THE EASTERN MOST SUPERMARKETS IN THE USA

A while back I had the opportunity to do a market study in the US Virgin Islands.  The island of St. Croix market is unlike anything we might see on the mainland.

First, on the Virgin Islands you drive on the left.  The weather is pretty much the same every day, sunny and warm.  Road signs are missing because they have been stolen and the metal recycled.  The address system is very complicated, with the island divided up into “estates.”   Road conditions are poor with lots of potholes.   People drive below the speed limit because they have no choice.

Now for the supermarkets.  All but one store are owned by Palestinians.  The chains have pulled out.  The Palestinians immigrated during the 1960s and own most of the gas stations and mini-marts as well.  The only store not Arab owned was Cost U Less which is a chain of warehouse club style stores located in remote Caribbean, Pacific, and Hawaiian Islands.  There are two Pueblo stores that used to be part of Puerto Rican chain that filed for bankruptcy.  Most store owners know each other well, are often related, and worship together.  Everyone knows everybody and news travels quickly within the industry.  If I want to stay at a 5 star resort for $99 a night, I know who to call.

Demographically the island is about 80% black.  However due to religious reasons many stores do not sell liquor, cigarettes, or pork.  This creates some hard feelings between store owners who break their religious rules and sell these items which are in high demand.

I learned very quickly the most important expense on the minds of store owners.  Can you guess?  It’s their energy costs.  Electricity costs about three to four times what we pay on the mainland.

There is a huge wealth gap between rich and poor.  The economy is weak due to the exit of a large oil refinery.  Many live in poverty and rely on Food Stamps.  On the other end are the uber-rich who live peacefully in paradise.  Most of the wealth is concentrated on the eastern edge of the island.

Conditions in the supermarkets would be considered deplorable by most of us.  Smaller stores seem to have the best store conditions.  Larger stores are often dark with most of the lights off.  Most of the supermarkets are supplied out of south Florida.  Freshness can be a challenge.  Pricing is about double mainland USA prices.  Most large stores have shop-worn equipment and in desperate need of a remodel.  Parking lots can be like driving through an obstacle course of large potholes.  Often striping has not been done in years.

 

There are no Walmart stores in the Virgin Islands.  Kmart had two stores on St. Croix that I found to be in good condition and well run.  Their annual sales volumes varied between $20 and $25 million per year which for Kmart is quite good.  Food offerings were limited.  Walmart does quite well in Puerto Rico which is in close proximity.  I predict Walmart eventually acquire the Kmart stores.  There is one Home Depot on St. Croix which has significantly improved the availability of hardware and building supplies.

Wholesaling opportunities are plentiful since retailers are always looking for a cheaper source or groceries.  Back rooms tend to be larger or extra truck trailers are available for deal buys.  Sometimes a wayward shipping container somehow finds itself mysteriously appearing behind the store.