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Wheatsville.png Photo By: Tim Inklebarger

A tale of two Austin grocers

Will Wheatsville Food Co-op survive by going small?

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Tim Inklebarger is the tech editor for Supermarket News. He is an award-winning journalist who has written for The Associated Press, Crain Communications' Pensions & Investments, Chicago Agent Magazine, Chicago Journal, American Libraries Magazine, The Juneau Empire, Chicago Parent, The San Antonio Express-News, Consumers Digest, and more. Sometimes he pontificates on topics other than grocery technology. 

It’s been more than 20 years now since I did my grocery shopping at Wheatsville Food Co-op in Austin, Texas. 

I lived half a block away from the community-owned grocery store in the 1990s and early 2000s. I worked as a cashier at Whole Foods for a couple of those years in my 20s, and it’s those two businesses that gave me my real education in grocery stores. 

While the two grocers had a lot in common, their differences were more pronounced. 

Both had a commitment to the environment, healthy eating, and the customers they served. Their employees didn’t look like your typical grocery worker — they had tattoos and played in alternative rock bands and were generally cool people. 

But by the time I started working at Whole Foods, it was just on the verge of becoming a household name. It already had a corporate feel to it despite the unconventional workforce, and people already called it “Whole Paycheck.” 

Wheatsville was different, though. It was small, there was only one location — a short walk from the University of Texas campus — and it’s the first place I ever ate a bagel sandwich. Their deli was glorious. 

That’s why I was saddened to learn a few days ago that the original Wheatsville location at 3101 Guadalupe St. would likely be closing by the end of 2026. 

The grocer said in its newsletter, The Wheatsville Breeze, that sales have been in decline at the location for more than a decade. Annual 2013 sales were $18.6 million, but by last year it was less than half of that at $9.1 million. “This year’s sales are trending even lower, meaning we have lost more than half of our peak revenue at the site,” the newsletter stated.

The co-op also is anticipating a huge revenue hit when the city begins work on the Project Connect Orange Line, a 20-mile light rail transit system that will run along Guadalupe Street. That project could result in a decline in sales of as much as 40%, according to Wheatsville General Manager Bill Bickford.

All things considered, it appears the Guadalupe location might be done for. I texted a friend of mine who still lives in Austin to see if I could get an inside scoop. He lives in South Austin now and was unaware that Wheatsville was facing hard times. 

“I thought maybe Amazon bought them,” he quipped. 

Another friend of mine in the Texas capital knew all about it — we were cashiers at Whole Foods back in the day. She wondered what might become of the co-op, noting their stated option of possibly going to a small-format store. 

“The Austin grocery market has seen a proliferation of successful small-format stores over the past several years, with many examples serving neighborhoods throughout Austin,” Bickford said in the letter. “These stores compete in a different segment of the market from the major grocery competitors such as H-E-B, Whole Foods, and Sprouts. After years of trying to punch above our weight class among these behemoths, a pivot toward small-format stores presents an opportunity to serve our community in a different way than we do today.”

Could they follow in the footsteps of Amazon-owned Whole Foods, which announced in March that it is launching a “quick-shop” small-format store that would range in size between 7,000 and 14,000 square feet?

The so-called Whole Foods Market Daily Shop format was originally rolled out at a location on the Upper East Side in Manhattan, but it’s too early to tell whether the experiment will pay off. 

For what it’s worth, I would have been happy with a smaller store. As a matter of fact, Wheatsville had a much smaller interior footprint back in my day. They renovated the location in 2009, according to the newsletter. 

Wheatsville listed some of the potential benefits of small-format locations, offering some food for thought for its members as well as chains looking to break into the small-format market. 

  • Lower open cost: Small-format stores are substantially less expensive because of lower construction and equipment costs. “In addition, we already own much of the equipment and inventory needed to open two to three such stores!” the newsletter noted. “Assets currently in use at our Guadalupe store can be relocated in order to further reduce opening costs.”
  • Lower operating cost: This is mainly due to smaller stores being able to be run by a smaller staff. 
  • More potential sites: There are just more locations that are available when looking for a smaller space to relocate. “In search for a location that could potentially serve a relocated Guadalupe store, we identified only a few viable sites in all of North-Central Austin. Meanwhile, we identified dozens of potential sites for smaller stores.” 
  • Increased relative buying power: The grocer said smaller stores will help them compete on price. “Whereas we struggle to compete on price with the likes of H-E-B, Target, and Costco, the same is not true when comparing the co-op to other small-format stores. The buying power of our South Lamar location gives us a significant volume advantage versus other small grocers.”

It appears that the small-format approach is the direction Wheatsville is headed, and I wish them luck.

In this line of work, I often find myself writing stories about multi-billion corporate acquisitions. They should be allowed, it’s argued, because of the threat posed by companies like Amazon and Walmart. 

That might be a convincing talking point, but what happens to the Wheatsville Food Co-ops of the world when companies like Kroger and Albertsons can beat them on price all day every day? It’s something decision makers should consider before allowing mega-mergers to proceed.

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