Atlantic City Supermarket Paper

Atlantic City Supermarket | April 2015 Feasibility Study

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Feasibility Study

April 2015

Stockton University

Prepared for:

Fema Long Term Recovery

Mark Strohoefer

Thomas Fesen

Prepared By:

Rachel D’Angelo

Grace Mazur

Caitlyn Ruffalo

Florencia Nievas

ATLANTIC CITY SUPERMARKET


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Table of contents 1. EXECUTIVE SUMMARY………………………………………………………………………………………….…1

2. INTRODUCTION………………………………………………………………………………………………..……….2

3. BACKGROUND……………………………………………………………………………………………………………..2

A. Geography………………………………………………………………………………..…………………...2

B. Wards………………………………………………………………………………………….………………….2

C. Transportation………………………………………………………………………….…………………2

D. Demographics……………………………………………………………………………….………….....3

E. Tourism ………………………………………………………………………………………….……………...3

F. Target Market………………………………………………...………………………….………………..3

G. Future Plans for Atlantic City………………………………………………….………………4

4. SITUATION ANALYSIS………………………………………………………………………………………….....4

A. Competitive Landscape……………………………………………………………….…………….4

B. Food Desert……………………………………………………………………………………….……….….5

C. Tourist Destination Status……………………………………………………………………....5

D. Perception of Crime…………………………………………………………………………………….5

E. Food Stamps………………………………………………………………………..………………………..6

F. Cargo Transportation Routes…………………………………………………………….......6

G. SWOT Analysis……………………………………………………………………………..…………….7

H. Similar Cases………………………………………………………………………………………………….7

5. RECOMMENDATIONS………………………………………………………………………………………………8

A. Store Layout…………………………………………………………………………………………………..8

B. Companies That We Suggest………………………..………………………………………..9

C. Land Suggestions…………………………………………………………………………………………9

D. Marketing Strategies…………………………………………………………………………………..9

E. Differentiation……………………………………………………………………………………..…....10

F. Branding………………………………………………………………………………………………………..10

G. Incentives for Supermarkets……………………………………...............................10

6. SERVICE LEARNING CHALLENGES…………………………………………………………………..11

7. RECOMMENDATIONS FOR FUTURE PROJECTS………………………………………...11


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1. EXECUTIVE SUMMARY

Atlantic City has a historic past of culture and entertainment. Throughout time,

millions of visitors have enjoyed the city as a quick getaway from their every-day lives.

Today, while the city continues to attract 26 million visitors per year, 40,000 local

residents struggle without access to a full-service supermarket. Atlantic City is a food

desert.

The rectification of this issue would improve the quality of life for residents, while

encouraging the development and infrastructure of the city as a whole. The purpose of

this study is to discuss which supermarket would best serve the population of Atlantic

City and a plan of action for all parties interested.

Atlantic City can offer supermarket chains a community that desperately needs

their goods. As the only one-stop-shop in the city and surrounding areas, the

supermarket would enjoy patronage of Absecon residents, as well as tourists and daily

commuters. Competition wise, Atlantic City has a large quantity of bodegas that offer a

limited selection of marked up goods. We believe that with the right plan, layout, and

management the chances that a supermarket will thrive are very high.

It is significant for investors to understand that they must cater to the population

in order to best serve the market. Similar cases have shown that supermarkets

succeed when focused on the needs of the community and use them as an outline for

the marketing strategy. Some challenges for a potential supermarket include: picking

the right location and determining the size and layout of the supermarket.

Through our research, we recommend that rather than having a large chain

supermarket, smaller chains, such as a PriceRite or C-Town, would suit the residents

and tourists alike. We believe that a successful supermarket would be smaller than

20,000 square feet as well as have multiple entrances to accommodate drivers and

pedestrians. The supermarket would provide the population with affordable store-brand

and brand name products, plus offer delivery services appropriate for the older and

disabled community.


