Grocery Retail Attraction in Food Deserts

Dan McCombie is a research associate at Larisa Ortiz Associates

We've had a couple of projects of late where clients have asked us to determine if their district has enough unmet demand to support a new supermarket. Though the client's reasons may vary from case to case, more often that not it stems from concerns with food access--typically in lower income and majority-minority communities. We've likely all heard the term "food desert" used before and understand its basic premise. Perhaps we've heard the USDA definition: a low income census tract where 33 percent of the population resides more than one mile from a supermarket [1]. But a comprehensive understanding of food deserts also acknowledges other variables like cost of transportation, rates of car ownership, and the price of groceries. It's also important to make the distinction between food deserts and food swamps--areas that have an abundance of convenience stores, fast food and junk food, but lack healthy choices. The purpose of this post is not to dispute the criteria used to understand food deserts (or swamps for that matter), but to think more critically about how district managers might respond to issues of food access and how they might start to engage in dialogue with prospective grocery retailers. What follows is a sequence of steps in service of that purpose:

1. Conduct a leakage analysis

Prospective grocery operators look at a lot of different site selection criteria, but at the top of the list is going to be how much unmet demand they can capture within a set trade area. As a district manager, this is obvious and its the same whether your talking about supermarkets or Starbucks.

By their definition, food deserts are likely going to show some unmet demand simply because they lack a supply of existing grocery options. What is at issue is if that demand, which is based on the discretionary income of the community, is going to be sufficient to attract a retailer (which explains why lower income communities are more predisposed to food-desert status).

The Food Marketing Institute calculated average annual sales per square foot (PSF) of selling area for supermarkets at roughly $620 in 2016 [2]. So what would a prospective grocery store retailer need to see in unmet demand to be convinced to build, say, a 10,000 SF store? The equation would be as follows:

Store size in SF * Annual sales PSF = Annual unmet demand

or

10,000 SF * $620 PSF = $6,200,000

In other words, if I'm a grocery retailer and you want me to open up a 10,000 SF store in your district, I'm going to need you to show me at least  $6.2M in leakage. Keep in mind that 10,000 SF is a relatively small size for a grocery store. A typical 40,000 SF supermarket is going to need to see almost $25M. This is where some industry research into specific retailer site selection criteria becomes critical. Different retailers are going to tend towards different size formats. Some value-oriented chains are also going to be more adept at addressing lower- versus higher-income bands based on their product mix. This will ultimately inform what is within the realm of possibility for any grocery retail attraction strategy [3].

2. Identify secondary site selection criteria

Having covered the main site selection criteria, further industry research should reveal what else is of concern to your prospective retailer. What do traffic counts look like within the trade area? If you have two prospective sites, one on a road with 10,000 average daily vehicles passing by and the other on a road with 25,000, its likely the latter that will be more attractive to a retailer. Does either site provide a lot near a signalized intersection with easy egress and ingress? Are they in areas that allow for freight traffic? Is there insufficient space for parking but proximity to a robust public transit system? Again--different retailers have different criteria and research should inform what is most feasible. 

3. Identify additional site specific challenges

Won't spend too long here except to say that even once you've found a parcel that meets the criteria of a specific retailer, there are other issues to address. Who owns the parcel? Will there be issues with land assemblage and acquisition? Does the zoning support a supermarket? Even if all the other boxes are checked, these issues can bring about long, expensive, and even contentious deliberation which may ultimately scuttle the project.

4. Improve access to existing grocery options

Let's say the issues in the previous point were impossible to resolve, or you never got past the first step of this sequence because your retail leakage analysis revealed insufficient demand to support a grocery store in your district. One thing we can't allow ourselves to do is ignore the facts or run away from the numbers. Instead we should ask the necessary question: Can food access be improved by creating better connections to what already exists? 

This satellite image of desire lines across an active rail evidenced how one
food desert sought to address their own issues with food access

What about a delivery service with online ordering? Though this appears to be a growing trend within younger urban demographics (read: FreshDirect, Instacart, Shipt), we've heard stakeholders express concern that its less feasible for communities without reliable internet access, that some customers still prefer to choose their own groceries by hand, and that some perceptions exist that delivery services are simply a means for discouraging marginalized populations from leaving their community. Whether those perceptions are real or imagined is irrelevant. If the demand doesn't exist, for whatever reason, a delivery service will not be sustainable. 

