Longtime party store closure prompts questions of local business survival

By Hillary Crawford, Daily Staff Reporter
Published February 5, 2014

“STORE CLOSING” signs plastered the door of the Blue Front party store in January. After selling the last of its inventory this past week, Blue Front locked its doors to the Ann Arbor community after more than two decades of business.

The 701 Packard Street convenience store, recognizable by its blue awning and cone-shaped roof, sold beer, wine and other convenience items. In 2005, owner Suresh Bhagat bought the establishment, which was founded in 1988.

Bhagat acknowledged that although rent has not changed in the last few years, business has declined. Inability to make up for the price of rent was a primary factor in the store’s closure.

“Rent was too high — that’s why I closed the store,” Bhagat said. “That’s it.”

Robert Kesto, who owns two University-area liquor stores, said smaller businesses like Blue Front lack the luxury of being able to lower their prices and make up for the losses.

“You can’t lower your prices so much to stay in business on campus, because rent is so high,” Kesto said. “So you have to run it as if there’s no competition.”

Kesto owns Champions Party Store at 1227 South University Avenue and State Street Liquor at 340 South State Street.

Last year, Bhagat said he asked the landlord of the property, Jill Warren, for lowered rent and renovations to areas of the building. Business revenue alone could not pay for necessary repairs to the property.

“I asked the landlord to remodel part of the building and she refused,” Bhagat said.

He added that there were no disputes between the business and Warren. She also owns the two apartment units above Blue Front.

Across the street from Blue Front is Campus Corner, another convenience store with a liquor license. Campus Corner sells liquor in addition to beer and wine, which are Blue Front’s sole alcoholic wares. Campus Corner Owner Gus Batwo said the ability of small stores to pay rent is a growing challenge.

According to Batwo, Ann Arbor has given too many business licenses to drug stores such as CVS, which opened in 2011, and Walgreens, which opened in January.

Unlike local liquor stores, drug stores do not make their money by selling alcohol. Batwo said students may walk to CVS for groceries and other goods, but liquor stores have a more comprehensive selection of alcohol.

Although individual stores must compete against cheaper prices, they have held onto their niche within the Ann Arbor community.

“To tell you the truth, Champions and State Street Liquor do not compete against our competition,” Kesto said. “Our competition competes against us.”

Kesto said the owner of a small business must understand his surrounding area. The fear of competing against larger chains often discourages newcomers from opening individual stores in the downtown area.

“Some customers believe in local stores and mom-and-pop party stores,” Kesto said. “We really appreciate their support for us and their business.”