Guest: Alex and Caileen Ostenson
Topics: Main Street Market, grocery stores

Transcript:

Chris Ressa 0:02
This is retail retold the story of how that store ended up in your neighborhood. I’m your host, Chris ReSSA. And I invite you to join my conversation with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC management

Welcome to retail retold everyone. Today I am joined by Alex and Kailyn Austin Anson. They are the owners of Main Street Market in Evansville, Minnesota. I think it’s a quite interesting story. I am happy they were able to join us today and come on the show. I think it’s going to be a great one. Welcome to the show, Alex and Kaylee.

Alex Ostenson 0:49
Thanks. Thanks for having me.

Ressa 0:51
Yeah. So Alex, Caileen, why don’t you both tell us a little bit more about who you all are?

A Ostenson 0:58
Okay, well, I so I kind of grew up out in kind of a rural town in Minnesota, kind of a smaller, smaller community and the country as well. And I went after graduating high school actually went into an automotive and diesel diesel mechanic. So I’ve been a diesel mechanic for the last 1011 years, and focusing in field service where I get to kind of go out and see different sites and different things every day. Very cool.

Ressa 1:28
Yeah, we’re about you, Kaylee.

Caileen Ostenson 1:31
Um, I’ve read not too far from Alex. We actually met in seventh grade. So we’ve known each other well over a decade now. Yeah. So we kind of did it off and on. I moved away to school. I ended up getting a Christian ministry degree. And we lived in the big city for a little while and came back home, I guess, what, four years ago? Four and a half, something like that. Yeah. We have two kids. And at the time, we had just a one and we wanted a little smaller town living situation. Being closer to family was important, too. So we made the move on back home.

Ressa 2:14
How old are your kids? Ah, so

C Ostenson 2:15
our daughter is five. She’ll be six later on. Pretty soon here, I think couple weeks, a couple of weeks. And then our son just turned one at the beginning of July.

Ressa 2:26
Oh, congratulations. I know those ages. Well, my daughter is four and my son will be three in September. So I’m right there with you. It’s fun. It’s fantastic. It’s stressful. It’s everything.

C Ostenson 2:39
Never quiet.

Ressa 2:40
Never quiet. That is true. Never quiet is not dull. Okay. We call this clear the air. Are you ready, sir? All right. So I’ve got three questions for you. These are personal to you, too. You can answer them go back and forth. One person can answer them all. It’s up to you. All right, here we go. Question one. What is one skill you don’t possess? But once you did,

A Ostenson 3:05
I’ve got this one. You kind of more and more prevalent. Excel and Microsoft Office. Never really had to deal with it before. And didn’t really, you know, worry about it years ago. But now it’s like, I wish I had some experience on this stuff because it really would come in handy.

Ressa 3:24
It would. There’s a lot of YouTube videos you can watch that can teach you some stuff on Excel. I’ve watched. I’ve watched many. Alright, question too. When is the last time you tried something for the first time outside of open up a new store?

C Ostenson 3:38
Can you leave off answer this one? Yeah, we were sitting down last night and we were so sad. We’re sitting there going? Oh my gosh. It’s been ages since. What? Well, we can’t use the store. We just can’t that’s not fair. It’s um, so yes. Apart from the store, I put into flower beds in our yard. All right, but you know, help from my boss. We’re still working on building our house. We’ve got it done enough that we’re able to live in it. But there’s still projects to finish it up and things like that. So we finally got grass in the yard this year. And yep. Designed and put in a couple flower gardens. Excellent. Last question.

Ressa 4:19
What is one thing most people agree with, but you do not.

A Ostenson 4:24
I think everybody thinks caribou and Starbucks is the best coffee ever. I think Folgers good ol Folgers with a little bit of creamer in it. I think it’ll beat them all.

Ressa 4:37
I’ve always said I thought Folgers should open up a store. And you could go and they could test new products and be a hot direct to consumer brand. So you all opened the store recently interesting time to open a store given everything going on in the world. I’m going to start with a high level question just really up in the cloud. How’s, how’s business going?