How about a shuttle service to an existing store? This is more a question of capacity. Who provides the shuttle? Are there local supermarkets that might consider subsidizing such a service, either as a means of generating revenue or as a long term break even position in order to improve their brand image? Might they be more amenable if a public or nonprofit partner complemented the effort with programming initiatives like guided shopping tours and healthy cooking demonstrations? These are all initiatives that we've seen done in service of better connectivity to existing supermarkets.

Programming, such as showcasing local and/or healthy products,
can be a great way to create dialogue between retailers and the community

The main point is that improving access may be the de facto strategy if unmet demand is insufficient. And that means reaching out to customers to determine what strategies might appeal most to them and to retailers to determine where opportunities for partnership might exist. 

A quick thought on food swamps

As mentioned at the beginning of the post, food swamps are different in that there are existing grocery options, but their product mix lacks healthy choices. Here in New York we have the Shop Healthy NYC initiative, which I believe is a good example of an "adopt-a-shop" strategy that employs more carrot than stick. It encourages community members to create a dialogue with food retailers to address issues with obesity and food access. The community suggests what options they would like to see and reward the retailer by assisting with product promotion and marketing. Though the program is specific to New York, the PDF guides available on their website can serve as helpful templates more broadly [4]. 

"Food Swamp" 

Conclusion and Best Practices

I'll close by offering a few examples of best practices where a supermarket served as an anchor for a larger mixed-use project, and aided in catalyzing larger neighborhood revitalization efforts. The point here being that a supermarket has the potential to be a huge community asset. Not leveraging it to its fullest capacity, whether as an existing store or a prospective one, feels like a lost opportunity for creating a more successful district.

New Community Neighborhood Shopping Center

• Location: Central Ward, Newark, NJ
• Est 1990
• Size: 55,000 SF
• Grocery Anchor: Pathmark
• Inline stores: Dunkin Donuts, Mail Boxes Etc, NC Print & Copy Shop, Grocery Delivery, Pizza Hut, Taco Bell, Magic Fountain, Nathan's
• Background: Conceived by the New Community Corporation as a catalyst for economic development in the predominantly low-income and African American Central Ward neighborhood. The development was a joint venture project between both the nonprofit and Pathmark corporation
•          Source: https://www.casestudies.uli.org/new-community-neighborhood-shopping-center-5/

Shops and Lofts at 47

• Location: South Cottage Grove, Chicago
• Est 2013
• Size: 55,000 SF of ground floor retail + 96 rental mixed-income housing units
• Grocery Anchor: Walmart Neighborhood Market (41,000 SF)
• Inline stores: Associated Bank, Burger King, Subway, Fadi's Hair Salon, Uncle Remus Chicken
• Background: A mixed-use project by The Community Builders nonprofit housing developers, conceived to revitalize Chicago's South Cottage Grove Avenue and 47th Street commercial corridors
•          Source: https://www.tcbinc.org/about-tcb.html 

Restoration Plaza

• Location: Bedford Stuyvesant, Brooklyn
• Est 1972
• Size: 300,000 SF
• Grocery Anchor: Super Foodtown (25,000 SF)
• Inline stores/uses: Applebee's Bar & Grill, post office, banks (x3), extension campus of the College of new Rochelle, Billie Holiday Theatre, Skylight Gallery, Youth Arts Academy
• Background: A former abandoned milk bottling plant, the Plaza is owned and managed by the Bedford Stuyvesant Restoration Corporation (CDC). The CDC was able to acquire the plant as part of Senator Robert F. Kennedy's actions seeking to create a national model for community development
•          Source: https://www.restorationplaza.org 

Sources_______________________________________________________

[1] http://americannutritionassociation.org/newsletter/usda-defines-food-deserts

[2] https://www.fmi.org/our-research/supermarket-facts

[3] See examples: https://www.sprouts.com/real-estate/site-selection; https://corporate.aldi.us/en/real-estate/real-estate-opportunities/  

[4] http://www1.nyc.gov/site/foodpolicy/help/shop-healthy.page

Why is retail important to building strong communities?

Nur is an associate at Larisa Ortiz Associates

Whole Foods Market covers over 428,000SF of ground floor 

retail space in St Paul, MN.