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2. INTRODUCTION

FEMA Long Term Recovery has partnered with a service-learning team from a

Strategic Marketing class at Stockton University to conduct a supermarket feasibility

analysis for Atlantic City, New Jersey. Currently, the lack of a one-stop supermarket

creates tremendous adversity for local residents and city employees. These individuals

must rely on bodegas for access to food staples and supermarkets outside the city limits

for periodic grocery trips. This study aims to measure the feasibility of a supermarket in

Atlantic City and recommend a plan of action for all parties interested.

3. BACKGROUND

A. Geography

Atlantic City is located in southeast New Jersey, on the Absecon Island. It

borders Absecon, Brigantine, Pleasantville, Ventnor and West Atlantic City. The total

land area covers 10.75 square miles where approximately 2,624 acres are developable;

the remaining acreage consists of water and wetlands. The city offers a 3.4 mile long

sand beach, lined by a boardwalk. The layout of the city consists of a grid system with

an average size of 350 feet by 550 feet.

B. Wards

Atlantic City is subdivided into six

wards. The fifth ward is the most

populous and has more population density

per square mile. The fifth and sixth wards

have a larger white and Asian population

and feature a higher per capita income.

The lowest income levels can be seen in

the second ward.

C. Transportation

Fifty percent of the Atlantic City

population does not own a car. Most

residents use public services, walking or cycling as their transportation methods of

choice. New Jersey Transit offers 13 local, regional, and interstate bus routes that stop,

depart, or arrive in Atlantic City from a centrally located terminal at 1900 Atlantic

Avenue. The local routes serve the essential role of allowing city residents to reach

suburban destinations, plus gain access to employment, shopping, educational, and

medical locations within the region. An alternative to New Jersey Transit buses are 13

seat buses called Jitneys. These buses have four fixed routes throughout the city and

offer a cheap and convenient way for residents to travel.


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There is rail service available through New Jersey Transit that offers trips

between Philadelphia and Atlantic City, with stops at Absecon, Egg Harbor City,

Hammonton, Atco, Lindenwold and Cherry Hill. Greyhound provides longer distance

services for tourists and residents. Buses usually leave and depart Atlantic City from

the Atlantic Avenue Terminal. These buses are often the preferred way to visit the city

for tourists coming from New York City, Philadelphia, Baltimore, and Washington, D.C.

D. Demographics

Atlantic City’s population consists of 40,000 local year-round residents and

15,920 households. The average age is 36-years-old and 12.7% of the population

consists of senior citizens. The median household income is $26,000 per year. It is

estimated that 34.3% of the population live under the poverty level. The unemployment

rate is 12.4% and varies throughout the year. The fluctuation is due to the seasonal

leisure and hospitality industry, which employs 37.3% of the population. The population

density is 3,680 people per square mile.

E. Tourism

Atlantic City continues to be a tourist destination for many people despite recent

casino closings. It is estimated that 64% of visitors are between 30-years-old and 64-

years-old with an average annual income of $71,000. The typical Atlantic City visit

starts on a Friday and usually lasts 1-2 days.

F. Target Market

1. Primary market: Atlantic City Residents:

Most of the residents of Atlantic City are low-income families. These

families often have laid-off breadwinners, family members who earn low

wages or members who have seasonal or temporary jobs. As previously

stated, most residents do not own cars and use public transportation.

Residents would benefit from supermarkets that offer perishable groceries at

an affordable price.

2. Secondary Market: Tourists and Commuters

These two sectors of the market are sectioned together due to common

characteristics. Both tourists and commuters stay for short periods of time.

They will most likely visit the supermarket to pick up essentials, forgotten

items, or snacks. Since population trends fluctuate, it is hard to predict the

number of tourists and commuters that would patronize the store. Also, the

diverse incomes of this secondary market make it hard to cater to specific

needs.


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G. Future Plans for Atlantic City:

The future of Atlantic City looks bright. Within ten years, there are plans to

increase the population of Atlantic City by 10,000 residents. Atlantic City is working to

earn status as a sustainable city, ultimately making it more resilient against storms.

