Rittenhouse: As Displacement Continues, Local Convenient Store Adapts to Survive

By Anh Nguyen for Philadelphianeighborhoods.com 2017

Sung Man Kim was the owner of First Food Market on 21st and Walnut streets for 18 years. Residents remembered Kim as Jimmy, Kim's American name, and his delicious breakfast sandwiches.

According to Jimmy's wife, he went to work almost every day and stocked the shelves himself. He always greeted the customers with a smile and offered them the freshest produce.

Kim passed away in his hometown of Mount Laurel, NJ on Oct. 5. His death left many in shock, especially for those who had come to consider Jimmy’s presence and First Food Market unforgettable parts of the neighborhood.

Donna Feltman, of Woodlynne, NJ, went to the store almost every day for 15 years since she worked in Philadelphia. “Jimmy was always willing to please everyone in the store,” wrote Feltman in Kim's obituary page.

The circle of life continues, but in Rittenhouse, one of the more upscale neighborhoods in town, things will never be the same. As store owners and traditional mom-and-pop shops wither away, big corporations and chain stores are moving up in droves.

There are more than 15 franchise stores around First Food Market (map below). Its biggest competitors are 7-Eleven and Trader Joe's. The fact that big stores can afford to make money even when they don't sell out their fresh produce baffles mom-and-pop shops like First Food Market.

Moreover, city's regulations and many different types of tax encumber even the big corporations, let alone smaller stores.

7-Eleven Inc. has a total of 70 stores in Center City, the majority of which were opened in recent years, according to 7-Eleven Franchise Representative, Linford Baulder, Jr.

The chain had plan to open 40 more stores in the Greater Philadelphia Area but it was put off indefinitely because of the city’s new ordinance that limits the number of tobacco permits each neighborhood can have, which took effect Jan. 1, 2017.

“The city gave us retailers a hard time to establish businesses,” said Baulder. “The sugar tax happened and now the changes on tobacco permits can push some of us out of business.”

The tobacco permit is crucial because up to 36 percent of convenience stores' profits come from cigarette sales, according to the Association for Convenience & Fuel Retailing. Without the tobacco permit, the convenient store’s business model is unthinkable.

The updated regulations increased tobacco retailer permit fees from $50 to $300, barred new permits within 500 feet of any K-12 school, imposed a one-year suspension for retailers who are caught selling tobacco to minors three times within a two-year period, and established a maximum density of one tobacco retailer permit per 1,000 people in the city’s 18 planning districts.

In addition, there's no guarantee that the permit would transfer if the retailer sells the store or transfers ownership. As a result, in the event of Kim's passing, First Food Market might lose its tobacco's permit.

However, for big corporations like Wawa Inc. and 7-Eleven, bypassing these regulations was only a matter of time.

Wawa announced its opening of two new stores in Center City back-to-back with their support for the tobacco ordinance on April 2017, even when the Department of Public Health announced that there were 1,300 more tobacco retailers than allowed under the rule for the population of 1.56 million people.

Coincidentally, one of its new locations is on South and 22nd streets, four blocks away from the late Kim’s store and Chester A. Arthur K-8 School.

With the financial resources for big PR events like Wawa Welcome America, the franchise knew its strength lay in the negotiating power with the city, which opened up doors that might be closed to others.

While Kim did not live to see the new Wawa’s move-in, his loyal base of customers would soon walk by the dimly lit First Food Market and head to the brand new Wawa for breakfast sandwiches.

This source of income for many immigrants was no longer sustainable. As the pit of wealth disparity in the city became deeper, it was harder than ever for small businesses to compete with Corporate America. It’s the battle between David and Goliath where Goliath keeps getting bigger.

However, Moritz Ritter, Associate Professor in the Department of Economics at Temple University, pointed out that the disappearance of local stores was not necessarily a bad thing.

"Firstly, keep in mind that large chains, even Walmart, started at some point as a small business," said Ritter. "They were just better at doing what they did and, as a result, grew. Secondly, if small corner stores were delivering a better product than Wawa, people would buy there. In fact, if you look at certain markets, you see that small stores can do very well. In markets in which this is not the case and consumers don't shop there, why should the small stores be protected?"

Baulder also shared this sentiment when he listed the benefits of owning a franchise over an independent store.

“Franchise has the brand recognition other mom-and-pop shops don’t have,” said Baulder. “We are able to provide a pre-selected assortment of goods based on specific neighborhood research and especially the business system support.”

However, First Food Market is here to stay. Many retirees who lived inside 2101 Cooperative shopped at First Food Market every day. They knew the employees by name and didn't want it gone. With customers' support and a niche for healthy and homemade food, First Food Market is ready to take on the competition.