Our work at LOA often entails diagnosing problems facing neighborhood retail corridors and offering recommendations and actions to take to revitalize these areas. More often than not, these retail corridors were once vibrant commercial districts that fell into decline following demographic shifts. This, as we all know, was a result of the flight that took place in the 60s and 70s as many middle to higher income families left urban neighborhoods for suburban homes. This shift led to urban neighborhoods falling into decay with increasing pockets of disinvestment and retail stores closing from the lack of residential and worker spending. Most recently, we have seen the trend impacting South Fourth in Mount Vernon, NY where retailers are struggling to attract local customers with poor sidewalk infrastructure, vacant lots and decaying buildings. Fortunately, this trend is beginning to reverse as more people move back to downtown neighborhoods and reap the benefits of living, working and playing in close proximity.

As this upward trend continues for urban neighborhoods, there is now an urgent need to revitalize the formerly vibrant neighborhood retail corridors that were home to a variety of businesses. Promoting and enabling neighborhood retail corridors can take the form of tenant recruitment and marketing strategies, however this assumes that the corridors already have existing physical assets to support existing businesses and attract new ones.

The typical market-led business attraction strategies may only serve to better inform commercial real estate agents and potential retail tenants about the untapped opportunity and market demand in these revitalizing neighborhoods. However, often, these neighborhoods themselves don’t have sufficient viable commercial spaces to support the retail tenants that might be interested in the market. This would then call for redevelopment and more specifically, mixed use developments that can both provide housing for residents hoping to move back to urban areas and provide commercial space for retail, restaurants and even offices.

In fact, the most direct intervention to promote neighborhood retail development is to develop new commercial real estate in the form of ground floor retail spaces and these may be led by the public sector, private sector, or even public-private partnerships. In fact, public sector-led projects can often “act as catalysts of further neighborhood development, with the expectation being that public investment in one or more key initial projects will lead to greatly increased private (unsubsidized) development activity.”

As urban neighborhoods start to get back on their feet with more ground floor retail, a myriad of economic and social benefits may also arise for local residents, particularly in areas that are still seeing a concentration of poverty or lower income families.

One South Market development in downtown San Jose.

Firstly, the presence of neighborhood retail at ground floor often has an incredible impact on overall neighborhood vibrancy and safety, and can create a positive image for the area. In fact, neighborhood retail has often been described as the ‘front door’ to a community, acting as a signal for the direction and types of changes occurring in the area. As retail offerings and storefronts improve, locals also will likely perceive the whole neighborhood as improving and becoming more vibrant.

In fact, ground floor retail, when designed well with transparent facades and welcoming signage, can result in additional lighting on the streets in the evening. If the stores operate into the night, for example restaurants and convenience stores, then these businesses will also contribute to more eyes on the street with patrons and employees coming in and out of the stores. These traits although often negligible can certainly contribute to neighborhood safety and other quality of life factors.

Neighborhood retail can also serve to provide key services to residents in the immediate area, including medical facilities, daycare centers, hair and personal care salons, and finance and tax service centers. These services would be especially important in neighborhoods that are attracting young families with children and working parents. Over time, the easy access to these amenities can even influence the location decisions of more households, potentially inviting even greater retail market demand from local residents.

Shops + Lofts at 47 in Chicago,IL features 55,000SF of retail

In addition, the retail and offices that fill ground floor commercial spaces can often become main employers for urban neighborhoods. Shops & Lofts at 47 in Chicago, IL for example is a mixed use development with over 55,000 ground floor retail SF. It is currently occupied by a Walmart Neighborhood Market, Subway, Burger King, Associated Bank and Uncle Remus Chicken, and as of 2016, there were about 35 full time employees working in the single development. Other than retail, medical service centers located on ground floors are also well-paying employers (in fact, ground floor commercial spaces are often suited to large medical institutions seeking outposts for supplementary services such as eye clinics). Overall, retail and services in revitalizing urban neighborhoods provide great job and even entrepreneurship opportunities, particularly in lower income areas.

Finally, neighborhood retail is key in solving for food deserts. Often neighborhoods that have experience the decline and decay of previous decades have lost major anchor grocery stores and are now the face of healthy food equity gap. By creating new and well-equipped spaces for large and small grocery stores to enter the neighborhood, many more residents will be able to gain access to fresh produce and essential goods that were not so easily available. Some revitalizing urban neighborhoods have even seen immigrant business owners that are bravely entering new retail spaces, offering culture-specific grocery items and thriving.

Pinecrest project in Cleveland will feature ground floor 

retail, office, residential, and public plazas.

