Screenshot from an EATS informational video on its website. Below left, EATS Groceries founder Thom Alcazar.
Thursday, February 9, 2017 || By Michael Romain || @maywoodnews
Thom Alcazar, the founder of Alcazar, Ltd., a consulting firm that provides expert knowledge in business automation, believes that he has a blockbuster idea on his hands and wants to deliver it to economically distressed communities like Chicago’s North Lawndale and Austin, and suburbs like Maywood.
It’s called EATS Groceries, and if Alcazar and his team have their way, the store could be housed in the old Maywood Market building at the corner of 5th Ave. and Washington Blvd. within roughly a year’s time after securing a deal.
On the surface, it’s an innovative concept that’s smoothly articulated in a neat, roughly 2-minute video on the EATS website.
“Shopping has become a chore,” the baritone-voiced narrator says. “Long aisles, long lines and screechy carts to push. Eats provides a safe and convenient concierge-type shopping experience, as well as transportation along major routes to our locations.”
Trained assistants, the voice-over notes, will guide shoppers to digital kiosks, where customers would place orders and receive assistance in other matters. Cooking demo kiosks will provide 30-minute tastings of “low-cost, healthy meal samples.”
Once the orders are punched into the kiosks, representatives in a warehouse will put them together and pack them “as they are received through the touch-screen shopping.”
Customers at EATS, the narrator says, won’t have to worry about waiting lines, cold aisles, inconsistent temperature controls or stress. The whole concept seems pulled from an episode of the Jetsons, which may both appeal and repulse, depending on the demographic.
During a public meeting about the concept held last week at St. Eulalia Parish in Maywood, Alcazar fielded some concerns from residents, some of whom expressed discomfort with the idea of grocery shopping on a kiosk.
And according to some older residents in Maywood, the old-fashioned shopping experience — replete with screeching carts and long lines — is a long way from stressful; in fact, they said, it’s actually therapeutic.
For some younger, working professionals, who may have much less time and patience for the supermarket, the idea is much easier to grasp. One who was interviewed last week said the idea of a ‘concierge’ anything makes her perk up at the prospect of such luxe-style treatment. She was open to it, although she admitted that she was still trying to wrap her head around the concept’s details.
So far, EATS has made no offer to purchase the village-owned building. Alcazar said that before his team attempts to deal, they want to make sure there’s sufficient community buy-in — both from residents and village officials.
The latter want to make sure that Alcazar’s team has sufficient capital to buy the building and finance their own operations (unlike the owners of the former Maywood Market, who required a $250,000 loan, which undersigned by the village, just to manage their expenses).
For their part, Alcazar said, the EATS team wants to make sure that village officials understand their social enterprise motive. More than a mere supermarket, EATS would focus not just on profits, but on creating promising career paths, providing healthy food options and stimulating customer traffic for local businesses in areas that have suffered from decades of economic disinvestment, they argue.
In an exhaustive interview last week, Alcazar answered a series of questions about the business and explained why he believes that Maywood could be a pioneer for a grocery store model that could have national appeal. Some of his answers have been paraphrased and condensed.
VFP: I guess one of the major fears that community members may have is that you would essentially be experimenting with Maywood — it would be the site of your first location and all kinds of things could go wrong. What prior experience can you point to in order to ease people’s concerns about the lack of defined track record?
Alcazar: [He mentioned the combined experience of the EATS team, which can be viewed in-depth by clicking here]. Robertino Presta, CEO of Caputo’s Fresh Markets, operates eight fresh market grocery stores in the Chicago area. They’re considered one of the highest quality stores in the area.
We’re going to start out buying through Caputo’s. So, that’s production we already have setup. They’ll be one of our wholesale suppliers. We’ll also be using a lot of local, urban farming whenever possible, which is part of being a social enterprise.
VFP: What about the capital concerns?
