Food Co-op Migrates to North Central

Three Rivers Market at last finds a new, larger home in "Downtown North"—with parking

Last week, in a letter to its members, Three Rivers Market announced tentative plans for a major expansion—at a new location on North Central Street, in the middle of a slowly reviving section the city has been targeting for redevelopment. If all goes well—the sale is expected to close in mid-October—they'll begin construction this fall, expanding what was once a Merita Bread warehouse on the northeast corner of Central and Baxter Avenue. Less than half a mile away from the original market, the new store will be about three times the size of the current one, perhaps doubling the 30 employees who work there now.

Friends have learned to be wary of reports the co-op is moving. For more than a decade, widely circulated rumors of a move (some of them based on actual proposals) haven't materialized. This time, papers have been signed. "We've never been this far before," says Three River General Manager Jacki Arthur, adding that this particular move has been in the works, but under wraps, for about six months. The site on Central and Baxter seems ideal in many ways, but the property had been tied up for years with estate and multiple-ownership issues, with some owners living out of state. Arthur says the logjam broke a little when it was discovered that one of the property's co-owners was also a share-holding member of the co-op.

The plan is to use the long-empty Merita warehouse building but expand it to a facility of 9,000 to 10,000 square feet, probably with its main entrance on Baxter. Details of its design have yet to be determined, but the outside of the store will have a proper loading dock, and the interior will include, for the first time, a deli. They'll also include a sitting area and 45 parking places. That may not sound like many until you realize the current co-op has been thriving with only four.

Thirty percent of the financing for the $2.8 million project will come through the store's profits and loans from its own members. The balance will come from a collage of other sources, mostly loans. The development is eligible for Empowerment Zone financing through HUD loans and city-administered facade grants. A national group called Northcountry Cooperative Development Fund is also likely to help with loans. Arthur says that Minnesota-based group has rarely operated in the South, but she's impressed with that organization's helpfulness in identifying resources.

As a business, the cooperative—with almost 2,000 shareholding members—has been successful with a business plan that might surprise some MBAs. Founded in 1981 as the Knoxville Community Food Co-op in a small house at 937 N. Broadway, the store has always emphasized organic foods and local farms' produce. In its early days, when members worked in the store to earn credit for food, it seemed a fringe phenomenon. Now the store employs actual clerks and customers pay in actual money, but the $25 shares entitle members, who make up about half the co-op's customers, to discounts on local produce and bulk items. If they move, or just need the cash, members are permitted to sell back their shares.

As the organic and local food movements have drifted into the mainstream, business has boomed. Three Rivers is currently doing about $2.6 million a year in business, and continued to grow even through the recession. The co-op is doing more than twice the business it was doing four years ago. That's when it incorporated as a proper, legally defined cooperative (but, perhaps ironically, dropped the word "co-op" from its formal name).

Jacki Arthur has been in charge of the place for most of this century, and some members credit her with much of the market's success. Business is still great, she says, in spite of new competition. Organic supermarket Earth Fare's recent opening of a second West Knoxville location, much closer to town than their first, has had an affect on business.

"We've already been getting ready for it," she says. "It's happening mostly like we thought it would. Business would flatten out for two to three months, then go back to normal. It's a glamorous store, and people need to see what the fuss is about." She thinks Earth Fare's connection with a more mainstream audience might even help the co-op in the long run by introducing organic shopping to less-daring customers who might then make the next step to the co-op. She doubts any chain supermarket can match the co-op's personal relationships with regional farmers.

"We probably carry more local stuff than anybody in town," Arthur says, excepting only the farmers' markets. Three Rivers has a close relationship with the Market Square Farmers' Market; on Saturdays, several farmers who have been selling food downtown all day drop by the co-op to buy food on their way home.

The move would seem to fill a big gap in the tenuous revival of North Central, a long-neglected part of town targeted by city officials as a promising place to extend downtown's recent energy. Knoxville Director of Redevelopment Bob Whetsel, who has concentrated much city effort on the North Central corridor, sounds excited about the prospect. "They'll make a great anchor tenant" for the neighborhood, he says. "They picked a good corner, at Baxter and Central. Maybe they'll do for North Central what Mast General Store did for Gay Street."

Visible to the north is old Happy Holler, a historic commercial area that's now a cluster of budding businesses, most recently a brand-new vegetarian restaurant, Vege-O-Rama. Just to the south is a newly rehabbed apartment building, North Central Village, and the new location of Magpies' successful bakery, with the Glowing Body yoga studio and its raw-food restaurant Glowing Bowl in the same building. Arthur refers to the neighborhood in idyllic terms: "the pretty church [Holy Ghost Catholic] and the cute fire station."

The co-op has been operating out of an old residential house on Broadway since 1981, and it was some time in the early '90s that supporters began noticing the place was a little cramped. It's a pretty little place, and its unconventional appearance and tiny parking lot are charming and homey to regulars, but Arthur suspects it has intimidated much of their prospective clientele. She says people may respond, "It doesn't look like a store, I don't know if I can go in there." She has the impression that some have felt "challenged," even "judged." A more conventional-looking store, with a big parking lot, will make the once-fringey enterprise seem more normal.

For a long time, city officials and downtown promoters tried to pair the co-op's moving dilemma with the elusive downtown-grocery dilemma. A few locations have been discussed in connection to the co-op, especially the Daylight Building on Union Avenue. Nothing worked out in terms of parking and loading. "We have six or more tractor trailer deliveries a week," Arthur says. "If we unloaded in the front, I don't think the Pembroke's going to appreciate that," she says of the upscale condo building across the street from the Daylight.

There's still no downtown grocery, but the new location of Three Rivers Market is slightly closer to downtown than the old location was, about three quarters of a mile from Jackson Avenue. It may seem a perfect compromise, a healthy pedestrian's walking distance from downtown, but also on an interstate exit: Baxter connects directly to Interstate 275. Although they have customers in West Knoxville, Arthur says surveys have shown their strongest customer base has a north-south linearity to it, roughly along I-275, and more and more of their customers live outside of Knox County. "This is going to be real easy for people to get to," Arthur says. She talks speculatively that after they're well-established at their new location, the co-op might set up small satellite stores, perhaps including one downtown.

It'll be a huge change for a cottage industry that has thrived for 28 years in what's literally a cottage, growing to more industrial size. Arthur acknowledges that one of the co-op's strengths is that they're "small and nimble," and able to maintain personal relationships with the farmers who supply the foods they present on their shelves. "We'll carry as many of the good aspects of this store as possible."