Retail is important to building strong communities in our neighborhoods as it contributes to street vibrancy, neighborhood safety, job opportunities, and access to key services and healthy food.  As we continue our work on neighborhood retail revitalization and leading development, or business attraction strategies in emerging neighborhoods, we need to maximize the benefits to local residents who will continue to live, work and play in these areas for years to come. 

For more resources, check out:

Beyard, Michael D., Michael Pawlukiewicz, and Alex Bond. Ten Principles for Rebuilding Neighborhood Retail. Washington, D.C.: ULI–the Urban Land Institute, 2003. http://uli.org/wp-content/uploads/2012/07/TP_NeighborhoodRetail.ashx_1.pdf

What difference can a few stores make? Retail and neighborhood revitalization. Rick Jacobus and Karen Chapple, 2010. http://communityinnovation.berkeley.edu/reports/Retail-and-neighborhood-revitalization.pdf

ULI, HUD, ICSC Publication on Retail in Underserved Communities

In 2014, the Urban Land Institute, in partnership with the U.S. Department of Housing and Urban Development and the International Council of Shopping Centers (ICSC) published "Retail in Underserved Communities". The publication was the result of a convening of over 30 national urban markets experts (including our own Principal Larisa Ortiz) over the course of two days. Participants offered insight into the challenges facing underserved communities and the opportunities to advance both practical and policy solutions at the local, regional and national levels.   

The basic challenges facing underserved markets are outlined nicely in the report. In addition to the lack of grocery options, underserved markets also often lack retail for convenient health care, dry cleaners, beauty salons, banking, and other neighborhood conveniences. This publication points out what we know first hand, the challenges are not simply "economic market conditions", they often reflect site specific factors such as:

• Site availability and assembly
• Local approval processes
• Matching the retailer to the market
• Inaccurate or insufficient market information

We particularly like the case studies that provide detail on the examples shared over the course of the retreat. With that, enjoy!

Busing our way out of the food desert conundrum

I really enjoyed this piece in City Commentary, entitled "Urban Residents aren't abandoning buses; buses are abandoning them" by Daniel Hertz. As a New York City resident living in the outer boroughs (where subways are not nearly as prevalent), I am often seeking other viable transportation options, like walking, busing or biking to get where I need to go. For communities that depend on buses to provide convenient access to residents customers, bus service can make or break some business districts.

The article reinforced a key observation that I have made over the years which is this: "service levels are still the number one predictor of bus ridership". Yes, yes and yes! If a bus doesn't come frequently enough, people develop other habits and patterns that only serve to further diminish bus ridership. However, if a bus came frequently enough that I could safely ensure a timely arrival to wherever I was going, I might take it.  Absent that, I'm personally unwilling to risk being 20 minutes late, or force myself to leave home twenty minutes early, just to make sure I am on time. In an age when we are all time starved, crappy bus service just doesn't cut it. So increasingly, the very poor and those with very limited options, are the only ones who take buses.

I recently completed work in two communities that are official "food deserts", defined as low-income places without ready access to fresh, healthy, and affordable food. Yet the term "access" is a tricky one. In both of these communities, viable full-service grocery stores exist within a few minutes drive. Grocery store operators typically look at short drive times - usually around 8 minutes - to determine their catchment area. In both cases, both neighborhoods were served by grocery stores within 8 minutes. Yet owing to low car ownership, the only options for residents were to walk many miles, take cabs, or take municipal buses. In both cases the municipal bus service was quite poor - coming infrequently and therefore making a quick trip to the grocery store nearly impossible. So again, instead of taking buses, residents often find expensive solutions (like cabs or the high cost convenience store on the corner) that further diminish their discretionary income.

Another interesting take away from the article was the fact that in many communities there is no correlation between falling ridership and bus service cuts. What that means is that cities are making bus service decisions without regard for the need for busing. The chart below shows that even in communities with positive ridership change the previous year, cuts to bus service were quite common.

At the end of the day, this is an important issue that drives to the heart of ensuring that communities with low-income and low rates of car ownership have access to the food and retail services they need to maintain basic nutritional standards and a decent quality of life. If we decrease bus service, we subsequently diminish access to these vital goods and services, creating avoidable havoc in the lives of the most vulnerable among us.