Diversification of the economy is the key towards a better future. A plan of action

includes the development of businesses other than casinos. With the increase of local

businesses comes new jobs; it is forecasted that the average annual income of locals

will increase from $30,000 to $50,000. New parks and housing developments will be

built to accommodate the projected increase of the population and make Atlantic City a

more attractive place to live.

4. SITUATION ANALYSIS

A. Competitive Landscape

The placement of a supermarket in Atlantic City would create competition with

bodegas; bodegas are small independently owned convenience stores that often mark

up the prices of the goods being sold. Bodega owners are known to shop at wholesale

retailers, break-up bulk purchases and sell per unit at a premium. These stores sell

ethnic foods and goods as well as snacks and food essentials.

Bodegas are also not conducive to a good neighborhood atmosphere, for they

have been described as “eyesores.” These stores have become meeting spots for

residents and often are linked to noise complaints and petty crime.


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Throughout the years, bodegas have thrived in Atlantic City by taking advantage

of low-income families who often have no other choice but to purchase their overpriced

goods. Atlantic City welcomes a full-service supermarket to allow competition for

bodegas; the intention of the city is to force the bodega owners to lower their prices.

Although some bodegas may not survive, it is predicted that bodegas that offer ethnic

goods and have a loyal following will continue to do well.

Currently, there is one supermarket in Atlantic City, located on 1501 Atlantic

Avenue, called Save-A-Lot supermarket. This supermarket was opened on May of

2012 and has been doing well in the area. It offers deals on store-brand items and

consists of 18,000 square feet. This supermarket employs armed security guards and

has a large amount of cameras in order to prevent theft. During the week, there is a

farmer’s market located on 1200 Atlantic Avenue. The farmers market offers a variety of

fruits, vegetables, baked goods and homemade crafts. Some farmers accept WIC and

Senior FMNP vouchers.

B. Food Desert

Food deserts are areas where at least 20% of families are at or below the federal

poverty line and where a third of the families are more than a mile away from a

supermarket, in urban areas, or 10 miles away in rural areas. Based on this, Atlantic

City can be defined as a food desert and is eligible for special plans, programs and

incentives. Save-A-Lot and the farmers’ markets have helped to slightly lower the

demand for discount groceries. However based on the above criteria, those who do not

fall within a mile of the Save-A-Lot’s radius still live in a food desert.

C. Tourist Destination Status

Contrary to popular belief, Atlantic City is not recognized by the New Jersey

Government as a tourist destination. Due to this, tourists cannot be counted as part of

the population when it comes to government issues. This affects the city in terms of

requesting funds for government related jobs, grants and activities. This issue also

skews many reports and research studies, as conclusions are reached by using the

local population and do not take into account the annual influx of tourists.

D. Perception of Crime:

Crime is not a threat to residents and tourists in Atlantic City. However, there is a perception that Atlantic City is ridden with danger. This assumption is not supported by actual data. For example, the total number of crimes in 1977 was 4,391. That number rose to over 16,000 within ten years, fell to about 9,000 in 1999, and eventually decreased to a little fewer than 3,000 in 2014.


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In the 1980s, the majority of the crimes committed were from petty larceny. For instance, robberies due to casino visitors leaving doors unlocked. Most of the perception currently comes from a lack of understanding. Those who are unfamiliar with “city-life” are quick to judge the city as dangerous because residents hang out on street corners. Atlantic City not only has improved its safety precautions, but officials are actively updating technology as well as bringing in cameras, advanced police software, etc. The city needs a public relations campaign - one that educates potential visitors about its current offerings and safe environment.

E. Food Stamps

Much of Atlantic City’s local population uses food stamps in order to meet the

nutritional needs of their families. Supermarkets considering a location in Atlantic City

should be prepared to work with the government in ensuring that customers will be able

to use their SNAP and WIC benefits. In order to be eligible to provide consumers with

this service, supermarkets must sell food for home preparation, consumption sell on a

continuous basis, and offer three varieties of products within the following categories:

meat, poultry or fish, bread or cereal, vegetables or fruits or daily products. Another

method of qualification would be if more than half of the dollar amount in total retail

sales comes from the sale of eligible staple foods.

