campaign should be sufficient enough to spread the knowledge that there is a new supermarket. Word of mouth plays a big advertising role in communities like Atlantic City.


10

During the first months to a year, a lot of attention must be called to the services that the supermarket can provide for the community. For example, if the supermarket delivers to seniors and handicapped individuals, then it should be advertised throughout the weekly booklets.

E. Differentiation

Unlike bodegas, emphasis should be placed on the convenience aspect of the one-stop-shop that the supermarket will become. It will provide customers with affordable prices for both brand name and store-brand products. The supermarket will have no frills, and will be simple to navigate.

F. Branding

Branding should focus on the fact that the supermarket is for the people of Atlantic City. However if it already has an established reputation, then that status should be used to earn the customers’ trust. G. Incentives for New Supermarkets

The incentives to open a supermarket in Atlantic City should be fully explored and promoted as it can help make the city more attractive to investors. It is important to note that some of the grants and loans available require that the funds be distributed through private, non-profit organizations. The following grants, loans and tax credits are available to Supermarkets: x Up to $125,000 in grant money from the New Jersey Food Access Initiative. x 39% of amount invested by Community Development Agencies towards new

businesses in low-income areas can be returned via tax credits -- CDFI Fund. x Up to $90,000 grant from the Voices for Healthy Kids, if the supermarket partners

with a 501 c3 non-profit organization. x Community Food Projects Competitive Grants Program is a private, non-profit

organization that can provide grants to cover up to 50% of costs of building and establishing projects that will help increase food security in communities.

x The Reinvestment Fund, a non-profit organization, has funding and loans for supermarkets opening up in food deserts.

x The following grants, loans and tax credits are available to new businesses of Atlantic City.

x The New Jersey Economic Redevelopment and Growth Program provides up to 50% of the project cost.

x The Grow New Jersey Assistance Program provides employee tax credits for new full-time employees.


11

6. SERVICE LEARNING CHALLENGES

We encountered some challenges with our service learning project. First, our team had a difficult time figuring out how to approach the project. FEMA had a vague idea about putting a supermarket in Atlantic City. To overcome this challenge, we decided to research similar cases of successful supermarkets in urban areas, such as the Pathmark in East Harlem and the PriceRite in Camden. By finding this research, we were able to decide what type of supermarket should be placed in Atlantic City and which location would best suit the population. Second, the main problem our team faced in working together was schedule conflicts. Despite this, our team worked extremely well and each member did an equal amount of work. 7. RECOMMENDATIONS FOR FUTURE PROJECTS

We recommend having a new public relations campaign created to neutralize the negative perceptions associated with Atlantic City, specifically aimed at crime. This would be beneficial because a supermarket chain and other businesses will be more willing to invest in the city if the actual amount of crime that occurs was publicized. The misperception of crime could ultimately affect the willingness of future organizations to migrate to Atlantic City. We also encourage finding a way to attain tourist destination status, as this would give the city more capital to fund special projects. Lastly, we urge the city to have more summer events and festivals to attract tourists and businesses, as well as encourage residents to stay apart of the community.


12

REFERENCES Procida, L. (2011, October 2). Food Deserts in Towns Such as Atlantic City Leave Residents Relying on Community Gardens. The Press of Atlantic City. http://www.pressofatlanticcity.com/communities/atlantic-city_pleasantville_brigantine/food-deserts-in-towns-such-as-atlantic-city-leave-residents/article_0ee87f26-ed39-11e0-80af-001cc4c002e0.html Casino Reinvestment Development Authority. (2012, February 1) Atlantic City Tourism District Master Plan Volume 1 http://www.atlanticcitynj.com/!UserFiles/crda/TourismDistrictMasterPlanV1.pdf Israel Posner & Stockton University. (2013, February) AC Visitor Profile Study. https://intraweb.stockton.edu/eyos/business/content/docs/LIGHT/AC%20Visitor%20Profile%20Study%20-%20Final%20for%20Website.pdf City of Atlantic City (2008, September) Atlantic City Master Plan http://www.cityofatlanticcity.org/docs/20120222151057-4.pdf Supplemental Nutrition Assistance Program (2014, September 17) USDA Food and Nutrition Servicehttp://www.fns.usda.gov/snap/how-accept-snap-benefits-your-store Terruso, Julia (2014, October 17) Camden Gets a Supermarket. Phili.com http://articles.philly.com/2014-10-17/news/55112667_1_north-camden-pricerite-camden-counties Clarke, Katherine (2014, April 16) Extell Makes Deal for Harlem Pathmark Official. The Real Deal http://therealdeal.com/blog/2014/04/16/extell-makes-deal-for-harlem-pathmark-official/ Pristin, Terry (1999, November 13) Harlem's Pathmark Anchors a Commercial Revival on 125th Street. The New York Times http://www.nytimes.com/1999/11/13/nyregion/harlem-s-pathmark-anchors-a-commercial-revival-on-125th-street.html A SPECIAL THANK YOU TO: Mark Strohoefer FEMA Long Term Recovery Thomas Fesen FEMA Long Term Recovery Paul Perillo FEMA Long Term Recovery Elizabeth Terenik City of Atlantic City Frank Gilliam City of Atlantic City Pamela Fields Main Street Atlantic City Christina Bevilacqua Main Street Atlantic City Professor Jennifer Barr

http://articles.philly.com/2014-10-17/news/55112667_1_north-camden-pricerite-camden-counties

http://articles.philly.com/2014-10-17/news/55112667_1_north-camden-pricerite-camden-counties

http://therealdeal.com/blog/2014/04/16/extell-makes-deal-for-harlem-pathmark-official/

http://www.nytimes.com/1999/11/13/nyregion/harlem-s-pathmark-anchors-a-commercial-revival-on-125th-street.html

http://www.nytimes.com/1999/11/13/nyregion/harlem-s-pathmark-anchors-a-commercial-revival-on-125th-street.html

Date post:	11-Apr-2017
Category:	Documents
Upload:	rachel-dangelo
View:	386 times
Download:	1 times

Atlantic City Supermarket PDF

Documents