The Downtown Project and Zappos CEO Tony Hsieh lean on entrepreneurs to make old Las Vegas a go-to destination

A trip to ICSC Dealmaking is an annual rite of passage for many of us who work in the retail environment - and this year was no different. Usually the trip involves lots of walking in a variety of air conditioned environments, so I was pleasantly surprised when an old friend and former BID Director - who now works for a large mall developer - suggested we visit Downtown Las Vegas for lunch. I was thrilled to accept the invitation, especially after he reached out to Resort Gaming Group, the development company that executes the revitalization effort. They served up John Curran for a fantastic tour (thank you John!).  We were also joined by David Downey, Executive Director of the IDA (and whose Board I sit on). With cab fare in hand, the three of us flagged a taxi to take us the two miles from the convention center to the old downtown.

For those who don't know, Downtown Vegas is the home of Zappo's CEO Tony Hsieh's efforts to create an entirely new kind of "office park".  Instead of a staid office park surrounding by not much (which is how you might describe Zappo's previous home in a suburban area outside Las Vegas), Hsieh flipped the script and took over the old Las Vegas City Hall after the City left, bringing in nearly 2,000 employees to the area. Not only  that, but he also backed an effort, known as "The Downtown Project" with $350 million of his own dollars. What has been done so far is still in its nascent stages, but the outcomes are many. The difference with this effort and other downtown revitalization efforts with which I am familiar is that it is less focused on physical improvements. Instead, the effort is starting with entrepreneurs - they have sought out multiple business owners with the passion, energy and creative drive to make a go of something interesting and unique. The three efforts that I was most impressed with were Container Park (a shopping/civic center for start up bus, the Market (a small specialty grocery store) and the Oasis, a hip motel that cashes in on the Las Vegas retro vibe. See pics below. For more on Hsieh's efforts and the Downtown Project, check out this Freakonomics Podcast ("Could the next Brooklyn be Las Vegas?"). Well worth the listen.

 Container Park: One of the more interesting efforts is the Container Park - a block of small business spaces located in custom made shipping containers.

The entrance to the Container Park - a shopping/civic/entertainment
space that aims to offer budding entrepreneurs a place to test their business concepts. 

The interior of the block includes a great play space for kids

More kids...

Shipping containers = spaces for small businesses

Restaurants have also set up shop

The Market, a small grocery store to serve a growing population: To make up for a lack of a grocery store (and still too little residential or employee demand to support a traditional grocery store) RGG helped establish one themselves.

Local residents no longer have to travel far for the basics. The Market is a Downtown Project
supported effort that provides an important amenity for a growing residential population. 

The Market is heavy on prepared foods for the busy Zappo's employee

The Oasis, a retro boutique motel (formerly a Travel Inn Motel) was completed rehabbed by the Downtown Project and now serves as a cool spot for visitors. 

The Oasis at Gold Spike offers high class, but low priced, accommodations. 

The swimming pool is a welcome reprieve from the Las Vegas sun. 

Poverty and the Pedal

Three times in the past year alone our firm has completed work in low-income communities and asked questions about alternative transportation options - one of them being - do people bike? In one bike-friendly west coast city, the response, from an African-American community organizer was "most of our folks consider that a hipster thing". And while there were lots of people biking through the historically African-American community, I had to admit that it was true, nearly every cyclist that past us by was Caucasian.

CityLab did some research on this issue last year and found that "while wealthier people increasingly reduce their car dependency, poor people still aspire to car ownership." Or as our West coast community organizer said, "people have the attitude that only losers ride bikes." Fortunately, this mindset is changing, and we should encourage a paradigm shift among minority communities through education, bike infrastructure (i.e. safe places to park your bike so it won't get stolen) and support (free bikes and helmets anyone?)

Would you walk this street with a bag of groceries?

More recently, we have been working in another low-income urban neighborhood on the outskirts of a major downtown in Connecticut. The neighborhood had been labeled a "food dessert" and our original scope was to help them attract a grocery store. But here was the problem. While there wasn't a grocery store within the specific boundaries of that neighborhood, there were multiple food stores within a five to eight minute drive - the trade area that most grocery stores consider when considering site selection.