F. Cargo Transportation Routes

Atlantic City is located on an island connected to the mainland through a series of

bridges. In order to limit the amount of traffic in residential neighborhoods, tractor-trailer

crossings are allowed in three bridges: the Atlantic City Expressway Bridge, the Albany

Avenue Bridge, or the bridge located on Route 30


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F. SWOT Analysis

Strengths Weaknesses Opportunities Threats

Demand by local residents

Not designated as a tourist destination by the state

Conditions are set for a successful supermarket should the right strategy and leadership be put in place

Misperception of crime

21 million adults located within 120 miles of A.C.

Less than 50% of residents have cars

Government incentives (food desert)

Negative perception of Atlantic City by outsiders

New mayor and fresh vision

Fluctuating population throughout the year

Supermarket delivery, unique layout, innovative store design.

Decreasing trends in tourism

Affordable and effective public transportation

Police staffing during busy summer months

Investments in the city will most likely increase the population in the near future

Bodegas

Low Income Levels

G. Similar Cases

Currently, there is a Pathmark in Harlem that is successful. It opened in April of

1999 and was the first full-service supermarket in Harlem in three decades (Pristin,

1999). It has drawn 30,000 customers a week, stated Harvey Gutman, a Pathmark

spokesman (Pristin, 1999). Only about 10% of the customers arrive by car, Mr. Gutman

said, suggesting to the company that most come from Harlem or the Bronx (Pristin,

1999). Last year, Extell Development purchased the Pathmark in East Harlem; the

building, at 142-96 East 125th Street, is under a long-term lease with Pathmark and

includes approximately 300,000 square feet of residential air rights and over 450,000

total buildable square feet with inclusionary housing bonuses (Clarke, 2014). “The site

has been a valuable asset to East Harlem since it was developed in the 1990s and we

believe it will continue to benefit the community for many years to come” Victor Sozio, a

property representative, explained (Clarke, 2014).

In 2013, the Pathmark on Mount Ephraim Avenue in Camden New Jersey closed

(Terruso, 2014). A year later, a PriceRite was established in the same location;

PriceRite was the first supermarket to move into Camden in 40 years (Terruso, 2014).


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The store is owned by Ravitz Family Markets, a family-owned business in operation

since 1968, which also plans to open a ShopRite in 2016 on Admiral Wilson Boulevard

in Camden (Terruso, 2014). Jason Ravitz described the PriceRite store as “a hybrid of

Aldi and Costco, with low prices and bulk items” (Terruso, 2014). “Shoppers bring their

own bags or pay 10 cents a bag a cost, Ravitz said, that would go toward keeping

prices low” (Terruso, 2014). The opening of PriceRite also marked a change for

Camden residents who have lived in a food desert. The store hired about 100 full-time

and part-time workers, more than 70% of who were Camden residents (Terruso, 2014).

This lowered the city's unemployment rate, which is now about 17% (Terruso, 2014).

5. RECOMMENDATIONS

A. Store Layout

We recommend that the

supermarket be 20,000 square

feet or less. In order to

accommodate for pedestrians,

as well as drivers, the

supermarket should have two

entrances, one at street level

and another towards the back,

accessible via parking lot. We

suggest that the supermarket

be self-serve, with meats and

deli items, pre-cut and

packaged. Warm deli cases

should be put near each

checkout with hot, ready to go

items, like rotisserie chicken

and pasta.

The store should run on

a Just-In-Time inventory

system, stocking just enough to

meet demand without having to

use up store space for storage.

The supermarket should stock excess merchandise on top of its aisles, much like

Costco and Staples do. The backroom should be solely used for food preparation,

management offices and deli and meat slicing.

In order to keep the store secure, we suggest investing in an excellent security

system, equipped with high technology security cameras and theft detectors.

