Downtown Louisville is growing rapidly. So why doesn't it have a grocery store?

All around downtown Louisville, new apartments are opening at eye-popping speed.

There are the 250 units at Main and Clay streets in Butchertown.

Another 230 at The Edge on 4, a block from the Louisville Palace.

And 225 more at the Omni Louisville — all opened within the past year amid a $762 million building boom, according to numbers from the Louisville Downtown Partnership.

People of all ages are flocking to the buildings, preferring downtown's walkable streets, proximity to work, and access to restaurants, shopping and events.

But there's a problem with Louisville's downtown living: It lacks a grocery store to greet the thousands of new residents moving in.

While downtown grocery stores are under construction or already thriving in cities such as Nashville, Tennessee; Lansing, Michigan; and Des Moines, Iowa; Louisville's urban center continues to struggle.

City officials tried to address the need in a deal with the Omni hotel that reserved space for a full-service grocery. But residents resoundingly say the resulting Falls City Market doesn't fit the bill — and even a manager at the business calls it an "urban market," not a grocery store.

"It just feels to me like this is an obvious missing piece," said Maurice Gattis, an associate professor at the University of Louisville who lives in the Henry Clay on South Third Street. "It doesn't seem like it should take much convincing that people need access to a full-service grocery store."

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Local developers, business owners and city officials agree that downtown residents need better access to groceries. But they say the time isn't right for a traditional store.

Despite recent growth, Louisville's downtown population is still too small to attract a company such as Kroger, the city's largest grocer.

Between the Central Business District, NuLu, Butchertown and the neighborhood south of Broadway, roughly 10,000 residents live in the downtown area. That number would need to double to sustain a typical grocery business, one developer estimates.

Moreover, the area's wide-ranging income levels make it more difficult for a store to cater to diverse customers' wants and needs.

Household incomes in Louisville's downtown Central Business District range between $7,800 and $186,000, according to census data calculations by Statistical Atlas of Minneapolis. Roughly 11% of households downtown earn at least $100,000.

"I think if we can create more housing, then the market will answer in a way that will serve all people," said Bill Weyland, chief strategy officer with Weyland Ventures.

"We've moved a lot, but we need to double one more time, I think, to see the fruition of what we've been doing."

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Why downtown doesn't have a grocery store

For decades, downtown Louisville had been home to a locally owned grocery store.

First Link Supermarket was in business 73 years at two downtown locations before it closed in 2016.

The following year, a Kroger just south of downtown shut down under failed lease negotiations.

And in 2018, a nearby Save-A-Lot closed after its parent company filed for bankruptcy.

The closures hurt downtown residents such as Quinn Powell, who lives in Dosker Manor, an apartment complex for people with limited incomes.

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"We've got people who've been here a long time, that are 78 years old and their only way is a bus or to walk," said Powell, who typically takes a shopper shuttle to the Kroger at Central Station, 4 miles away.

"There's no real good transportation to get to (a grocery store). Where we can go is high (priced), and where we used to go is gone."

Industry insiders told the Courier Journal none of the now-closed stores was profitable toward the end — and they don't expect a new store would fare better.

The grocery industry typically operates on a profit margin of about 1%, meaning stores depend upon large volumes of customers to stay in the black.

Developer Gant Hill, whose company oversees several residential properties downtown, said grocers typically "like a 25,000-population ring between stores."

According to the Louisville Downtown Partnership, an organization that aims to promote downtown, the Central Business District and its adjoining neighborhoods have about 6,500 residential units that are home to nearly 10,000 people.

Louisville's lower population density doesn't preclude its downtown from getting a grocery store.

A Whole Foods and a Publix are under construction in downtown Nashville. And a Hy-Vee recently celebrated two years in downtown Des Moines. Both areas are home to about 12,000 people.

But Louisville isn't home to a multistate grocery chain that would be willing to take a chance on a downtown grocery — like Hy-Vee in Iowa or the urban Kroger in Cincinnati.

"I think one thing that sets us apart a little bit is that Kroger is headquartered here in Cincinnati," said Joe Rudemiller, vice president of marketing and communications for the Cincinnati Center City Development Corp. "They have made a tremendous commitment to this city over a number of years, and they are dedicated to downtown."

Erin Grant, a spokesperson for Kroger's Louisville division, said the company is committed to Louisville in different ways.

While it may not be building a new store downtown, it has dedicated funds to finding innovative solutions toward improving food access in the city, Grant said.

"An example of that is our soon to be launched Kroger Mobile Market (in partnership with Dare to Care Food Bank) that will provide fresh produce, meat, dairy and other grocery staples across multiple neighborhoods, and Kroger’s commitment to improving our digital platforms to better meet our customers where they are," Grant said in a statement.

Central Louisville also struggles with high poverty rates, which could further complicate designing a brick-and-mortar store, developers say.

While several new "luxury" apartment complexes have brought higher wages into downtown, the most recent census estimates still put the area's average annual household income at $17,600.