The good news was that the area was poised to get a grocery store at a new development immediately adjacent to the neighborhood at a major highway interchange. So problem solved, right? Wrong. The street connections to the future grocery-anchored community shopping center could not have been less hospitable to residents coming by alternative transportation means. No sidewalks or bike lanes and desolate streetscapes all made what was only a few minute long walk both unpleasant and in some places dangerous. Yet in a community where 48% of households do not own a car (compared to the state average of 85%) and meager public transportation at best, improving access to the shopping center for residents without cars should be a driving priority. Hey, if you can't bring the supermarket to people you can at least do everything in your power to bring the people to the supermarket. This means bike infrastructure, dedicated bike lanes and safe places to park your bike once you get there. In this community, it also means slowing cars down on a one-way street that should be made two-way. And finally, it means education in the local public schools (bikes are cool, right!) and yes, maybe free bikes and helmets for kids and their parents.

Biking is not a panacea, but it should be a viable option for those who don't have other options. And right now, there is tons of room for improvement on that front.

News round up...

Image source: Walk [Your City]

We scoured the web so you don't have to. Here are some things this week that caught our eye...

DIY Wayfinding Signs Are About to Go Mainstream

Former graduate student Matt Tomasulo began a project in Raleigh that debuted in 2012 drawing much attention for his self created signs which guided and informed citizens of Raleigh which direction and how long it would take to get to a certain destination, often noted in minutes by foot or by bike.  Now, after a Kickstarter campaign and funding from the Knight Foundation, Tomasulo's "WalkRaleigh" project is expanding in a big way.

Check out the story and see how the new "Walk [Your City]" project allows users to create signs aimed at guiding others to destinations within their city.  Signs are color coded for their type - Commercial, Public Space, Civic/Institutional , and Amusement.

The Neighborhood Has Gentrified, But Where's the Grocery Store?

Image from GOVERNING article,
credit: Shutterstock

Part of a series by GOVERNING regarding gentrification, this article covers the issue of the changing landscape and revitalization of America's downtowns, such as Cleveland, which still noticeably lack grocery options.






Urban Regeneration: What recent research says about best practices

The mid-19th Century brought declining population and disinvestment in the core areas of major American cities, many in the Rustbelt, and coincided with state and federal policies that effectively encouraged suburbinization. This post provides key findings and many potential strategies to address disinvestment and spur regeneration.

Why Are Developers Still Building Sprawl?

Image from The Atlantic article, credit: Don Graham/Flickr

The Atlantic points out that while data and feedback supports that Boomers and Millennials alike want to live in compact, walkable developments builders still are investing in sprawling suburban communities complete with even larger McMansions than before.

Wooing Trader Joe's to your downtown. What does it take?

It’s inevitable. Every time I work with a community on retail attraction, I hear the dreaded question: "Why can’t we get a Trader Joe’s?”

Most of the time, I use this question to start a conversation about the metrics that Trader Joe's uses to select sites, and then we work through what kinds of things need to happen downtown to move the fundamental metrics in the right direction. But then I get the question from someone else and we start the conversation over again. 

So...I decided to do a side by side comparison of three of Trader Joe’s sites in the New York Metro Market to see what common denominators those sites shared. I already know from speaking with site selection reps that Trader Joe's looks at a mixture of income, educational attainment and density, so I decided to focus on those metrics and see what we found. The three sites were:

• 9030 Metropolitan Avenue, Rego Park, Queens, NY 11374
• 259 Allwood Road, Clifton, NJ 07012
• 2385 Richmond Ave, Staten Island, NY 10314

For the Rego Park site, which is in a more “urban” market than the two others, we looked at a .5 mile radius from the store. We then compared the Rego Park site to a 1-mile radius around the Clifton, NJ and Staten Island, NY locations, which are arguably more automobile oriented.

What is the median income of the primary customer?

First we looked at income. Median household income was between $74k - $85k. When you consider that median income for the US is around $51k, it becomes clear that they seek out communities that are convenient to high income neighborhoods.

How many customers should there be in the primary market?

Then we looked at household population. Again, keep in mind that we are comparing .5 miles in Rego Park to 1 mile in more suburban communities. If we consider the fact that our Rego Park site is a .5 mile radius (and therefore double the household population for an apples to apples comparison), we are looking at markets that have between 18,000 – 26,000 households within a mile of a site.

How educated should the local population be? 

Another key indicator is levels of education. Trader Joe’s is notorious for seeking pockets of highly educated consumers. The thinking is that more educated consumers have traveled and are somewhat more worldly and therefore open to trying the sometimes quirky offerings at Trader Joe’s.

In every case, the lowest threshold of population with either bachelor or graduate degrees was 30%, and in both New Jersey and Rego Park, Queens, the threshold was significantly higher – closer to 40% when considering the U.S. average is 38%. 