Additionally, we suggest having a locker system, where an employee behind a desk


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takes the customers’ bookbags and purses and places them in a cubby. The customer

then receives a number belonging to a cubby hole where the items were placed.

Customers should only be carrying their wallet inside the store. Once the purchase is

done, the customer simply returns the number and receives their belongings back.

There should be at least two armed guards, one at each door during all business hours,

and one night custodian.

B. Companies That We Suggest

Supermarkets chains, such as C-Town or PriceRite that have a history with

opening supermarkets in challenging areas should be approached. We recommend

that Atlantic City stay away from big corporate supermarket franchises, as these

organizations usually have many rules in place – those that do not allow for the

customization that Atlantic City’s market needs.

Private investors, entrepreneurs and small business owners should also be

contacted. The unique marketing challenge may be attractive to investors, and the

appeal of serving a community in need can help entrepreneurs get funding from banks.

C. Land Suggestion

We recommend that investors seek privately-owned land in a centralized location

near the Jitney route. We have heard of similar supermarkets that have been in

negotiations with community organizations for a long time, and the process has been

extremely slow. Opening a business is complicated enough; if the people of Atlantic

City are top priority, then they should not continue to suffer the consequences of a food

desert due to lengthy negotiations.

D. Marketing Strategies:

1. Finding the right investors:

In order to make the plans for a supermarket become reality, the right

investors must be reached and be fully on-board with customizing a supermarket

to fit Atlantic City. They must have an optimistic view of Atlantic City’s future and

be fully aware that the crime perception is false. In exchange, Atlantic City must

provide investors with the guarantee that the supermarket will be successful even

though there are those that have failed.

2. Marketing to the Primary Market

The new supermarket is going to enter the market at a time where there is

high demand. A small advertising campaign should be sufficient enough to

spread the knowledge that there is a new supermarket. Word of mouth plays a

big advertising role in communities like Atlantic City.


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During the first months to a year, a lot of attention must be called to the

services that the supermarket can provide for the community. For example, if the

supermarket delivers to seniors and handicapped individuals, then it should be

advertised throughout the weekly booklets.

E. Differentiation

Unlike bodegas, emphasis should be placed on the convenience aspect of the

one-stop-shop that the supermarket will become. It will provide customers with

affordable prices for both brand name and store-brand products. The supermarket will

have no frills, and will be simple to navigate.

F. Branding

Branding should focus on the fact that the supermarket is for the people of

Atlantic City. However if it already has an established reputation, then that status

should be used to earn the customers’ trust.

G. Incentives for New Supermarkets

The incentives to open a supermarket in Atlantic City should be fully explored

and promoted as it can help make the city more attractive to investors. It is important to

note that some of the grants and loans available require that the funds be distributed

through private, non-profit organizations.

The following grants, loans and tax credits are available to Supermarkets:

Up to $125,000 in grant money from the New Jersey Food Access Initiative.

39% of amount invested by Community Development Agencies towards new

businesses in low-income areas can be returned via tax credits -- CDFI Fund.

Up to $90,000 grant from the Voices for Healthy Kids, if the supermarket partners

with a 501 c3 non-profit organization.

Community Food Projects Competitive Grants Program is a private, non-profit

organization that can provide grants to cover up to 50% of costs of building and

establishing projects that will help increase food security in communities.

The Reinvestment Fund, a non-profit organization, has funding and loans for

supermarkets opening up in food deserts.

The following grants, loans and tax credits are available to new businesses of

Atlantic City.

The New Jersey Economic Redevelopment and Growth Program provides up to

50% of the project cost.

The Grow New Jersey Assistance Program provides employee tax credits for new

full-time employees.


