VOL. 133 | NO. 130 | Friday, June 29, 2018
Grocery Veteran Bringing Cash Saver Store to Former Kroger Southgate Site
By Patrick Lantrip
Rick James got his start in the grocery store industry at 15 when he, like a lot of teenagers, got his first job bagging groceries at a small independent retailer outside Union, Missouri.
But unlike most of his peers, James has spent the past 40 years honing his craft. He now runs a modest empire of independently owned grocery stores in the Memphis area including the nation’s first Cash Saver on Madison Avenue, a retail concept James helped perfect several years ago.
When Kroger decided to pull the plug on what it considered an underperforming location in the Southgate Shopping Center, James was one of the few people who was uniquely positioned to swoop in and save the South Memphis neighborhood from becoming Shelby County’s latest food desert.
Businessman Rick James said that he believes his Cash Saver grocery store model will be successful in the new Southgate Shopping Center based on his experience operating stores in similar areas. (EDGE)
“Coming back as a supermarket is a really big win for that shopping center and that neighborhood,” James said. “I’m excited about bringing the store back, and I think that the overwhelming response is going to be positive.”
James said that he believes his model will be successful in the new location because he has ample experience operating stores in similar areas.
“We’re familiar with the products they want, the price they are willing to pay, the quality they expect, and the service that they are looking for,” James said. “All of those things are what we’ve been doing for years and years, so we will just extend that from our current successful locations into a new one.”
James’ Cash Saver stores market themselves as a “cost-plus” food outlet, a model that he says has allowed him to not only survive in an industry that already operates on thin margins, but thrive.
The basic concept of cost-plus, he said, is identifying the true cost of each item in the store, based on capturing the cost between the source and the shelf, which includes factoring in manufacturing, freight, warehousing and stocking costs. Once this price point is established, 10 percent is added at the register on every item to cover the overhead cost of operating the store.
“Once you determine what the true cost of every single item on the shelf, it allows you to price them at the very lowest point and then set a defined 10 percent across the board,” he said. “This allows us to flatten out the pricing throughout the store so that every item is priced at its lowest point.”
While it’s not a model that he invented, it is one that he has helped define.
“The very first Cash Saver in the United States was opened at 1620 Madison Avenue here in Memphis,” James said. “And since that time, we’ve converted our other stores as we developed it and learned how to present it.”
There are more than 100 licensed Cash Saver locations across the country and dozens of independent retailers continue to tour James’ Midtown location looking to re-create its success.
Since James, nor anyone else, had plans in the works to occupy the Southgate store before Kroger made its announcement earlier this year, John Lawrence, the senior economic development specialist with EDGE, said they were brought in to help make the project a financial reality.
“This was something that came up, it was not in his long-range business plan necessarily, so it’s not like (James) was sitting on a pile of cash, ready to move in there,” Lawrence said. “So our role was to reduce the taxes on the center to make the rents and operating costs for Cash Saver something that fit their model.”
The tool EDGE used to provide assistance came in the form of a Community Builder PILOT, which was recently approved by the EDGE board earlier this month.
“We were hearing time and time again that there are disenfranchised neighborhoods that don’t have access to the retail, medical or grocery needs, and under our old policies there wasn’t any way for us to help,” Lawrence said. “But the Community Builder PILOT allows us to work on retail-oriented projects or smaller projects that meets some community need other than just the traditional types of things that we were looking into.”
As for James, Lawrence said that it has been enjoyable to work with someone who is so passionate about their work.
“He seems to be a really great guy, a good operator, and is in it for the right reasons,” Lawrence said. “He’s motivated by keeping costs as low as possible and providing the highest quality product to neighborhoods who don’t normally have access to it.
“He’s a good businessman too, but he certainly looks at it from the community development side.”