So, before you jump to wooing Trader Joe’s – a tall order for most communities – first take a peek at your demographics and see if they pass muster.

Walmart opening more Neighborhood Markets

February 21, 2014 - Walmart faces sluggish sales and will seek to double the number of smaller new stores planned in the coming year. The retailer has seen sales increase by 5% last quarter at their smaller format stores, called "Neighborhood Markets", compared to falling sales (.4% drop) at their traditional stores. In an announcement, they called this the "next generation of retail". Analysts suggest they are feeling pressure from the success of Family Dollar, which has expanded rapidly in many under served urban markets the past few years. Walmart announced plans to add approximately
270 to 300 small stores this year, double its initial forecast of 120 - 150 stores. They currently operate 346 Neighborhood Markets and 20 Walmart Express stores. The Neighborhood Markets are approximately 38,000 sf (compared to 106,000 sf for traditional Walmart stores). The company is also testing 2,500 sf, college-based convenience retail called "Walmart on Campus".

If you think you have a site for consideration, you must gather and submit the following information:

1. Site Plan
2. Property Boundary Information
3. Aerial Photography (if available)
4. City Map with Property marked on the Map
5. Zoning Information
6. Your contact information

This information can be sent to the appropriate real estate manager for your region.  A territory map of real estate managers can be found by clicking here.

Resource Articles

• "Wal-Mart places big bet on going small, but is it enough?", CNBC
• "Wal-Mart forecast disappoints as grocery business struggles", Reuters

Small-format British grocer leaving US market...

Small grocer seemingly tailor made for urban communities exits the U.S. market, cites Bloomberg news (TESCO exits U.S market. (Bloomberg News, 12/5)

This story caught my eye...perhaps because a few years ago, Fresh & Easy Neighborhood Market, a 14,000 square foot grocery store concept by British-based TESCO was all the rage. The company had reportedly spent $1 billion (yes, with a B) on R&D and was looking at extremely rapid US expansion. Lots of communities were clamoring to sit down with TESCO to see if they could convince them to fill the smaller retail spaces typically found in older urban communities. In fact, I was part of a few of those conversations at ICSC Dealmaking in Las Vegas in 2008. But apparently, no more. "Fresh & Easy was let down by poor execution, clinical stores, a predominance of own-brand products in a brand-loving U.S. market, and a lack of understanding by consumers" says Bloomberg news. Not to mention bad timing...the end of 2008 saw the collapse of the economy as well. I wonder what the plan is for existing Fresh & Easy's....

Not anymore....

Fresh & Easy was a cool concept that worked in urban neighborhoods...

Going "Store by Store" to Help Local Business Owners Improve their Displays

Finding ways to help local business owners improve their window displays is a perenial issue. The small convenience stores typically found in urban areas are notorious for their cluttered displays, boxes and merchandise in the window blocking views into the store (which has the added "benefit" of turning store into a target for thieves), and posters and stickers haphazardly placed over all the windows. Many of us are very familiar with this challenge. But a creative partnership between a local Visual Arts school and a local development corporation in Staten Island hopes to change all that. As a consultant to the Coro Neighborhood Leadership Program, the first commercial district leadership training program of it's kind in the nation, I had the benefit of hearing Michelle Sledge, Economic Development Coordinator for the Northfield Community Local Development Corporation share the impact of her "Community Change Project" with her NL colleagues as part of our final program day.

The results of her efforts, a program dubbed ¡Revive!, brings together graduate students from the Manhattan School of Visual Arts (SVA) to provide volunteer service that helped make the display windows of Monte Alban, a Mexican market, more appealing. According to Michele, the owner couldn't be more pleased with the outcome and believes it is helping business. Her story is one of many that I heard yesterday that continue to inspire me - and I hope they inspire you too! I'll be sure to share a few others with you in the coming weeks.

Here is a great video documenting the day....

News Roundup: August 3, 2011

"SD Council OKs revised payment plan for business districts" [La Jolla Light, 8/1]
The [San Diego] City Council voted to change the way money is distributed to Business Improvement Districts. The city had previosly collected assessments directly, but now the assessments will go straight to each BID, which will have to file reports to the city on their expenditures.

"Mobile market brings fresh produce to to ‘food deserts’" [Kansas City Star, 8/2]
The absence of a grocery store (the nearest is almost 2 miles away) and the lack of public transportation have left seniors in the Argentine neighborhood without easy access to fresh food. The Beans & Greens Mobile Market is filling the gap.

