No Asheville industry has seen stiffer competition than the area’s grocery store market in recent years. The latest indication of the high stakes involved surfaced March 17 when Katuah Market, a locally owned, locally sourced food store and deli, announced it was closing on March 31 after struggling to compete in a saturated market for the past year.
Katuah attributed the struggles to “location, difficult ingress-egress and relentless corporate competition,” in a statement on its Facebook page. Owner John Swann adds, “We opened the store in December 2013 and really had disappointing sales from almost the beginning. … It started with a rough winter, and even when the weather improved, it was challenging to get people to come down here. I underestimated how hard it would be.”
Swann has been disappointed by the failure to build a consistent patronage, which he attributes, in part, to Katuah’s location in Biltmore Station. “We’re not on the beaten path,” says Swann, noting that perception and routine played a big role in keeping consumers away. “People get into habits, and it’s very difficult to break them of those patterns. I had countless people tell me. ‘I love your store, I just don’t get down there that often.’”
Despite efforts to tweak the store model and cut costs, new competition in the past year from national brands like Trader Joe’s and Whole Foods made it nearly impossible for Katuah to compete, he says. “As soon as Whole Foods opened, our sales dropped and we never recovered from that,” states Swann. “Asheville’s the most competitive food market in the United States for its size.”
Even with competitive pricing, Swann says that Katuah was outmatched by the marketing capability of his corporate rivals. “They are very good at it: They take a concept and co-opt it into a marketing theme,” Swann explains. “The grocery world is dominated by big business. They’re too effective at what they do and convincing people that their products are what they claim to be.”
Katuah’s closing strikes another blow to Oakley residents seeking a neighborhood grocery store in their vicinity. Last October, the Bi-Lo on Fairview Road closed as well, citing “underperformance.” Residents are now faced with a longer commute to access groceries and may find more traffic congestion around hot spots like Greenlife on Merrimon Avenue and Whole Foods off South Tunnel Road.
The loss of Katuah also means the loss of a community gathering spot. “I had high hopes for Katuah,” says Marita Renner, a resident of the area. “They had a great outdoor seating area for enjoying their food and socializing,” she says. “On busy days, I often ran into people I knew. It will be missed.” She also notes, “It’s a challenge for a relatively small business to carry so many local, high-quality items.”
“We’re very sorry that Katuah is having to close its doors,” says Steve Hargadon, an organizer of the Small Is Beautiful series, which Katuah provided a meeting space for. “We have really appreciated the staff and management, and will miss the healthy and open environment. They’ve been a class act, and I’m sure it’s been hard for them to throw in the towel.”
For the current 45 employees of Katuah, the writing has been on the wall for several months. “People would come for the big sales, but they didn’t stay,” says Farra Lomasney, who ran Katuah’s supplement department before taking a voluntary sabbatical in December in an effort to save the company money. Lomasney, whose husband also works at Katuah as a butcher, agreed that location was a big issue in the store’s struggles. “We had a good following from Oakley and South Asheville, but a lot of folks from the north just wouldn’t drive this far.”
She defends Swann, who has received a fair amount of criticism through social media as the news unfolded. “Everyone here stands strongly with John,” she says. “It bothers me to see so much negativity leveled at him, when all he tried to do was bring local products to Asheville, based on what people told him they wanted.”
As with most aspects of a locally intertwined economy, the ripple effect of Katuah’s closure extends beyond the immediate players. Swann worries about his ability to pay local suppliers. “We can’t even pay our vendors, and that hurts, because to a large degree, this was to help support local food producers. A lot of them are my friends and colleagues, and it kills me because our debts hurt them too.”
Lomasney says she understands why some vendors might be angry, but she is quick to remind them that “while this definitely hurts [vendors], Katuah and Greenlife [Swann’s former business prior to a controversial buyout by Whole Foods] have helped a number of them build a brand for themselves in the past. That aspect is forgotten at times.”