A Ostenson 5:02
It’s going really good. Actually, we, you know, it’s it’s kind of an interesting because it’s something new and it’s bringing it to a small community. So it’s been it’s been going really well.

Ressa 5:14
That’s good to hear. Why don’t you tell us the story, how this store ended up opening up, give us some insights of how this idea came to be. And the action you all

A Ostenson 5:25
took? Well, I’ll start, I guess. So the, the idea kind of came from, when we move back to our, I guess, home community, right, they actually lost their grocery store about four years ago. It was an instance where there was kind of not another person to take it over at the time. And they had kind of got up in their, in their age of wanting to retire and, and it ultimately ended up closing, nobody, nobody really took it over. So when we came back, and seeing that, you know, recently happening, and that kind of was the push to well, it’s you know, the city really needs needs a grocery store, it’s when a when a small community loses, there’s kind of a cornerstone business, it’s pretty tough on the community. So the idea was started with, you know, how can we bring one back, but then on the flip side, with me working in field service, and I don’t always know, my, my hours I I’d like to be done at, you know, four o’clock one day to swing by the store on the way home, but then something happens and I’m not getting home till seven, eight o’clock at night, and then everything’s closed and, and, you know, then it started turning into we’ll hop or make a small grocery store 24 hours, 24 hours a day. You know, that’s kind of what sparked the idea of this concept that we have. And we’re a person could access it, walk everyone through what is the concept some people call it like an unmanned store, or I guess that’s generally what I’ve heard a call is an unmanned store concept where where we sell, we’re open to the general public on Tuesdays, Thursdays and Saturdays for for anybody to come in that just wants a normal grocery store experience, right? They want to talk to somebody they want somebody to, you know, help them out picking things out. But then outside of that, we actually sell memberships that gains a person 24 hour access to the store. So they can come in at midnight if they want. And we’ve got a self checkout, or also an application on your phone where they could scan everything on their phone and actually check out using their own their own device.

Ressa 7:46
Wow, that’s pretty technology forward pretty business savvy, given the the world that we live in. Everyone’s wants to be in the subscription or membership business, to turn the subscription and membership business into grocery. Like a Costco. You know, for some the holy grail of subscription businesses given it’s such a purchase that everyone needs. So, Caitlin, you were a preschool teacher, and you were in the diesel mechanic field. How did you guys decide? You know what, we can do this? We want to open up our own store? Because that’s a pretty big leap.

C Ostenson 8:25
Yeah. When Alex brought the idea to me, at first, I thought he was joking a little bit. I it was not on my radar. I think I asked you a couple times if you were serious. And turns out he was very serious. So a lot of research, a lot of research went into it. Not only with just how grocery stores are set up and run, because we don’t really have any experience with that, to the technology, the security, all the all the background stuff happening to resolve a lot.

Ressa 9:01
How long did it take from the ideation process when Alex comes home from work and says we’re opening up a grocery store to when it actually opened?

A Ostenson 9:11
It was we started, I think the idea kind of came through like in January of 2020, January of last year, we kind of started with, you know, this is what we want to do, you know, what’s it going to take for it to happen, you know, because I, you know, me and my feel I’m a problem solver. So, you know, it’s like, this is what we want to accomplish. How are we going to get there? And it took pretty much all of 2020 We as far as you know, we got the building the building was a mess, literally and then so we we remodeled the building ourselves with some help with family members. But so we we did majority of the work in the building as well as Yeah, figuring out everything else. In the evenings trying to find the best systems for this and that, and it was, it was about a full year, we were, we were probably 90% done. And then the last little bit was these extra hoops that we were finding out because of our idea that we had to jump through. So that was we had a real a lot of people, I’d never heard of it before. So

C Ostenson 10:28
and with licensing and stuff, there was a little back and forth, and just making sure we satisfied requirements. And, and all of that, too.

Ressa 10:37
I have so many questions. So a couple, where do you all get the food from? Do you do what most people do you have like Cisco? Or how do you get? Where do you get the food? Who’s your food supplier?

A Ostenson 10:46
There’s a local distributor, local distributor?

