Natural Foods Merchandiser

A Warm Welcome in Juneaus Cold Climate

David Ottoson longs for fresh-squeezed juice. It would seem an easily satiable desire for the owner of a natural foods store. But Ottoson doesn?t own a typical store. His Rainbow Foods store is located in Juneau, Alaska—a city so remote that it has no roads connecting it to the rest of the United States or Canada. The only way to get to Juneau is by sea or air.

?It?s a whole different world here. Some tourists come in and ask us if we take American money,? Ottoson says.

Most of Rainbow Foods? stock is delivered via refrigerated barge from Seattle. Because the journey takes five to six days, highly perishable foods like fresh-squeezed juice are well past their sell-by date when they finally make it through Rainbow?s door.

In the winter, delivery can take even longer because of high winds that make sailing conditions dangerous. Ottoson could opt for airfreight instead—delivery takes one day—but the cost of 35 cents per pound of product is prohibitive for all but special orders or some produce items.

Barge freight is costly enough—25 cents a pound. Ottoson passes the expense along to his customers, but that doesn?t hurt business, he says. ?Every [business] here charges more, so people are used to it.?

Running a natural foods store in Alaska poses other challenges beyond distribution. The growing season is only three months long and the climate is very wet, so it?s difficult to find and stock local produce. Rainbow?s local supply is limited to cooler-weather crops such as leafy greens, peas and cabbage, along with greenhouse tomatoes. But the store is still able to stock a 100 percent organic produce section, giving it a marketing advantage over the four major grocery stores in Juneau, three of which have natural foods sections.

Staffing is also a problem at Rainbow. Juneau is a tourist area and the state capital, so employees often want to stick around only for the summer or are lured away by higher-paying government jobs. Ottoson solves that problem by asking for a six-month commitment from new employees and courting retired government workers to take part-time jobs.

But Rainbow has advantages some stores in more accessible regions of the country don?t have. First of all, it?s the only natural foods store in what Ottoson calls a ?pretty highly educated, affluent community.? And although that community only numbers 30,000, it?s tightly knit and supportive of local business.

Rainbow is also next door to state offices, so it does a booming noontime business with government workers who ?don?t care so much about natural—they just want lunch,? Ottoson says. Nearly one-fifth of Rainbow?s revenue comes from its salad bar, hot bar, pizza, soup and sandwich stations, and from its bakery, which features three types of homemade bread each day.

Rainbow also benefits from the cruise ships that unload 800,000 tourists a year onto the Juneau docks. Although, Ottoson says, ?It?s amazing how little business we do with tourists—we?re six blocks from the port, and most people don?t go that far,? but cruise ship employees are regular customers. ?They come in every week and get a fair amount of supplements, energy bars and easy-to-prepare foods they can make in their cabins,? he says.

When Ottoson bought Smith?s Seasons Supply health food store in 1980 with two partners and renamed it Rainbow Foods, he didn?t bother to weigh the advantages and disadvantages of owning a natural foods store in such a remote region.

?I stumbled into it. I was just out of college and working in a day-care center,? he says. ?I didn?t know much about anything.? For instance, he didn?t realize that having a food store on the second floor of a building was ?kind of stupid,? he says with a laugh. ?There was no freight elevator, so we were carrying 50 pounds of juices and bulk grains at a time. I was young—I wouldn?t be able to do it now.?

Still, the store attracted enough customers that in 1984 Ottoson and his partners decided to open a second location in the valley outside Juneau. ?It was a boom time with oil money—everyone thought there would be 100,000 people here by 2000,? he says.

A year after the new store opened, ?the bottom fell out of the oil market,? Ottoson says. There weren?t enough customers to support two natural foods stores, and the second Rainbow location never made a profit. Ottoson and his partners closed it in 1986.

In 1987, the original Rainbow finally moved to a street-level location, and in 1990, Ottoson bought out the last of his partners and became the sole owner. In 2003, Rainbow moved to bigger digs in an old stone church with a 40-foot ceiling. ?It looks like Noah?s Ark turned upside down,? Ottoson says.

We Want to Hear From You
Is your store successfully fighting back the competition? Or has a new marketing campaign or store remodel increased sales? Tell NFM why your store—or a store you do business with—should be considered for ?Store of the Month.? E-mail your store?s story (in 50 words or less, subject line ?Store of the Month?) to lpiscopo@
Not only does the new location have more room for produce and bulk food, it now has a 12-space parking lot—the store?s first-ever off-street parking. ?Before, you had to be really dedicated to fill up your shopping cart and then carry all the bags home,? Ottoson says.

Rainbow also attracts customers through its special-order program, which is popular with rural Alaskans. The store fills 30 to 40 special orders a week.

Rainbow works with the community in other ways as well. It underwrites the local public radio station and offers a play area with books and toys for visiting children.

In addition, Ottoson has an arrangement with an organization that finds jobs for developmentally disabled people. Rainbow currently employs five to six people from the REACH center. Some have coaches who guide them through their daily tasks. ?We have one guy from REACH—Nial—who works here and often brings disguises to work—funny glasses, false teeth, squirt guns,? Ottoson says. ?They all make the workplace more fun.?

Rainbow Foods and Deli
224 Fourth St.
Juneau, AK 99801
Owners: David Ottoson and his wife, Mary Alice McKeen, are principal shareholders; employees and other members of the community own the rest of the shares.
Year established: 1980
Number of employees: 30
Square footage: 6,000 Best-selling departments: groc
ery, 30 percent to 40 percent; foodservice, 17 percent to 18 percent; produce, 15 percent; vitamins, 12 percent

Natural Foods Merchandiser volume XXV/number 11/p. 62

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