Some members of the Asheville community have attempted to rally around Katuah; a gofundme account created by one of Katuah’s vendors went up the day after the closing announcement in an attempt to help the market manage its debts. Swann is thankful for any help people are willing to contribute. “If we could raise some money to help pay vendors off, I’d absolutely love it,” he says. “I’ve devoted my personal resources to keeping this afloat, but I’m back to square one.”
Public sympathy notwithstanding, some of Katuah’s staff can’t help but feel that it’s too little, too late. “What else can I say?” asks employee Teresa Rice, as she watched people flock to take advantage of the liquidation sale last Wednesday evening. “There will be 45 employees left here without jobs in two weeks. Now all these people are in here filling up their carts. But where were they before?”
For his part, Swann sees the market’s failure as a wake-up call to what the “Buy Local” movement really means. “I had a concept that I thought would resonate more with the Asheville community, but the reality is that people aren’t particularly into it,” he says.
Lomasney believes that consumer indifference is not intentional but rather the culmination of “small choices. That decision to turn right towards one place instead of left. The decision that you’re too busy to drive the extra distance. It adds up.”
“Supporting local is more than a bumper sticker on your car. It’s more than going on a family outing once a week to the farmers market,” says Swann. “That’s all great, but if you want to support local, then really support it. That means not supporting multibillion-dollar, multinational corporations.
“I now know how the local hardware store feels when Wal-Mart comes to town.”
After reading the article, it seems to me that the major problem is NOT that people fail to support the concept and type of products. Location is a very big deal in Asheville. If Katuah’s location had been nearer the center of town, like the competitors that were mentioned, it would have been roundly successful. When I think of Oakley, I think of traffic jams all around, trying to get there (Biltmore Village, jammed expressways, etc.).
Also Katuah was not advertised well. I’d just heard the name, but didn’t know anything more about its products and focus. Please try again, in some place more accessible!! I regret not shopping there myself during the time it was open.
Thanks for the thoughts George. You are right that location played a very big part in the struggles of Katuah. Mr. Swann was very forthright about that in our communications. Part of the reason he settled on that location was the lack of available space elsewhere; as I’m sure you know, property values within the city are rising rapidly, and Katuah was unable to find a downtown location that matched their price range, even after a 2 year search, according to Mr. Swann.
The opening of Katuah -in an obviously less than ideal location… and in an uber saturated natural grocery store marketplace- was simply a pretext for John to fleece his newfound “investors” in Katuah. This is what John does…. everyone who has ever been in business with John (and there are no repeat partners/investors in John’s serial ventures…. ever) knows this. This was never about local and sustainable… this was about John garnering a generous salary for a year or so. And, despite John’s previously statements in regard to his financial position…. he won’t be declaring personal bankruptcy. His investors however lost every penny they gave John…. which is unfortunate but was pretty much a certainty from the get go. I seems though that John has burned all his bridges this time around and [finally] worn out his welcome here in Asheville. Let’s hope so anyway.
Those are some pretty serious allegations, Just Saying. Nobody I spoke to for this article expressed any of these sentiments you’re bringing to the table; quite the opposite actually. However, I’m sure there are people out there that could tell a different story than the one I was given. Do you have any examples of folks who feel the way you do? I’d be interested in hearing their side.
I must say that I agree with Just Saying.
Swann , at some point knew the ship was sinking, but he kept taking products from suppliers, including many of us local small vendors.
If he himself cared so much about the small local business, he would not have screwed several of us. I know this as fact, firsthand.
The large multinationals wont feel the loss, but the small businesses get stuck with unsecured bad debt and will never recoup the loss of our hard work and money that we fronted Katuah and never got paid.
I certainly agree that location was a major and probably THE major factor. But, in my opinion, Katuah didn’t offer any differential advantage over its competitors — in any of the elements of the marketing mix (place, price, product, people or promotion). In that respect, it was totally unlike Greenlife in its early days, when it truly brought something new to the market — wonderful staff, local organic and natural products, competitive pricing (compared with others in its niche), plus it was a community meeting place. My daughter and her friends spent a lot of time at pre-Whole Foods Greenlife after school during their high school years, having snacks and drinking coffee or tea.
