Engaging the community in creating our store

Direct Public Offerings (DPOs) are a way for small businesses to raise investments from their communities and customers. DPOs are similar to Initial Public Offerings (IPOs), where people buy shares in a company. But unlike IPOs, stock is not traded on a stock market or sold by big investment banks. DPOs are also an alternative to private investments that are limited to wealthy investors. Businesses conducting DPOs can take investments from almost anyone in the general public who meets minimal requirements. This allows working class and middle class people to make investments in companies they believe in. DPOs are similar to “crowdfunding” in that businesses can bypass conventional sources of financing and raise money directly from their supporters.

We are conducting a DPO to raise the equity portion of our project financing (as working capital) because, as a startup business proposing to operate a grocery store in a lower-income neighborhood, we aren’t able to get funding from traditional investors and institutions. The DPO allows us to implement an authentic and grassroots community investment campaign in which residents of California, of all economic backgrounds, can become Founding Shareholders in creating People’s Community Market. 

Federal securities regulation in the United States allows small business conducting public stock offerings to take on a limited number of shareholders. In order to ensure that we reach our fundraising goal while staying within the allowed number of shareholders, we have set the minimum investment at $1,000. We feel that this is a low enough amount to allow many California residents to purchase shares. We have partnered with Credibles to allow individuals and families, for whom $1,000 is too high of an amount, to help create People’s Community Market by pre-paying for groceries through the purchase of Credibles in amounts between $50 and $500.

We do not play an active role in assisting friends to pool their money to make an investment in People’s Community Market. However, individuals are free to organize among themselves as they wish to pursue their economic interest.

You can donate money directly to People’s Community Market. However, because we are not a tax exempt or charitable organization, your donation will not be tax deductible. If you’re looking to make a tax deductible donation we suggest making a donation to our sister nonprofit organization People’s Grocery.

We have partnered with Credibles to allow individuals and families, for whom $1,000 is too high of an amount, to help create People’s Community Market by pre-paying for groceries through the purchase of Credibles in amounts between $50 and $500. Additionally, supporters can help spread the word about what we’re doing to their own network of family, friends, neighbors and co-workers. Please visit our Be a Champion page to learn more about how you can help us reach our goal.

In 2013 we raised over $1.2MM in seed funding through a grassroots DPO campaign in which over 400 California residents purchased shares in our company. The community support and funding that came from the campaign was critical in helping us secure an optimal location for our store. We are now conducting a second DPO campaign to increase our total community investment to $2MM. California residents can purchase shares by following the step-by-step process outlined on the Buy Shares page.

People’s Grocery is a non-profit that was founded in 2002 and has operated numerous food projects (including the Mobile Market and the Grub Box), urban gardens and nutrition education programs in West Oakland. Peoples Community Market (PCM) is a for-profit business that is working to develop and operate a neighborhood food store in West Oakland. Both organizations were founded by Brahm Ahmadi. PCM emerged out of the work and experience of People’s Grocery, but it is a separate organization with its own board of directors and staff. The two organizations may partner to conduct community outreach, job training and nutrition education.

People’s Community Market is a startup business that is currently in its pre-development phase. We have undertaken a thorough planning process and have assembled a seasoned leadership team. We have raised over $1.2M in working capital through a public stock offering in which over 400 California residents purchased shares in our company. The success of that campaign helped us establish a credible negotiating position with property owners, financial institutions and key partners. We are now working to secure a site, as well as institutional financing for the acquisition of the site and construction of the store. Once we have secured a site, we plan to launch a second campaign to raise $786,000 in additional public investment.

We secured a location for our store in March 2016. We are now working on the next key objectives: securing government approvals/permits and a commercial loan. The timeline for completing these objectives is a bit uncertain as there are many variables affecting each process including how quickly the government agencies and financial institutions act on our applications and what additional stipulations they may impose. Our current target is to complete these objectives by the Fall of 2016. If that timeline can be met, then it’s likely that we can begin construction before the end of 2016. We estimate that construction will take about nine months to complete, which would put the timing for opening of our store around the Fall of 2017.

We conducted extensive study of the West Oakland trade area and identified the areas within the community that are most optimal for a retail store location. We paid special attention to criteria such as high population density, accessibility by walking and public transportation, high vehicle traffic, sufficient parking, public safety and potential synergy with other small businesses. Based on these criteria, we targeted numerous sites located along the busiest traffic corridors in the neighborhood. Given the extremely competitive and expensive real estate market in the Bay Area, our efforts to secure a location took a year and half. As of March 2016, we secured a location on San Pablo Avenue that will accommodate our plan to construct a 14,000 square foot full-service food market and social hall. This location sits at the edge of three historic West Oakland neighborhoods: McClymonds, Hoover-Foster (aka ghosttown) and Clawson (aka Dogtown).

There are many complex factors behind why supermarkets can’t or won’t open stores in lower-income urban areas. A few of the main reasons are:

• Higher development costs in densely populated urban areas where there is limited land availability for building larger supermarkets. One study concluded that it can cost up to 30% more and take up to three times as long to build a grocery store in a densely populated urban area.
• Higher employee turnover in lower-income areas where fewer residents have job training and job experience. Large supermarkets tend to lack the ability to provide the in-depth employee training and ongoing support necessary to mitigate this problem.
• Higher rates of product loss from shoplifting, employee theft, damaged and spoiled products, and errors in recording the purchase and sale of products. Many chain stores struggle to establish authentic relationships with their employees and customers in a way that reduces these problems.
• Inability to tailor products and services to the preferences and needs of specific communities. Large chain stores can have a difficult time adapting to communities with a high degree of cultural diversity.
• Inability to undertake the deep community engagement and relationship building necessary to strengthen the business’ chances of success.

We believe that there are solutions to all of these issues. Designing the right solutions requires fresh thinking, local insight and an investment of time and effort. Most supermarket chains aren’t able to make that kind of investment. There’s also evidence that independent grocers that are locally rooted can more effectively address these issues and can perform better and serve better in lower-income areas. We’re creating People’s Community Market to demonstrate solutions that can work and how independent stores can excel at providing those solutions.