Alcazar: If we ever need access to more than what we’re expecting to need, we’ve got access to capital. I just met with five funding agencies at Merchandise Mart [last Tuesday] and we’re their model. There are a lot people who will want to take credit for what we’re going to do. We’re going to have neighborhoods across the United States bidding to get us to come in.
VFP: What advantage would EATS have over conventional grocery stores?
Alcazar: Traditionally, the supermarket industry is a low-profit industry. The average profit margin for supermarkets nationwide is between 1 and 2 percent.
When you consider typical annual inventory shrinkage — which is the difference between the amount of inventory that you should on paper versus what you end up having in actuality (after accounting for customer and vendor theft, and other things) — that profit margin gets even thinner.
[According to a report by the National Retail Federation that was reported on by Forbes in 2015, “Shrinkage, along with administrative errors, cost U.S retailers about 1.4% of their 2014 sales.”]
Why do the supermarkets in [many economically depressed communities] leave? The retail shrinkage from shoplifting, employee theft and vendor theft goes up to over 5 percent in those communities. You can’t make money like that.
We don’t have that problem because we’re basically a warehouse. Whatever product we have that someone would steal is in the warehouse, but we’ll still employ ex-offenders because we’d be protected. Everything in the warehouse is filmed, there’s plenty of surveillance and we don’t accept cash. There’s no checkout. You’d simply input your debit, credit card or LINK card and start spending.
VFP: Where will you get the technology?
Alcazar: The technology already exists. There’s nothing we’d be doing that’s new. We’re just assembling what’s already available and putting it into a retail environment. So, that gives us more advantages.
For instance, by not having people fondle the food, we’re throwing away 25 percent less of it. We also have lower operating costs because we won’t need any cashiers.
Marriano’s might have 400 employees to put out the same amount of sales we put out with 170 employees. Their store has a lot of duplication (employees running down aisles, display product that gets damaged and thrown away, open refrigerators, cold aisles, high utility costs, etc.). We don’t have any of that. Our customer area will be tiny. Marianno’s has to make up for that loss with higher prices.
VFP: You say, on the one hand, that you’ll be able to provide all these great job opportunities for ex-offenders in low-income areas, but on the other hand, you’re arguing that your labor costs are going to be very low compared to traditional grocery stores. How do you square the two?
Alcazar: To be honest, we’re going to have a hard time trying to keep employees because the industry I’m in, which is supply chain management, doesn’t have enough workers. We have more people retiring than coming in. But supply chain is the future of the country and the world. We don’t have a lot of low-paying, crappy jobs. Those are becoming obsolete.
When these guys get trained, they’ll probably quit and go on to better careers and better jobs, so we’re going to be a job incubator that will keep hiring locally all of the time. Every time someone leaves, they’ll leave better trained, with greater experience and they’ll be able to buy homes in the community.
VFP: Can you name some of the specific skills that you’ll train people for?
Alcazar: Marketing jobs, customer service, information technology, radio frequency access points, scanning all of the product — all of these things go along with the supply chain. We’ll need people to be able to calculate minimums and maximums, and reevaluate the amount of inventory for each item.
These skills teach you how to be cost-effective and how to run your own business. We’ll have an apprentice level, an expert level and a master level, with everybody able to work up to higher levels. We’ll need as many master levels as possible, so they can train people at the lower levels.
VFP: You talked about EATS being a concierge service. Have you talked with any local institutions about being a food supplier?
Alcazar: We will have one route that does drop-off deliveries daily. This came about after we met with the head of Loyola University Medical Center and explained the process. Loyola said they would be willing to setup a drop-off point at the medical center and staff the distribution. We’d also do drop-offs to Madden, Hines, Triton, Dominican, Concordia and even some of the senior centers in the area. VFP
Alcazar will be meeting with the Maywood Chamber of Commerce’s Economic Development Commission tonight, Thursday, Feb. 9, 6 p.m., at 125 S. 5th Ave. in Maywood. Anyone who would like to learn more about EATS or field questions, comments or concerns directly to Alcazar may attend this meeting. To download the EATS informational flyer, click here.