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The large population of people with lower or fixed incomes presents a challenge to grocery companies because people with higher incomes and more mobility will pass by smaller stores to shop at others with more variety.

Hill said when Old Louisville had a grocery store, "no one really considered it. People said it doesn't count because it didn't appeal to them. Now that it's not here, they're like, 'Why did it go away?'

"You've got the type of shopper that's looking for fresh vegetables and nice product, maybe some gourmet items. … That doesn't often meet the needs of a lot of demographic that shops in these areas.

"Who are you going to build it for?"

The promise — and disappointment — of the Omni

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Falls City Market in the Omni Hotel. July 8, 2019 (Photo: By Michael Clevenger/Courier Journal)

Falls City Market, at the base of the 30-story Omni Louisville Hotel, certainly wasn't built for every demographic.

To the dismay of residents who thought they were getting a new downtown grocery, the "urban food hall" — as the market is described on its website — focuses more on prepared foods such as sushi and tacos than on affordable staples.

Since the Omni opened in March 2018, the market has been a point of contention for downtown residents who say the hotel did not meet obligations laid out in a contract with the city, which provided $102 million toward the project, along with $17 million in donated land.

"It's time lost that people were thinking they were getting a grocery store," said Gattis, who lives about three blocks from the hotel. "It appeared, and it's not a grocery store."

See also: I went shopping at Falls City Market. Spoiler alert: I left with nothing

According to the contract, Omni agreed to set aside 20,000 square feet of first-floor space for a "high-quality, full-service urban grocery store" that could be managed by an outside operator and approved by Louisville Metro.

If the Omni could not find an acceptable operator within six months of opening, the contract stated, the company could lease the retail space for something else.

Several national corporations have been experimenting with urban stores in the 20,000-square-foot range, paring down their products to the essentials. A store that size in Louisville might have been feasible.

After failing to find an outside operator, however, the Omni decided to take on the market itself, hiring general manager Dan Greet to oversee the development.

By the time it opened, Greet and his team had created an "upscale urban market" that featured a small selection of groceries and produce within a food hall atmosphere that caters to hotel guests and the downtown lunch crowd.

Louisville Forward Assistant Director Laura Ferguson said the city's economic development arm was aware of the market's progress, and she thinks it meets the city's expectations.

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"I think some people focus on the 'full service' and expect it to be more like a Kroger, where you have 10 brands of toilet paper instead of three," Ferguson said. "What we wanted is you could get milk, you could get eggs, you could get meat, you could get cheese. But what you'll find at these urban grocery stores is they just don't have a huge selection."

About 75% of the market's customers are hotel guests and tourists who want more grab-and-go items than fresh meat and produce.

The Omni's apartments are 50% occupied, and as more residents move in, Greet said the market can shift to meet their needs. But until then, he hasn't seen the demand for groceries.

"I think two years, three years from now, a grocery store downtown is a must. We'll ebb and flow as the demand changes."

Small shops fill community's needs

Downtown residents point to another new business — Superior Market and Deli — as proof that demand exists for more grocery options.

Superior opened in May in the Fincastle Building at Third and Broadway. The store has aisles of kitchen necessities such as cleaning supplies, canned goods and an assortment of fresh produce. But at 5,400 square feet, it's about a tenth the size of a Kroger under construction in downtown Cincinnati.

Kenneth Badgett, director of operations for Whitestone Property Management, which oversees the Fincastle, said Superior has been a game-changer for people who don't want to drive for a few items. But it doesn't entirely fill the grocery void.

"People downtown need more stuff like Superior," Badgett said. "People look for that balance of quality and price."

They also look for local owners who stock what they need. That's why Yousef "Joe" Ali said he's stayed in business so long at the corner of Hancock and Lampton streets in Smoketown.

Ali opened Joe's Neighborhood Food Mart there in 1982 and remained through the demolition and reconstruction of Sheppard Square, a nearby low-income housing community.

Powell and other residents from Dosker Manor sometimes walk the mile from their apartment building to Joe's store because they can expect reasonable prices on milk, eggs and meat at his deli counter, and they can get two thick sandwiches for $6.

"If you take care of customers, they keep coming back to you," Ali said.

"I was thinking about retiring, closing down. … (But) the neighborhood would be in trouble if I ever leave."

Weyland said local stores will do well to serve the residents living downtown. But until more housing is built, a larger store is still "out in the future."

"We need to study cities that are building faster and building more diverse products," said Weyland, who's advocated for city and state incentives that could lure new developers and homeowners into downtown Louisville.

"We're light years beyond where we were, and it's fabulous to see all these apartments being built, because it's bringing life onto the streets, which is what we need to have.

"We're getting there. I just want to go faster."

Related: Louisville's vacant groceries find new tenants. But they won't sell food

This story has been updated to include a statement from Kroger.

Bailey Loosemore: 502-582-4646; bloosemore@courier-journal.com; Twitter: @bloosemore. Support strong local journalism by subscribing today: courier-journal.com/baileyl.

[This story was originally published by Courier Journal.]