Ressa 10:49
Is that everything that’s all the box products as well as the produce and meats? And can you do a full shop in your store?

A Ostenson 10:58
You pretty much good? Yeah, there’s a few items that that they’re they’re lacking. But they pretty much got the the broad spectrum of you know, pretty much everything so And how big is the storm? The retail areas about 1000 square feet?

Ressa 11:15
Okay, and what’s the back of house?

A Ostenson 11:18
Very small? About 200.

Ressa 11:23
So when do you get deliveries? Right? Because you’re only there three days a week, the rest on demand, as you call it? When do you get deliveries?

C Ostenson 11:30
So our deliveries come Wednesday mornings, and my father in law, and I actually come and meet a truck driver, and they unload stuff. And he and I do inventory put things away. And so usually, usually by lunchtime on Wednesdays, that’s all wrapped up, and we’re good to go.

Ressa 11:46
Excellent. So you had this idea you moved away to the city, you come back, there’s no grocery store. You’re like we need a grocery store here. How far is the closest grocery store except for Main Street Market?

A Ostenson 11:59
So here it’s it’s not too far. We’re about 10 minutes from another small growth small town grocery store for a larger like a supermarket here about a half hour. So

Ressa 12:10
a half hour from like, is that a club or a target? Or a Walmart? Yep. Yeah. So the town needs something like this? Because that’s definitely far. And you decided on this concept? You decided you’re going to make it membership based? How did the community reacts to that

C Ostenson 12:25
through a lot of questions. A lot of so when we were in the process of redoing the building, we’d always leave the front door open. And so people walking by would just pop on in because everyone’s curious, oh, there’s a something’s happening on Main Street, what’s going on? And, and so we started out with saying, Okay, we’re going to do a small grocery store. All right, people got used to that. And then we started talking a little bit more about this membership thing. And at first, some people were kind of like, whoa, wait, what, but once we explained, you know, you don’t need a membership to physically come in and shop and stuff like that a membership gives you access, the idea started to catch on a bit more are opening week we were open, physically open, what was that Monday through Saturday, all day into the evening. So that way people could come in, see the store, ask any and all questions that they had look over paperwork, we can show them how the system works with getting in along with checking out and it’s caught on pretty well,

A Ostenson 13:29
we had we actually have in our town, a small community that’s looking to try to kind of bring the town back. And so we’ve met with them and kind of gave them the idea about six or seven of them. And we kind of pitched it to them to kind of see what they thought and they, they were had a lot of questions, but they were very supportive. And, and we also so that kind of got started. But as we got closer, we started our Facebook page. We started posting some videos once in a while kind of talking about because, you know, we’re in a small town. So you know, people hear things right. So

C Ostenson 14:11
we tried to kind of turned into a telephone game.

A Ostenson 14:15
So we played we did some videos on Facebook. So those who had that could kind of see it and actually understand what we’re trying to do. So ahead of time, they had an idea.

Ressa 14:27
Understood. And in a small town, how many members did you expect to have? Did you have an expectation or like we need to get to this membership count.

A Ostenson 14:35
We didn’t have anything to go off, of course. So we just kind of thought if we could hit 45 In the first year. That would be just awesome. That would just be you know, great to hit 45 In the first year. And we’ve met that in the first week. So we’ve exceeded it.

Ressa 14:55
Excellent. And how big is this town? How big is Evansville, Minnesota

A Ostenson 15:00
A 600 people. Wow.

Ressa 15:03
And are people coming from outside of Evansville to your store?

A Ostenson 15:07
Generally, it’s they’re all fairly local.

C Ostenson 15:11
We have gotten people off the bike path. We have the Central Lakes Trail, which runs from what Fergus Falls to Alexandria past that. And so we do get some random people off the bypass coming in to check it out. We’ve had interviews with the daily journal, and Fergus Falls, and the echo press, and Alexandria. And so people who have seen those articles, if they’re in the area, they swing on by when we’re open to check it out. And we’ve had family members say to Oh, hey, you need to come over and see this, check this out. And we even had a couple from they were driving from California, all the way to somewhere on the East Coast. And for some reason, Evansville, was there one of their staffing points to do laundry. And so they’re hanging out at the laundromat, just a few stores down. And they came over like, Oh, this is pretty cool. Like this.

