As many local businesses struggle to survive in a sour economy, two are seeing such strong sales that their owners have decided to expand in the coming weeks.

What are they selling? Bargains – mostly deeply discounted food items but also some health and beauty products. One is even branching out into toys, lawn furniture and outdoor grills.

The owners of the two companies said recently they are catering to people who either want or need to cut their spending. It’s a growing customer base in a time of layoffs, job insecurity and devastated 401(k) funds, they said.

Extreme Bargains, the brainchild of John and Jean Fowler, started selling what is called salvage food merchandise a dozen years ago from their original store on North Stone Avenue. The couple recently opened another store on East Platte Avenue and plan in January to expand its third location on Palmer Park Boulevard into an adjoining 36,000-square-foot space once occupied by a grocery store.

“Business has really picked up within the last couple months,” John Fowler said. “People are looking to save that extra money.”

Across town, at the Westside Bargain Mart, owners Jim and Diane Krug are seeing similar growth. The Krugs bought their business from the Fowlers in November 2005 when it was in an old racecar museum on West Colorado Avenue. Eleven months later, they moved into 6,000-square feet of space in the Red Rock Shopping Center on Colorado Avenue near 31st Street and have seen business explode.

Jim Krug said the couple were ringing up $30,000 a month in gross sales just before they left their old location. Today, they’re enjoying more than $100,000 a month in gross sales, with sales growing 5 percent to 10 percent each month.

The Krugs plan to expand the business in mid-January into an adjoining 5,700-square-foot space. They also will decide in January whether to open a second store in a 13,000-square-foot space in the Fountain area.

The two operations stock their stores with truckloads of food and beauty products purchased from middlemen, called reclamation centers. The Fowlers have essentially grown into wholesalers, and Krug gets 30 percent to 40 percent of his stock from them.

In most cases, the two operations don’t know exactly what they’ve purchased until they open the boxes on delivery.

The merchandise is overstock from traditional grocery stores, stock from stores that have gone out of business, or goods that have been discontinued by manufacturers. In some cases, the food is nearing its “sell by” date. A small percentage of the products are past their expiration date or the packaging has been damaged.

Both operations sort through the boxes, throwing away dangerously dented canned goods and products far out of date.The result? The Fowlers can sell their products for 50 percent to 60 percent less — and sometimes even more – than traditional grocers’ prices.

Krug said he’s “stuck in the ’70s” and prices his products partly on what he thinks the food should sell for and partly on a well-honed sense of what kind of price he must attach to the jumbled-up cans and cartons to make a modest profit.

“Our customers are in survival mode right now, and I feel it’s my duty to help them,” he said.

Although both stores stock similar products, each business has tried to carve out a unique niche.

Krug said he probably stocks more gourmet marmalades, cooking wines, vinegars and salad dressings than any store in the state.

The Fowlers have recently been buying name-brand toys and outdoor furniture from companies that have gone out of business. John Fowler said his 36,000-square feet of new space on Palmer Park that will open in January will allow him to display a lot of merchandise that has been piling up in his warehouses.

Unlike dollar stores, these stores sell name brand products. And unlike traditional grocery stores, their product lineup changes often, so customers know to stock up on products they like because those goods might not be there the next time they visit.

And visit they do. Roaming the aisles recently at Westside Bargain Mart was Tina Vidovich, an administrator in Harrison School District 2 who has an informal phone tree with another D-2 administrator to alert her to new products in the store. “I’ll call her and tell her what they have, and she better get down here,” she said.

Krug and Fowler said they serve people who need bargain food: the elderly, the working poor, and an increasing number of young people who have recently lost jobs. But both said also have a surprisingly large number of well-off customers who arrive in luxury cars like a Mercedes. They said all their customers have one thing in common: In an unsettled economic climate, they’re looking to stretch their dollars.

Both men said their businesses have been successful because they, too, have seen hard times in their lives, and they know what it’s like to struggle.

The Fowlers lived in an RV when they first arrived in the Springs and sold goods at a flea market. The Krugs moving and storage business in Pueblo went bankrupt after 9/11.

“There are a lot of people hurting right now,” Krug said. “It’s kind of sad.”-Contact the writer:636-0197 orbill.mckeown@gazettedev.gazette.com

Maria McGill shopped for the Manitou Springs Christmas dinner and food giveaway Tuesday at the Westside Bargain Mart. She said that because of the low prices she was able to buy a lot of food for the event. Photo by Carol Lawrence, The Gazette