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07/09/2021

Bargain Grocery Sustains Communities in Empire State

Upstate New York retailer offers access and affordability with a concept that addresses food waste
Mike Duff
Contributing Editor, Progressive Grocer
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Bargain Grocery Sustains Communities in Empire State
Bargain Grocery's Mike Servello

Bargain Grocery is a food retailer with a purpose in fact multiple purposes and an example of how the idea of sustainability is becoming broader and more interrelated with other social issues.

The operation arises from an idea of Mike Servello’s when he was pastor of the Redeemer Church, in Utica, NY. With a family connection to the produce distribution business, Servello recognized that he could  fund the charitable foundation he was operating, Compassion Coalition, on food sales in a part of the city that was lacking in supermarkets. Small stores selling food were around but expensive for the large lower-income and refugee community in the town. About 30% of Utica’s population lives beneath the poverty line, and major supermarkets tend to be outlying and, so, not necessarily where the people who have the greatest need for inexpensive food live.

When he first came up with the idea, Servello didn’t yet know he was in a food desert, or even what a food desert was, but when officials started encouraging him to expand the food operation he launched in the Compassion Coalition distribution center, he managed to get funding and open Bargain Grocery, which now is a model that has gained the interest of municipal and state agencies in New York state, and one that’s soon to be repeated.

What Others Don’t Want

In its operations, Bargain Grocery acquires food that might otherwise wind up as waste. In that way, it keeps all of the environmental inputs that go into the food, from fertilizer to transportation to refrigeration, from going to waste at a time when more people are becoming aware that something like 30% of food produced is trashed. Although food banks absorb a proportion of food waste in big cities, such operations are rarer and less sophisticated in small cities and rural areas, and often can’t handle perishables consistently, given that they’re generally not open every day, Servello notes. Bargain Grocery, in contrast, is open every day and sells lots of perishables acquired by various means.

As it has become a bigger food retailer, Bargain Grocery has had to scramble to find new sources of inexpensive food products. The company has worked with Bentonville, Ark.-based Walmart and, when it was an independent company, Jet.com (later a subsidiary of Walmart, and now discontinued), to acquire products that might otherwise have been thrown away, selecting and merchandising the best of what remains to sell at low prices. As such, Bargain Grocery is working to sustain the community as well as the environment, which is consistent with the larger sense of wellness that’s emerging in the United States, one that sees the environment, personal health and community well-being as being tightly tied together.

As it operates today, Bargain Grocery is a full-blown grocery store operation with attractive produce displays at its core. In addition to other sources, the company gets produce directly from growers, striking the best deals it can and trucking the goods back to Utica from as far away as Arizona and Florida, often in its own trucks. With freight rates being what they are today, and the difficulty of arranging mixed loads, it’s an economical way to go, but finding truckers is tough, and Servello’s nephew often takes up long-haul duties.

The company works with just about any retail, manufacturing, growing or other source, such as liquidators, to get product, and it will apply a bit of tender loving care to get product that remains good quality, even if a bit dented, in front of shoppers.

“We’ll take damaged pallets that sometimes even food banks don’t want,” Servello says. “Every week, we’re striving to keep product on our shelves. We’re always searching for great sources for frozen and grocery items.”

a store filled with lots of oranges
Founded in a food desert in Utica, N.Y., Bargain Grocery is a full-blown grocery store operation with attractive produce displays at its core.

This Just In

At store level, Bargain Grocery is innovative in serving customers. Merchandising and marketing emphasize both quality and nutrition, with consideration given to eating trends and the dietary needs of underserved consumers. For example, the store provides nutritional literature for many products.

Bargain Grocery uses social media to promote products arriving in the store. Since the grocer works with various suppliers to get product at prices that allow it to serve the Utica food desert’s residents, what’s available at the store can vary. So, Bargain Grocery makes a virtue of necessity, posting Facebook videos of what’s just arrived. These videos are produced and narrated by Rachel Daughtry, who handles marketing for Bargain Grocery but, given her diverse role, has the official title of director of agency relations. The videos often emphasize newly arrived fruits and vegetables just after they’re unloaded, but include other perishable and grocery items as well. Daughtry offers pricing information, highlighting the advantages that Bargain Grocery offers, and availability, letting consumers know the quantities available and whether the store might run through a given item quickly.

“People like the treasure-hunt aspect,” Servello observes.

Because Bargain Grocery is able to consistently refresh Chobani products, the brand is often featured in the videos as well. In fact, Chobani, which has operations in the upstate New York city of Norwich, is a major Bargain Grocery backer. CEO Peter McGuinness visited the store and was moved enough to provide product for the operation at cost.

As such, Bargain Grocery supports the wider Compassion Coalition effort, which addresses a range of community needs. For example, the charity, with its warehouse near Bargain Grocery, has a section dedicated to distributing free classroom necessities to teachers, but it also provides everyday needs for low-income Utica residents.

From Humble Beginnings

Before it started its food retailing operation in 2002, Compassion Coalition distributed $20 million a year in food, personal care and household items without any ongoing government aid, according to Servello. He came to recognize that a carefully operated low-cost food store could support the larger charitable effort, and the community in general. To get started, he visited the Walmart perishables distribution center and asked whether he could buy their salvage. He then marked it up just enough to sustain the operation, Servello recounts.

The original store operated in 1,200 square feet of the Compassion Coalition warehouse before officials took notice and encouraged Servello to expand. That led to his securing funding to open the 13,000-square-food Bargain Grocery store in 2018. Recently, Bargain Grocery moved its storage functions out of the Compassion Coalition warehouse, as Servello had negotiated a deal on a 30,000-square-foot warehouse for $725,000. The facility now houses about $2 million in refrigerated and frozen food storage, and will provide centralized receiving and buying, he says. 

Local and state officials have watched Bargain Grocery forge ahead and have taken notice. Servello is working with officials and other backers to help set up an independent operation based on Bargain Grocery in Troy, N.Y., near the state capital of Albany, with projects in other New York cities such as Syracuse under consideration. As such, the Bargain Grocery model of minimizing food waste, feeding people and supporting charitable initiatives will sustain more communities in the Empire State.

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