Brownwood Taxpayers Charged Over $400,000 to put Kroger Out of Business

News broke yesterday that Kroger will be closing their Brownwood location after 40 years of operation. The news struck many, as Kroger has perhaps the most loyal shoppers of any grocery store in town. What citizens have yet to realize, is that their own city helped to seal Kroger’s fate.

Increased competition, a dilapidated building, and other factors doomed Kroger as Aldi and United have opened new locations near Kroger in recent years. A remodeled Brookeshire’s on the south side of town, and the presence of Wal-Mart just a few blocks away has surely saturated the grocery market in a town of 19,000.

Before we begin, here’s a disclaimer that this article is not about United vs Kroger and who is better, it’s about fairness.

In 2011, the city of Brownwood, Brownwood Chamber of Commerce, and the Brownwood Economic Development Corporation hired a retail consulting firm (The Retail Coach) at a total cost of $45,000 to recruit new retail to the area.

Shortly after their hiring, The Retail Coach identified that Brownwood residents needed and wanted another grocery store (in an already saturated market where profit margins are low to begin with). Soon after, discussions began between the city of Brownwood and representatives of United Supermarkets.

grocery stores
Above: A comparison of similarly sized cities, disproving Brownwood’s “need” for another grocery store, at the expense of taxpayers to boot.

The city eventually reached an agreement on an incentive package for United Supermarkets to construct a store in Brownwood. The Brownwood Economic Development Corporation promised reimbursements up to $360,000 for infrastructure and site improvements. Promises made to United from the City of Brownwood included giving .342 acres of city owned land near West Commerce Street to United, paying for and installing a flapper valve on a detention pond, and 24,000 cubic yards of fill material at no cost (an amount that would cover Gordon Wood Stadium in dirt 13.5 feet deep).

Mayor Stephen Haynes was quoted as saying that negotiations with United, “have been a breath of fresh air.” Who wouldn’t be cooperative when getting over $400,000 in cash and assets handed to them to help establish a business? The question many would like to know now is why didn’t Kroger receive any financial incentives from the city? What about Brookeshire’s, Wal-Mart, etc? Mr. Mayor, what is your office going to do to help Kroger keep their doors open?

The city of Brownwood, with assistance of The Retail Coach, handpicked United Supermarkets to locate a store here knowing well that the grocery market was already saturated and something had to give. In the end, we gained a new grocery store on an empty plot of land, while an existing building will now sit empty. That seems to be the Brownwood way.

The city hired The Retail Coach in hopes of booming the local economy and creating more sales tax revenues. Let us not forget that the majority of products sold in a grocery store do not generate any sales tax revenues to begin with. Additionally, the city’s claims of economic development in the building of United are completely untrue. The building of United Supermarket did not cause the citizens to purchase more locally, all it did was spread those sales out to a new store in town, and now it’s costing someone their job. We have enough grocery stores and donut shops. If you want true economic development Mr. Mayor, try recruiting something that we don’t already have.

Sources:

http://www.brownwoodnews.com/brownwood-approves-funding-to-hire-retail-consulting-firm/

http://www.brownwoodnews.com/united-supermarkets-negotiating-for-store-in-brownwood/

https://www.brownwoodnews.com/united-supermarkets-and-united-express-convenience-store-open-in-brownwood/

http://www.brownwoodtx.com/article/20140128/news/301289961

http://www.brownwoodnews.com/united-supermarkets-breaks-ground-on-brownwood-store/

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