Ressa 15:59
So how long have you been open now?

A Ostenson 16:01
Well, we’re coming up on three months,

Ressa 16:03
you’re open three months, and you have this 24 hour access. If someone wants to wake up in the middle of the night and go, they realized they don’t have the goods to make a sandwich and they want to make a sandwich they can pop on buy, have you done the math? Is it financially worth it to be open 24 hours a day, still have a little ways to go as the memberships you know, better than the cost of operating right now,

A Ostenson 16:28
I would, I would say that the way we kind of looked at it at the beginning was, you know, we’re always paying for the coolers to be cold, right? We’re always paying for some lights to be on, we’re always a lot of this stuff, we’re already paying for it. So it’s like if we could find an affordable way to do the memberships and a point of sale, that, you know, for us, it was kind of a no brainer, because a lot of the stuff we’re already we’re already paying for the building to be cool. There, really the added cost is just the membership. But what was kind of, you know, for where we are not a lot of people work normal hours. So we do get a fairly large, you know, a lot of the members, they come in between seven o’clock and 11 o’clock at night, every once in a while we’ll get maybe a couple right after midnight, because they just work odd hours. So, you know, I think it’s, it’s been going really good. I for us, it’s it’s been totally worth it. Just just because you know, we’re not having to pay somebody, you know, seven days a week or the days that we don’t personally want to be here, or we’re not able to be here. You know, it just a lot of it just kind of made sense.

Ressa 17:43
That’s great to hear. Sticking with this on demand grocery store, I think headline news highlights what Amazon is doing. I’m sure you all have seen what Amazon’s doing with their carts and everything. But I think there’s a lot of enterprise size businesses who are trying to figure out how to integrate the tech and do what you all have done in your 1200 square foot store in Evansville, Minnesota. And some of these big brands are still trying to figure out how it works. Obviously doing things like this nationwide at scale is harder. But talk to me about the whole technology piece and getting that up and running and the security piece of that, how is that

A Ostenson 18:25
part of it? Well, the I would say that, you know, one benefit of kind of the Small Town Living is everybody knows everybody, right? So in a sense. So, you know, we have I mean, we do have our cameras as a as a backup in case and, and with our membership, everybody has their own unique access. So we know we can go to our door log and we know exactly who’s been coming and going. And then you know if if we’ve got questions or whatnot, or if our inventory shows off, then then we have our camera system that we could go back to and, and search but we’re aware of Amazon and the way that they do it. But you know, we kind of just went to the basics, right?

Ressa 19:16
So and what you’re doing, it’s a unique login to our unique access code to walk in the store based on your membership. And then once you’re in the store, it’s just like a normal self checkout. What is the application on the phone that you’re using? Because that’s unique? Like most of my grocery stores? I don’t know. Maybe I can. I don’t think at the self checkout. I can check out on my phone. What is that?

A Ostenson 19:42
So it’s a company out of out of California actually that it took it that was kind of also one portion why it took as long as it did to find a company that did everything because we really wanted the wind The phone, application side of things. So we found several companies that kind of did the self checkout and kind of did a little bit of this, a little bit of that, but not everything. And, and the cost of it was not was unreasonable for what we were trying to do, right, we’re, we’re trying to make a kind of more of a basic store that is affordable enough for us to be able to do this concept. So we eventually found this company out of California, it’s called yoke payments, and they actually have their own bunch of micro markets. So we kind of took the micro market concept and just kind of made it bigger, and into a grocery store form. So we’re kind of I like I kind of say, we’re kind of stretching the system for what it’s meant for with such a store, but it’s been working. It’s been working great for us.

