San Diego County farm expands into retail storefronts

Not many farmers live in the city and commute back to the farm every day. But that's exactly what brothers Noel and Jerome Stehly do. They live in San Diego and drive about an hour north to their organic farm in Valley Center, because they married "city girls" who have active careers in the city.

Not many farmers test the waters of the retail market by opening grocery stores. But that is what the Stehlys began doing last summer, with plans to open store No. 3 this fall.

The push into retail came for several reasons.

The brothers grow avocados, citrus and a variety of vegetables and fruits, selling at farmers markets primarily in Los Angeles and Orange counties.

Their farm is off the beaten track and they don't own any public road frontage, so putting up farm stands was not an option.

They also saw the trend toward buying local and an increased appreciation for organic produce.

And because they live in San Diego, they noticed there were several underserved areas where residents had to travel far for stores that offered organic options or wait for the weekly farmers market. That situation offered potential for what they had in mind: small stores open seven days a week that would stock not only the fruits and vegetables the Stehlys grew, but also selected produce from other organic farmers, supplemented by groceries that would enable customers to put together a complete meal.

Noel Stehly had given the retail option some thought during the years, since he and his brother bought out their siblings and took over the 278-acre farm in 2002, but he never suggested it to Jerome or spoke the thought aloud.

"I didn't want people to think I was crazy, but when Jerome brought it up, I was excited," Noel said.

"If you do it right, it would be a great extension of our business," Jerome said.

Initially, they planned to open one store and see how it went before expanding to a second location in two or three years. But as it happened, they received such a strong response with the first store that plans were quickly hatched to open two more.

Jerome found the first location when he was running an errand and noticed that a guitar store had closed and there was a For Rent sign up.

"Opportunity came up in great locations and if I had waited, I wouldn't have gotten those places," he said.

Location also dictated the size of the stores.

The first, with 1800 square feet of space, is on Morena Boulevard in the vicinity of Sea World. A second store, set to open at the end of this month, is a much smaller location—800 square feet—in South Park, a somewhat locked-in neighborhood, with the closest organic shopping options at least 25 minutes away.

Store No. 3, scheduled to open this fall, will be much bigger at 5,000 square feet but, as the Stehly brothers point out, still smaller than the average 40,000 square-foot grocery store.

Choosing the right location has been a critical factor for success, the Stehlys said. The underserved markets don't fit the typical demographics for organic chain stores, so they don't compete against them. Selling to retailers and wholesalers still represents the bulk of their business.

Operating a retail store has been a learning experience in many ways.

Noel recalled how he had initially thought they could do it by themselves, before quickly realizing it required someone with solid retail experience, so the brothers hired a manager with 25 years of experience in the organic retail industry.

The manager turned out to be a boon, because she knew where to purchase quality produce that they did not grow on their own farm.

She also pushed for a juice bar, something the Stehlys resisted because they wanted to get the store up and running first. But once they saw the need for a juice bar and got the permits to set one up, they saw business take off quickly.

"We didn't know some of this initially—we were amateurs—but that's okay," Jerome said. "In business, you make mistakes, but you learn from them as quickly as possible and correct them."

Since retail involves detail, it's been a time-consuming initiative, taking up to 25 percent of their time while representing a small portion of their total business.

As partners, being able to split the work and juggle different responsibilities has enabled them to ensure they don't neglect either the farm or the retail operation. While they make joint decisions, Noel concentrates more on the day-to-day farm operations, freeing Jerome to focus more on the retail side.

Both brothers listed permitting as the top challenge—dealing with the Health Department for the juice bar and winning all the approvals required a lot of time and effort, for example.

Getting the store design right, in terms of where to put what, is an issue that keeps him up at night, Jerome said.

Theft has also been an issue. After two break-ins, they put in security gates.

But the Stehlys said local residents have been grateful and appreciative of their presence, because they did not have comparable shopping options in the area earlier.

"I knew it made sense to target underserved markets, but we didn't know it would take off this quickly," Jerome said.

As to whether they would suggest other farmers go down a similar path, the brothers offered cautious encouragement.

"If you have the gumption to do it, go ahead. It's a lot of work and it's another business altogether," Noel said. "People want to spend their money locally and want to know where their produce comes from. So any farmer who wants to tap into the locally produced market and hit a niche market or two can make it work."

Jerome advised, "It's a tough road and you'd better hire the right person."

(Padma Nagappan is a reporter in San Diego. She may be contacted at padma.nagappan@gmail.com.)