Fareway makes foray into small communities, adds Venmo, PayPal to all stores
As food deserts become more of a problem in rural Iowa, Fareway Stores has tweaked its business model in the past year and a half and has developed a plan for grocery stores in small communities.
Fareway has opened two stores in small towns in the past year and is about to construct a third.
The Boone-based grocery store chain bought an existing store in Colfax in February of 2021, built a new site in Rockwell City that just opened Feb. 9, and plans to begin construction of a location in Ogden in April.
“We love being the leader in doing what's right and helping our communities,” Fareway CEO Reynolds Cramer said.
He’s been with Fareway for the past 37 years, starting in high school at the Boone store, moving up the ladder and serving as CEO for the past nine years.
“I think we had a shift in the last 20 years with a lot of people leaving small communities and going to more metro areas. But now I think you’re seeing a little of that go back the other way, where people would rather live in a smaller community and commute,” Cramer said.
And some of those communities don't have grocery stores, he added.
In the past decade especially, he’s seen a lot of independent grocery stores close because they don’t have a family member to pass it on to or they just don’t know what their future looks like.
Some of those independent owners have called Fareway to discuss the possibility of selling to it.
It caused Cramer and his team to look at the opportunity to enter the market in smaller communities with stores in the 5,000- to 10,000-square feet range that have enough population to support a store and also have the desire to support it, he said.
“Not only does it help Fareway because it’s one more store, it’s one more opportunity for employees,” Cramer said. “It’s one more opportunity for people in our management program. It’s also a catalyst for that community to grow.”
Fareway President Garrett Piklapp created a comprehensive plan for smaller communities that desire a Fareway. It involves funding from both Fareway and the community.
It also involves a commitment from the community to increase its number of homes.
“In Ogden, the city has committed to building almost 150 homes over the next 15 years, which will be substantial,” Piklapp said.
The foray into smaller communities goes hand in hand with the state of Iowa’s focus on rural economic development, Cramer said.
“It’s more than just opening up a store. We want to figure out a way to be a catalyst for home growth, restaurant growth, community growth,” he said.
Cramer said he’s talked to customers at the Rockwell City store who are happy to have a place to buy groceries without having to drive all the way to Fort Dodge.
“That’s a great statement because if they don’t have to go to Fort Dodge for their groceries, what else can they stay in town to get?” he said. “So the hardware store can stay open. Restaurants can stay open.”
The Ogden store was 'the right thing to do'
The state of Iowa’s investment in broadband has been important in the process, Piklapp said. Main Street Iowa grants that are funded, in part, by the state and administrated locally have also been beneficial.
“Protecting TIF (tax increment financing) for these small towns is super important,” Piklapp said. “That generally provides a vehicle where they don’t have to give us cash. They can just remit part of our ongoing tax investment back to us. We do it in a way that also allows schools to continue to get their funding and the other taxing jurisdictions to get their funding.”
Fareway has been investing in smaller communities for a long time, but this goes to the next level, Cramer said.
“We’ve been in Grimes for 25 years, Waukee for 25 years, Norwalk for 15 years, Winterset for about 45 years, Polk City, Carlisle,” he said.
Those communities have seen significant growth over those decades.
“We’ve gone to the next level of looking at smaller communities that maybe don’t have the long-term potential that some of these suburban towns have,” Cramer said.
“We knew Grimes would grow, although maybe we didn’t know it would grow so much. We’re hopeful that Ogden can grow over the next 10 years,” he added. “We know that it’s going to grow small amounts and slowly.”
Cramer said the decisions are made with shareholders and employees in mind because Fareway is a for-profit business.
“We do have to make good financial decisions,” he said. “But I also know we can do it right if we have all the right puzzle pieces – great people in the city, great people on the chamber, great people on our team, great people at the statehouse finding ways to help.”
He said he and Piklapp had many discussions about the Ogden location.
“I think Ogden is a go because we together just said it's the right thing to do,” Cramer said.
In Colfax, Fareway bought Shugar’s Grocery, an independent store, when the owner Jim Shugar wanted to retire. Fareway took a few weeks to make some changes to the interior, installing new shelving.
“When we reopened, the Ogden team of investors and economic development people were at that opening so they could see firsthand what we were talking about,” Cramer said.
Similarly, Story City representatives were at the opening of the Rockwell City location to see what might be available for that community, which lost its grocery store in 2021.
Cramer admitted there are competitors that communities could be talking with about adding stores to their towns.
“I don’t think any other competitor in the state of Iowa has the ability to maneuver and adapt to a small-town situation like we do,” Cramer said.
The number of applicants Fareway has had in its small community locations is indicative of the good fit, Piklapp said.
“The number of people who want to come work for Fareway in Rockwell City shows us that we’re the right fit for that community,” he said. “They believe in our brand and how we treat our employees. It was really cool to see.”
The Fareway stores built in smaller communities, both of which are metal buildings, will have a different exterior but will be easily recognizable with the company’s branding.
“Outside it’s going to look a little different, but when you walk in, it’s going to feel exactly like a Fareway,” Piklapp said. “
All Fareway stores now accept PayPal and Venmo
Fareway is now accepting PayPal and Venmo payments at all of its stores.
“This new technology expands on Fareway’s commitment to provide the best in customer service, with personalized and efficient options for our customers,” Mike McCormick, Fareway’s chief retail officer, said in a news release. “With the rise in demand for mobile payments and digital options, we’re confident that our partnership with Blackhawk and PayPal will be positive for both customers and our company.”
Reynolds Cramer points to a Bitcoin memento on his desk. It’s not a real Bitcoin, of course, since they’re digital currency, but it’s an item to make him think, he said.
“It keeps me thinking about the fact that we need to stay relevant in the eyes of all our consumers. And there's one niche of consumer that is into Venmo, PayPal, crypto, all this stuff,” he said.
Fareway used to look at customers as one segment, but now the company sees that different groups have different needs and desires, he said.
“It's our job to try and fulfill that for everyone. And that's a tough thing to do because it's ever changing,” he said. “Twenty years ago, you couldn't buy hard alcohol at Fareway, or cold beer. And you couldn't use your credit card,” Cramer said. “We’ve come a long, long way. And we’re actually in the forefront with this. … It’s a challenge to be always moving forward and at the same time not forgetting who we are.”