I don’t sense any negative feelings about John Swann. Poor site selection is a mistake that a lot of businesses make, one that’s almost impossible to overcome.
I would add that the argument that “property was too expensive in Downtown Asheville” (or in North Asheville) so Swann had to choose an “affordable” location in Biltmore is the kind of thinking that gets business owners in trouble.
Fact is, if you truly understand the five elements of the marketing mix (the so-called Five Ps: place, price, production, promotion and people) you understand that the Five Ps are interrelated. What you “save” on one you end up spending as much or more on another. For example, if you’re in a bad location with cheaper lease costs you’ll have to spend much more to promote the business and bring customers in, or you may have to discount heavily to attract customers on the basis of price. All other things being equal, if Katuah had located in a better site, it could have spent less on the other elements of the marketing mix.
And, in the end, no location is a good deal if it is a major cause of the business failing.
I would have gone way more out of the way than katuah market was had there been a compelling reason to. If the buffet was like greenlifes buffet before whole foods took over which imo had food of better quality than most restaurants (especially their many Indian dishes and barbecue with all the accompanying sides which I still deeply miss on a near daily basis) Or the baked goods (which were often better than any local bakery) were what greenlife used to offer before the whole foods brand pushed many of them off the shelf, I would’ve trAveled there on a near daily basis. The disappointing thing was that those things were never near the quality of greenlife pre whole foods buyout, when that’s one area that could distinguish them from what any other grocer could offer. It also didn’t help that when I tried to find it the first few times Google maps sent me to an entirely different location way down hendersonville road nearly into arden, but having to make several attempts to find the place, and then having it be out of the way in bad traffic were drawbacks I’d be willing to deal with for what could’ve been an awesome place. Unfortunately i didn’t find that in katuah despite wanting to and didn’t return after several visits. Local businesses can’t blame the consumer for not wanting to pay more and travel farther for an inferior product, or one they can get closer for a better price from a store that was local and the same owners sold to a multinational. I’m willing to pay more for local products if they’re of similar or superior quality, but sorry, I’m not willing to pay more for something that isn’t good just because it’s local, and I’m tired of hearing the attempts of local business owners whose businesses failed attempting to blame their lack of success on people not buying local just for the sake of it being local.
Location, Location, Location, Location, and not enough density of market share. oopps, you have a great concept good luck on your new location. Hint, Hint. I like you store a lot.
Thanks for stiffing all the local vendors Swann, now you have to return phone calls and emails so these local hard working people can continue to operate, or just be a scum who is more lucky the savvy.
I agree with others that location was a big factor, but I object to the characterization that Asheville doesn’t get the idea of “buy local.” For a while we bought most of our produce, bread and meat at Katuah. We didn’t mind that things were a little higher because we were supporting a LOCAL business which was buying LOCAL products to resell when possible. We told our friends about it. We stopped going there because they were regularly out of common things like Bread, Bagels, Bacon, Sausage, Chicken and Hamburger — so we had to go somewhere else (EarthFare) for those things.
We commented on this to the owner, who shrugged it off. More than anything, that’s why we stopped shopping at Katuah six months ago.
I do not doubt that Swann did some market research, but it is very clear that either it wasn’t rigorous or courageous enough to explore a scenario that his location would sink him. It’s common for people to pressure themselves, their staff, or their hired consultants, to only tell them what they want to hear. The sale of Green Life plus the entry of Whole Foods, are learning moments for many in Asheville who think their market beliefs will overcome and trump the greater, stronger and vaster market forces of capital, liquidity and cash flow, marketing, location, access, inventory management, quality control, and effective training of staff. They Do Not Overcome Such Forces. That is a lesson appliable to every industry sector and is not aimed necessarily at Swann or Katuah. I do hope the F.B. Co-op keeps their financial “break-even” point low enough so that they can stay marginally profitable in the face of larger market forces they have no control over,