Could the 'grocery store of the future' land in Austin?

Thom Alcazar, the founder of EATS Groceries, certainly hopes so

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By Michael Romain

Editor

Thom Alcazar, the founder of Alcazar, Ltd., a consulting firm that provides expert knowledge in business automation, believes that he has a blockbuster idea on his hands and wants to deliver it to economically distressed communities like North Lawndale and Austin.

It's called EATS Groceries, and if Alcazar and his team have their way, the store could be housed in the old Maywood Market building at the corner of 5th Ave. and Washington Blvd. within roughly a year's time after securing a deal.

On the surface, it's an innovative concept that's smoothly articulated in a neat, roughly 2-minute video on the EATS website.

"Shopping has become a chore," the baritone-voiced narrator says. "Long aisles, long lines and screechy carts to push. Eats provides a safe and convenient concierge-type shopping experience, as well as transportation along major routes to our locations."

Trained assistants, the voice-over notes, will guide shoppers to digital kiosks, where customers would place orders and receive assistance in other matters. Cooking demo kiosks will provide 30-minute tastings of "low-cost, healthy meal samples."

Once the orders are punched into the kiosks, representatives in a warehouse will put them together and pack them "as they are received through the touch-screen shopping."

Customers at EATS, the narrator says, won't have to worry about waiting lines, cold aisles, inconsistent temperature controls or stress. The whole concept seems pulled from an episode of the Jetsons, which may both appeal and repulse, depending on the demographic.

Last October, Alcazar told Austin Weekly News that he was seeking $5 million in Tax Increment Financing district funding in order to purchase the former Moo & Oink located at 4848 W. Madison Ave. The store closed in 2011 after operating in Austin for 30 years. It's been vacant since then. Alcazar said at the time that, once he secures the TIF funds, his team will purchase the building and have it open within 6 to 8 months.

In an interview earlier this month, Alcazar said that he has filed TIF-related paperwork with the city and is waiting to hear back on the status of his application. A proposal to locate an EATS on the site of a proposed industrial and commercial space at the corner of Roosevelt Road and Kostner Ave. fell through.

Alcazar discussed what Austin could stand to gain from his concept and elaborated on its details.

 

AWN: I guess one of the major fears that some community members may have is that you would essentially be experimenting with Austin — it would be the site of your first location and all kinds of things could go wrong. In addition, some people fear that you may not have sufficient capital. What prior experience can you point to in order to ease people's concerns about the lack of defined track record?

Alcazar: [He mentioned the combined experience of the EATS team]. Robertino Presta, CEO of Caputo's Fresh Markets, operates eight fresh market grocery stores in the Chicago area. They're considered one of the highest quality stores in the area.

We're going to start out buying through Caputo's. So, that's production we already have setup. They'll be one of our wholesale suppliers. We'll also be using a lot of local, urban farming whenever possible, which is part of being a social enterprise.

AWN: What about the capital concerns?

Alcazar: If we ever need access to more than what we're expecting to need, we've got access to capital. I just met with five funding agencies at Merchandise Mart [last Tuesday] and we're their model. There are a lot people who will want to take credit for what we're going to do. We're going to have neighborhoods across the United States bidding to get us to come in.

AWN: What advantage would EATS have over conventional grocery stores?

Alcazar: Traditionally, the supermarket industry is a low-profit industry. The average profit margin for supermarkets nationwide is between 1 and 2 percent.

When you consider typical annual inventory shrinkage — which is the difference between the amount of inventory that you should on paper versus what you end up having in actuality (after accounting for customer and vendor theft, and other things) — that profit margin gets even thinner.

[According to a report by the National Retail Federation that was reported on by Forbes in 2015, "Shrinkage, along with administrative errors, cost U.S retailers about 1.4% of their 2014 sales."]

Why do the supermarkets in [many economically depressed communities] leave? The retail shrinkage from shoplifting, employee theft and vendor theft goes up to over 5 percent in those communities. You can't make money like that.

We don't have that problem because we're basically a warehouse. Whatever product we have that someone would steal is in the warehouse, but we'll still employ ex-offenders because we'd be protected. Everything in the warehouse is filmed, there's plenty of surveillance and we don't accept cash. There's no checkout. You'd simply input your debit, credit card or LINK card and start spending.

AWN: Where will you get the technology?

Alcazar: The technology already exists. There's nothing we'd be doing that's new. We're just assembling what's already available and putting it into a retail environment. So, that gives us more advantages.

For instance, by not having people fondle the food, we're throwing away 25 percent less of it. We also have lower operating costs because we won't need any cashiers.

Mariano's might have 400 employees to put out the same amount of sales we put out with 170 employees. Their store has a lot of duplication (employees running down aisles, display product that gets damaged and thrown away, open refrigerators, cold aisles, high utility costs, etc.). We don't have any of that. Our customer area will be tiny. Mariano's has to make up for that loss with higher prices.

Contact:
Email: michael@austinweeklynews.com Twitter: AustinWeeklyChi

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