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6. SERVICE LEARNING CHALLENGES

We encountered some challenges with our service learning project. First, our

team had a difficult time figuring out how to approach the project. FEMA had a vague

idea about putting a supermarket in Atlantic City. To overcome this challenge, we

decided to research similar cases of successful supermarkets in urban areas, such as

the Pathmark in East Harlem and the PriceRite in Camden. By finding this research, we

were able to decide what type of supermarket should be placed in Atlantic City and

which location would best suit the population. Second, the main problem our team

faced in working together was schedule conflicts. Despite this, our team worked

extremely well and each member did an equal amount of work.

7. RECOMMENDATIONS FOR FUTURE PROJECTS

We recommend having a new public relations campaign created to neutralize the

negative perceptions associated with Atlantic City, specifically aimed at crime. This

would be beneficial because a supermarket chain and other businesses will be more

willing to invest in the city if the actual amount of crime that occurs was publicized. The

misperception of crime could ultimately affect the willingness of future organizations to

migrate to Atlantic City. We also encourage finding a way to attain tourist destination

status, as this would give the city more capital to fund special projects. Lastly, we urge

the city to have more summer events and festivals to attract tourists and businesses, as

well as encourage residents to stay apart of the community.


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REFERENCES

Procida, L. (2011, October 2). Food Deserts in Towns Such as Atlantic City Leave Residents

Relying on Community Gardens. The Press of Atlantic City.

http://www.pressofatlanticcity.com/communities/atlantic-city_pleasantville_brigantine/food-

deserts-in-towns-such-as-atlantic-city-leave-residents/article_0ee87f26-ed39-11e0-80af-

001cc4c002e0.html

Casino Reinvestment Development Authority. (2012, February 1) Atlantic City Tourism

District Master Plan Volume 1

http://www.atlanticcitynj.com/!UserFiles/crda/TourismDistrictMasterPlanV1.pdf

Israel Posner & Stockton University. (2013, February) AC Visitor Profile Study.

https://intraweb.stockton.edu/eyos/business/content/docs/LIGHT/AC%20Visitor%20Prof

ile%20Study%20-%20Final%20for%20Website.pdf

City of Atlantic City (2008, September) Atlantic City Master Plan

http://www.cityofatlanticcity.org/docs/20120222151057-4.pdf

Supplemental Nutrition Assistance Program (2014, September 17) USDA Food and Nutrition

Servicehttp://www.fns.usda.gov/snap/how-accept-snap-benefits-your-store

Terruso, Julia (2014, October 17) Camden Gets a Supermarket. Phili.com

http://articles.philly.com/2014-10-17/news/55112667_1_north-camden-pricerite-camden-

counties

Clarke, Katherine (2014, April 16) Extell Makes Deal for Harlem Pathmark Official. The Real

Deal http://therealdeal.com/blog/2014/04/16/extell-makes-deal-for-harlem-pathmark-official/

Pristin, Terry (1999, November 13) Harlem's Pathmark Anchors a Commercial Revival on 125th

Street. The New York Times http://www.nytimes.com/1999/11/13/nyregion/harlem-s-pathmark-

anchors-a-commercial-revival-on-125th-street.html

A SPECIAL THANK YOU TO:

Mark Strohoefer FEMA Long Term Recovery

Thomas Fesen FEMA Long Term Recovery

Paul Perillo FEMA Long Term Recovery

Elizabeth Terenik City of Atlantic City

Frank Gilliam City of Atlantic City

Pamela Fields Main Street Atlantic City

Christina Bevilacqua Main Street Atlantic City

Professor Jennifer Barr

http://articles.philly.com/2014-10-17/news/55112667_1_north-camden-pricerite-camden-counties

http://articles.philly.com/2014-10-17/news/55112667_1_north-camden-pricerite-camden-counties

http://therealdeal.com/blog/2014/04/16/extell-makes-deal-for-harlem-pathmark-official/

http://www.nytimes.com/1999/11/13/nyregion/harlem-s-pathmark-anchors-a-commercial-revival-on-125th-street.html

http://www.nytimes.com/1999/11/13/nyregion/harlem-s-pathmark-anchors-a-commercial-revival-on-125th-street.html

Documents

Atlantic City Supermarket Paper