Ressa 21:02
So that’s excellent. What was the research that you all did right? To understand you’re coming from a place where you don’t have background in the supermarket business with how to price the products, you’re buying milk from the distributor, what you’re supposed to sell the Kraft macaroni and cheese for and still profit? How did you go through that whole process? And what was that learning like for you all,

A Ostenson 21:26
it’s been trial and error, what, you know, what we like to say is we all eat 80% of the same thing, right? We all have bread, we all have bonds, we all have mac and cheese, pizzas, whatever, you know, noodles, we all eat the same thing, right? Majority wise. So you go into a large supermarket. And yeah, they got breads and whatever. And they have 20 different options, right, they’ve got the name brand option, the competitive name brand option, you know, all that. So we, you know, with our space, it’s like we’re not, we can’t carry that many options. So let’s just run a name brand option that everybody knows about. And then let’s run kind of the more value type brand. And so instead of 10 brands, we’ve got two brands. That kind of that was kind of our starting in the store to kind of get where we were reopened. And then now that we’re open, we actually have a suggestion board on the wall where people can jot down and give us suggestions on what they’d like to see in. And then we can, we could see if we’re, if we’re able to bring it in or not.

C Ostenson 22:34
And then our inventory system too. It’s nice, while our distributor gives us like a suggested retail price on each item. But we’re not really locked into that. So it’s nice being able to have some flexibility here and there to adjust prices maybe that we know would do do better in our type of a setting. And you know, some things, there’s not a lot of markup on it to begin with, like milk, and stuff like that. So we you know, we just we take a look at what we have, we adjust where we can, we have a couple of different cool areas, as far as markup to hit but part of our main drive to is we don’t want to mark something up 500% If nobody’s gonna buy it, that makes no sense at all. We don’t want produce sitting on the shelf going bad all the time, because nobody’s buying it. That’s, that’s kind of a tough area to just because it goes you know, it needs to get used up faster than other more shelf stable items. But we just we try and adjust as we can and run a couple sales here and there when we can are still figuring it out.

Ressa 23:39
Yet three months. I’m fascinated by the concept. I think this on demand grocery membership based is such a clever business model. And you still have the consumer facing or the store facing opportunities three days a week. I think it’s there’s a lot to it. I think there’s probably room in the United States for more of these stores. You guys are onto something here. So kudos to you. Have you thought about delivery at all?

A Ostenson 24:07
Yeah, we actually so in our community, we have an assisted living facility where some some of the some of the residents there can get up but others might have a little bit harder time so right now we are trying to work on on the systems to be able to maybe do delivery to our assisted living facility or the community members that just find it hard so that is we’re in progress of that one. So you all

Ressa 24:32
are right on trend for the things that are happening in the largest hottest most dynamic metropolitan areas in the country. So I give you all a ton of props because you’re spot on right on trend. Talk to me about the the actual location. How did you come across this? Did you buy it or rent it? We bought up oh good for you.

C Ostenson 24:55
So we were looking at a different location in town that was for sale. It was a much smaller footprint. But we figured, well, you know, if that would work, maybe we go with that. And then someone from the community developers group, who we had been in contact with, she told us that a couple was looking to sell their building on Main Street. They hadn’t talked with any Realtors set up any signs or anything, just word of mouth. And so we were able to meet up with them, and did a walkthrough of the space. And that, yeah, the main street location can definitely make the space work, it was going to be a lot of work to clear it out. He liked to collect different things, it was kind of like a man cave storage shed, he didn’t have enough space in his garage. So he had a year’s worth of collections and, and things in here. So, um, funny enough, the couple had a connection with Alex’s family, you know, small town, that sort of thing. So we were able to think through topics with each other, talked with them, and we were able to come down to an agreement, and we were able to purchase the building and got to work clearing it out.

Ressa 26:10
When did you close on the purchase?

A Ostenson 26:13
Yeah, about the middle of middle of the summer last year.

Ressa 26:16
So you buy this building to open a retail store? In the middle of a global pandemic? Were you getting cold feet at all along the way, given every time you turn on the news? What was happening to small business in America?

