Basic Business Model:
Mobile grocery stores are a retail intervention strategy to address the issue of geographic proximity and lack of public or private transportation by bringing grocery items directly to residents, usually on a regular schedule and with specific stops within neighborhoods. For the purposes of this study, we do not include stationary road-side produce markets or trucks serving only prepared food. Mobile grocery stores take the form of retrofitted buses, shipping containers, trailers, vans, beer delivery trucks, 18-wheeler trucks, bookmobiles, etc., and offer a variety of goods and services, ranging from only fresh fruits and vegetables to a full selection of standard grocery items, including dairy, eggs, poultry, meat, seafood, bakery items, dry goods, and health and beauty aids. Mobile grocery units can be more cost effective to deploy than brick and mortar storefronts, especially in vulnerable
neighborhoods, thanks to lower barriers to entry and lower costs to maintain, retrofit, and operate (EcoDistricts, 2016).
Legal Form:
Possible legal forms include sole proprietorship, limited liability corporation (LLC), nonprofit organization, cooperative-worker ownership, or hybrid for-profit/nonprofit (Briejer & Carbary, 2016). In a sole proprietorship, one person owns and controls the business, and assumes full responsibility for acquiring a truck, sourcing goods, identifying sales locations, managing the back office, and otherwise performing all necessary activities to sustain profitable operations. The owner keeps all profits but assumes all risk of ownership and bears all the losses of the business.
Most of the mobile grocery operations we examined for this study are structured as a hybrid model, with a mix of private commercial, government, higher education, foundation, and nonprofit partners. While a stand-alone business can be viable, most of the successful mobile markets around the United States are successful because they have multiple revenue streams, such as from sales revenues and nonprofit funding. The introduction of grant and donor funding into the startup funds of a socially mission-aligned operation allows the business to take advantage of revenues from sales to support overall operations and outside funding to keep it viable when sales are low. Some examples of this model are MoGro in New Mexico, Fresh Truck in Boston, Twin Cities Mobile Market, St. Louis Mobile Market, and Fresh Moves Mobile Market in Chicago (Briejer & Carbary, 2016).
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Management/Governance Structure:
The management and governance of mobile grocery operations vary according to their
organizational structure. If a sole proprietorship or LLC, the management structure will be governed by incorporation or other documents. However, most mobile groceries are operated and funded by more than one entity, and one or more of those entities will take the lead.
Funding Strategy:
While less expensive than opening an actual supermarket, mobile grocery units still require significant investment to start and operate. Grants and other funding are integral, but the financial model should be sustainable if this funding diminishes. There is also very little room to pass additional costs to buyers (EcoDistricts, 2016).
Mobile markets employ a variety of capitalization/initial financing strategies. If a sole
proprietorship, the prospective operator will use personal funds and/or personal or commercial loans to generate start-up funding. Most projects, because they are a public-private hybrid form, combine a unique mix of private and public funds from a number of different sources. Private financing sources include private banks, community development financial institutions (CDFIs) offering lower interest rates for projects with social benefits, private equity funds, and charitable foundations (PolicyLink, & Local Initiatives Support Corporation, 2008). Public financing sources include the USDA Local Food Promotion Program (LFPP), which offers planning and implementation grants with a 25 percent match to support the development and expansion of local and regional food business enterprises (U. S. Department of Agriculture, Agricultural Marketing Service, 2019).
To help address economic disparities, some mobile markets sell produce at or below cost and/or participate in United States Department of Agriculture (USDA) nutrition assistance programs for low- income households, such as the Supplemental Nutrition Assistance Program (SNAP), the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), the WIC Farmers’ Market Nutrition Program (FMNP), and the Senior FMNP. Research suggests low-income individuals eat more fruits and vegetables when they have WIC and FMNP coupons (Herman et al., 2008; Kropf et al., 2007); Zepeda, Reznickova, and Lohr (2014) suggest policy makers at the national level can facilitate greater purchase of healthier foods by permitting the redemption of farmers market food vouchers at all mobile markets.
117 SNAP, WIC, FMNP, and other food subsidies can represent a large percentage of mobile grocery store income. In 2012, the Arcadia Mobile Market reported 40 percent of its sales came from SNAP, WIC, FMNP, and other matching incentive programs. Similarly, the Nashville Mobile Market reported 20 percent of its sales were to customers using SNAP (Robinson et al., 2016). Arcadia’s Mobile Market reported SNAP, WIC and Senior FMNP transactions generated an average of $8.44 per transaction. The Nashville Mobile Market reported customers spent an average of $5.93 per transaction (Robinson et al., 2016).
The St. Louis, Missouri MetroMarket, in addition to relying on grants and donations, partners with a local hospital to allow doctors to prescribe fruits and vegetables for children based on their level of hunger. They can then use the prescription as a coupon for the MetroMarket. The MetroMarket is also available to corporate or wealthier shoppers, who are charged more than regular customers to help keep prices discounted for those of lesser means (Cherian, 2016).
Product sales alone are usually insufficient to cover operating costs. For example, the Arcadia Mobile Market in Washington, D.C., reported its gross sales in 2012 were $43,478 while its general operating expenses totaled $99,395. The Nashville Mobile Market reported $22,922 in sales revenue for 2011 and $25,932 in total expenses (Robinson et al., 2016).
Number of Workers:
The number of workers varies considerably and depends upon the configuration and scale of the operation. The Kansas City Rollin’ Grocer employs ten paid team members and has numerous offers of help by volunteers; however, volunteers require the same amount of training and supervision as paid staff (Sauer, 2016).
Briejer and Carbary (2016), in their feasibility study for Seattle, suggest the following staff roles at a minimum:
1) Sales: two sales staff members to manage sales at each location, drive the grocery unit from one location to another, and load and unload the unit at the beginning and end of the day. It is important to have at least two staff members be available to manage the sales volume, provide information, samples, and demonstrations, efficiently set-up and take-down between locations to maximize the number of stops per day, and provide a sense of security.
2) Inventory Management and Community Outreach: at least one staff member available during regular business hours to manage inventory, business administration, and community engagement. Engagement is directly related to sales, and if revenues do not permit the hiring of staff for this role, it may be possible to utilize strong partnerships or the outreach capabilities of a larger parent organization to meet outreach needs. 3) Training: a business expert who will train staff in sales, inventory management, and
118 someone from a local college or university, a foundation or nonprofit organization, or a private consultant.
Trust is fragile, particularly for residents in vulnerable communities, and while they desire what everyone wants in a grocery shopping experience (value, service, quality, and convenience), these characteristics might not be present in their current shopping environment. According to Zepeda,
Reznickova, and Lohr (2014), the shoppers in their study to evaluate the effectiveness of mobile markets in food deserts made it clear trust is built through experience and relationships, and they valued direct contact with mobile market staff they perceived as being part of their community. The implication is that hiring staff from the community, emphasizing relationship building with the community, and projecting a message of caring may be important to the patronage and financial success of the mobile grocery (Zepeda, Reznickova, & Lohr, 2014).