Mark Begich, frustrated by rural Alaska’s exorbitant prices, is opening a grocery store in Utqiaġvik

Mark Begich poses for a photo in his Anchorage office last week. Begich, the former U.S. senator, is working with a company that’s taking over management of Utqiaġvik’s big grocery store. (Photo by Nat Herz/Alaska Public Media)

When Mark Begich was a U.S. senator, he took visiting dignitaries on trips to rural Alaska. Every time, he said, he’d drag them into the village store, to show just how much residents had to pay for laundry detergent or a gallon of milk.

“Universally, among all of them: shock. They would look at a head of lettuce that might be seven, eight, nine dollars and they’re looking at you, like, ‘What?’” Begich said. “They’re trying to understand: How does that happen?”

A year after losing his campaign for governor, Begich is working in the private sector, where he’s now trying to solve that same problem. This week, a company he runs is assuming management of the big grocery store in Utqiaġvik, the North Slope hub town of 4,500 people.

In an interview in his Anchorage office last week, Begich said his company, Stuaqpak Inc., will offer lower prices and better products, and be more accountable to residents than the North West Co., the publicly traded Canadian corporation whose subsidiary ran the store previously.

“We think we are doing something that is transformational to rural Alaska on a basic issue, which is survival on a food product that can be affordable,” Begich said.

But Begich’s business is launching an untested model, and it will still face competition from North West, whose subsidiary, Alaska Commercial Co., has already reopened in a different spot.

AC welcomes the competition, said Walt Pickett, the company’s general manager.

“If there’s any learnings that come out of this, I’m excited about that,” Pickett said. “If they found a better mousetrap, let’s figure out that mousetrap and replicate it.”

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To some degree, expensive groceries in rural Alaska are inescapable: Dozens of villages across the state are disconnected from the road system, meaning that goods have to be boated or flown in.

But there’s also a persistent sense that AC takes advantage of the lack of competition in Bush communities like Utqiaġvik, said Elise Patkotak, a longtime resident who now lives in Anchorage.

Sometimes, she said, those frustrations are justified.

“And other times it is just a matter of, you’re so tired of how much they’re making you pay,” she said. “It’s just kind of a way of life — you have no other alternative, so all you can do is bitch.”

AC has 33 locations in Alaska, from the North Slope to Southeast, and nearly all of them have competition, Pickett said. That includes Utqiaġvik, where there were two other grocery stores before Begich’s company arrived.

“We do everything in our power to minimize costs,” Pickett said. “We are pretty good experts at what we do. And at the end of the day it’s just an expensive effort to move product into these remote communities.”

AC was originally formed in the 18th century as the Russian American Trading Company, then purchased and renamed in 1867 by a pair of San Francisco merchants. The North West Company acquired it in 1992.

The company has 950 employees in Alaska, with revenues of some $240 million a year — roughly $20 million of which come from Utqiaġvik, according to Pickett. It occupied its most recent building since the late 1990s, he said.

AC’s landlord in that location was Ukpeaġvik Inupiat Corp., the Alaska Native village corporation for Utqiaġvik. When AC’s lease came up for renewal, UIC put out a request for proposals and picked Begich’s group out of the three respondents, said Nagruk Harcharek, a UIC official.

“I think we’re all excited at the opportunity to hopefully make the cost of living for this community a little bit more affordable,” Harcharek said.

Begich is president of the company, Stuaqpak, that’s taking over the Utqiaġvik store; other investors include Begich’s nephew Nicholas Begich III and Jason Evans, an Iñupiat businessman. Stuaqpak is also working with a separate consulting firm run by Begich, Northern Compass Group.

Stuaqpak took possession of the store late Thursday, and Begich and others are now in Utqiaġvik preparing to reopen it as soon as this week, with what he describes as several improvements.

First, Stuaqpak is working with a wholesaler, JB Gottstein, that Begich said will allow the store to sell basic goods at lower prices. Second, he says his Alaska-owned company will be more responsive to feedback than AC and its parent corporation, North West, which is based in Canada. When people in Utqiaġvik have complaints, “I’ll get the message, I guarantee you,” Begich said.

Third, Begich’s group is making physical changes to the store, in an effort to turn it into more of a gathering place. It’s planning to redo an area that Alaska Native artists sell their work on consignment, and it’s also bringing in what Begich calls a “high-quality Alaskan coffee roaster” — he won’t say which, but think Steamdot or Kaladi Bros.

“Our goal is, at the end of the day, it’s a place that people can see as a destination,” Begich said.

Patkotak, the longtime Utqiaġvik resident, said her friends in town are taking a “wait-and-see” approach. Begich isn’t the first businessman to come to the community with big promises about groceries, she said — she remembers similar hype around the opening of the store under AC’s management two decades ago.

“There was a big brouhaha about how everything was going to be more wonderful,” Patkotak said. “And eventually it just settles back into, you know, you can buy this avocado for $20 and hope to God it ripens before it rottens.”

If Begich’s model works, it could expand to other communities in rural Alaska, he said.

AC isn’t going away, though. It was expecting to renew its lease for the Utqiaġvik building and planned to make its own improvements there, said Pickett, the general manager. “It was a shock” when Begich’s company won the bid, he added.

AC spent the past six weeks remodeling the new building it purchased, but the company sees the space as a short-term solution, Pickett said. Ultimately, AC expects to have a bigger footprint in Utqiaġvik, whether that’s through an addition, a different space or a second store, he said.

“We want to continue to provide for the people in that market on the North Slope,” Pickett said. He added: “We’re looking at all options.”

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