C Ostenson 26:32
You know, strangely enough, the pandemic stuff didn’t worry too much about I was more concerned about okay, is this really gonna work like in the in the small town? That was I guess more of my concern. You know, regardless of where in a pandemic or not people need food, people need access to good healthy options to you know, especially if the nearest grocery store is 10 minutes away, for some people that’s really hard to get there or to rely on someone else to drive them the half hour at the into the larger town and, and we just really saw this as a need that the community has, and we are able to work with that situation and try and bring it about. So yeah, pandemic or not, I mean, people still need to eat, we got to figure out a way to help people get the food they need. And

Ressa 27:22
terrific kudos to you. So what’s next, what is next for Alex and Kayleen.

A Ostenson 27:28
So our, our plan is we want to get this store running efficiently and kind of get it all squared away and get our kind of our delivery slide, all taken care of and squared away. And then we start we’d like to start looking at the next small town that’s maybe lost their store some years ago. And that, you know, there may be even further out because the way we looked at this one is Yeah, neighboring town is 10 minutes away. So if it’s going to work in this situation, it’s probably going to work, it’s definitely gonna work in a situation where the nearest town is 30 minutes away, you know, we’re kind of, we’ve, we’re we have the ability to have another store close, but there’s other communities that they’re, they’re, you know, 20 minutes away 30 minutes away from the nearest town that that it’s in itself might not have another store. So that is our plan to then start looking for the next one.

Ressa 28:24
That sounds unbelievable. I love the small town story. Thank you so much for sharing. Okay, we call this retail wisdom. I’ve got three questions for you. They’re fun. Are you ready? Yep. Okay, all right. Question one. And you could eat anyone can answer him I don’t care who it is. What extinct retailer Do you wish would come back from the dead

C Ostenson 28:45
Teavana so Teavana is not like completely dead because Starbucks still sells their stuff. But I miss going into their store seeing all the different options of loose leaf stuff you could mix and match and and the tea pots and Teavana ins that

Ressa 29:01
that is a good answer. Question two. What is the last item over $20 You purchased in store?

A Ostenson 29:09
Saline we’ll have to answer this one because for me, it was probably some sort of a power to move out my house or something

C Ostenson 29:17
like the clearance section and somewhere in

A Ostenson 29:24
calian probably has a better answer. Um,

C Ostenson 29:26
I did recently get a Fitbit, which I had been looking at for a couple of years and just hadn’t gotten around to getting one. So I finally got a Fitbit, which has been a lot of fun tracking my steps and I definitely meet my goal and go beyond it on the days I’m at the store

Ressa 29:42
with the kids. I can imagine. Where do you buy the Fitbit? I got from Target. Last question. So I’ll stick with Kayleen on this one.

A Ostenson 29:53
Probably a good thing.

Ressa 29:54
If you and I were shopping at Target and I lost you what I would I find you in

C Ostenson 29:59
there’s like a three way tie the coffee mug aisle, or the kitchen stuff, which is, you know, kind of I like to try and dabble with cooking and baking and those types of things. So if I’m not in that section, then you could find me in the candle section.

Ressa 30:17
That leads me to a question I should have asked before. And I mentioned pricing. If I were to walk into Walmart or Target somewhere like this, are the prices comparable to your store?

A Ostenson 30:30
Well, we’d like to say it. I mean, there’s, there’s no way we can compete with those type of pricing it. What we like to we shoot for is when you walk into a small grocery store, small town, you a small community grocery start. Generally, you’re always, you know, sticker shock with the price because while smaller stores, that’s just kind of the way it’s been. So our hope is trying to be just under that where people come in and they kind of they go, Oh, it’s you know, the prices are more reasonable. You know, it kind of kind of gives them a little surprise that it’s a small town store and the prices are actually reasonable for what you’d expect. Listen, you both were

Ressa 31:15
terrific. Thank you so much. Good luck on this new endeavor. I think you are so on trend. I see a lot of stores throughout the country. I see a lot of innovative things happening for a small town America. I have not seen anything like this. You both are on it. Keep it going. I can’t wait to see how successful the store goes and you all off to your next one.

A Ostenson 31:37
Sounds good. We appreciate it. Thank you.

Ressa 31:41
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