Dallas/Fort Worth has one of the most competitive grocery markets in the United States.
In the corridor between McKinney and Little Elm, nearly any chain you can think of has a presence. Grocery companies, from Aldi to Whole Foods, have purchased about every corner along U.S. Route 380.
In Lakewood, Tom Thumb recently opened a swanky new store 1.4 miles away from rival Whole Foods. Neither of those stores is more than 4 miles from Kroger’s flagship Dallas store on Mockingbird Lane.
As with everything, the story is a little different on our side of the river.
Aldi opened two Oak Cliff locations in 2010. But the last time our neighborhood attracted a major supermarket chain was in the previous millennium. Houston-based Fiesta Mart built stores on Jefferson Boulevard and on South Lancaster Road in 1993 and ’95 respectively.
Last year, the City of Dallas offered a $3 million incentive to grocery companies willing to build a store in the food desert east of Interstate 35 in Oak Cliff, but there were no takers.
And then this past August, Central Market purchased land in the Bishop Arts District, on West Davis Street at Beckley Avenue, adjacent to where Crescent Communities is building an apartment complex. While the San Antonio-based retailer, whose parent company is H.E.B., has said they have no immediate plans to build there, it is one of the few signs of interest from any major retailer in the southern sector of Dallas in decades.
That comes down to the tricky business of selling groceries as well as the demographics of our neighborhood.
The average profit margin for grocery stores is about 1 percent.
“It’s a very high-volume, low-margin business,” says Will Adams, a real estate broker who has worked with grocery companies. “That’s why they’re so careful. Because it really can affect the bottom line of these companies.”
Grocery companies know their customers down to the nitty-gritty. When considering real estate, they might have as many as 200 demographic data points that must match before they’re willing to make a deal.
While those specific data points are proprietary and generally a mystery to anyone outside the company, they usually include income and population density, as well as education level, median age and traffic patterns.
Oak Cliff has ever-growing pockets of wealthy households with high levels of education, but there are still more dropouts and higher levels of poverty in our neighborhood than in the rest of Dallas. Consider that 22 percent of adults in zip code 75208 graduated from college, compared with only 7 percent of those in adjacent 75211, according to 2015 U.S. Census data.
Even after extremely careful vetting, grocery companies can’t always make it work.
A few grocery chains that seemed to have homerun locations and concepts, such as Sun Fresh Market and Sprouts, closed stores in Dallas.
In its 23-year history, Central Market has never closed a store.
“It doesn’t hurt my feelings that H.E.B. is interested in this area,” says Matthew Munchrath, the second-generation owner of Ann’s Health Food Store on South Zang Boulevard. “We’ve been interested in it since 1974.”
That’s when his mother, Ann Munchrath, started working at the health-food store that she wound up buying in 1984.
While Ann’s opened to offer organic produce and to serve as a resource for those with special dietary needs, it has remained profitable only because of its vitamin and supplement business.
“We couldn’t make a living on grocery alone,” Munchrath says.
He says he doubts that Tom Thumb on Hampton Road nor Kroger at Wynnewood Village Shopping Center have more business than they can handle. Neither of those grocers returned our calls.
While Oak Cliff’s reputation has flipped and is now perceived as trendy and cool, it would be misguided to think it’s an easy market for groceries, Munchrath says.
“It’s not just, ‘open and they will come,’ ” he says. “It has to be something that the general population that lives in Oak Cliff will buy.”
If Central Market did build a Bishop Arts store, that could open the door for more developments to come our way, real estate experts say.
“It’s a catalyst for residential redevelopment because you’re walking distance to a Central Market,” Adams says. “If there’s a grocery store in the bottom of a residential development, the rents are 10-to-15 percent higher because you can walk down to the grocery store. You don’t have to get in your car.”
Oak Cliff has a strong show of Latino markets, such as El Rio Grande and La Michoacana Meat Market. And the family-owned Cox Farms Market now offers organic groceries in West Dallas.
It remains to be seen whether a Central Market, Whole Foods or Trader Joe’s will make the bold move into Oak Cliff. But locally owned grocers say they’re here for the neighborhood, just ask.
“I don’t know what H.E.B. is thinking, and I’m not sure they’re thinking anything except that they’re real estate people along with grocery people,” Munchrath says. “They’re going to see how it plays out too. Everybody wants grocery. Well, you’ve got a good grocery store that will serve you if you just ask for what you want.”