"Project to make area around Performing Arts Center stroll-worthy" [Kansas City Star, 8/1]
A new performing arts center in downtown is the catalyst for a set of downtown improvements aimed at encouraing a pedestrian-friendly atmosphere.

"Riders Will Race for Cash at First Birmingham Bike Festival " [Birmingham Patch, 7/26]
The first such event organized by the Principal Downtown Shopping District will award cash prizes to cyclists and downtown. 

AND THE WINNERS OF THE BEST CHAIN ON MAIN ARE....

The Commercial District Advisor (CDA), in partnership with the Local Initiative Support Corporation (LISC), is pleased to announce the winners of our first annual 'Best Chain on Main' competition!! Click here for the press release.

These businesses were selected by a nationally recognized judging panel for their successful business model and their contribution to commecial revitalization. Congratulations to all of our winners! 

In the coming weeks we will be profiling the winners on a dedicated website sponsored by Retail Traffic, and interviewing the business owners. So stay tuned!

First Place Winner: Villa

The first place winner is Villa, an urban-inspired apparel and footwear retailer with 26 locations throughout the Mid-Atlantic Region.

“Villa succeeds by combining profit and socially responsible business practices” says Farah Jimenez, President & CEO of People’s Emergency Center Community Development Corporation (PECCDC), the neighborhood-based non-profit leading local commercial revitalization efforts along Lower Lancaster Avenue in West Philadelphia, where one of Villa’s stores is located, and the entity that nominated Villa. “Villa’s arrival in 2008 significantly advanced our commercial revitalization efforts. Their gleaming storefront served as an example that helped inspire other businesses and property owners to improve their storefronts and window displays. Since then, we have completed 15 façade improvement projects in our district – 8 on Villa’s block alone.”

“Villa is proud to receive the top honor as the 2010 Best Chain on Main,” says Jason Lutz, Villa’s President and CEO. “This award exemplifies Villa’s strong commitment to the communities we serve— by providing our customers with quality merchandise and excellent service, by supporting neighborhood initiatives, and by setting a positive example through good storefront design. We believe the respect we show our communities through these efforts is a cornerstone of our success.”

Second Place Winner: Pamela's P&G Diner

Pamela’s P&G Diner is recognized for their “Strip District” location, a historically gritty, industrial neighborhood just northeast of downtown Pittsburgh. Pamela’s P&G Diner is an anchor in the district, attracting visitors from the entire region and drawing foot traffic that invariably helps other local businesses. According to nominee Neighbors in the Strip, a local community group leading commercial revitalization efforts, Pamela’s also takes the lead in donating to worthy causes at its Strip District location. They consistently supports community efforts by sponsoring block parties, providing breakfast for more than 35 photographers during the organization’s annual photo walk and photography contest, and donating to other local causes.

The judges were particularly impressed by the attention to interior and exterior design detail – each location is designed and themed to enhance neighborhood ambiance and contribute to neighborhood character. The judges also recognized Pamela’s P&G participation in local commercial revitalization activities.


“We are proud of our commitment to walk able Main Streets” says Gail Klingensmith, owner of Pamela’s P&G. “Wherever we locate a store, we always make sure to belong to the local business group. We take pride in the fact that our stores have become a destination on Pittsburgh’s urban Main Streets.”


“They have been great partners since they opened about six years ago. For our annual Art and Stroll event, they helped close the block and brought in a 50’s band” says Becky Rodgers, Executive Director of Neighbors in the Strip. Rodgers adds “they are always first in line when we ask for help, donations, support or sponsorship. We are so pleased to see them getting the recognition they deserve.”
 
Third Place Winner: The Fresh Grocer
The dearth of fresh food options in urban areas is well documented. Philadelphia-based independent grocer The Fresh Grocer is helping to fill that market gap. The Fresh Grocer has been targeting urban markets in the Philadelphia area since 2001 at University City at 40th and Walnut. Their stores have helped catalyze commercial revitalization activities in many of the markets where they locate.

“These stores have spurred a lot of economic development in the areas” says The Fresh Grocer spokesperson Carly Spross, adding “our Northeast Philadelphia store is in an area that had been without a supermarket for 40 years.” “We also focus on hiring locally. In our newest locations, we have hired 98% of employees from within 2-miles of the store.”

The judges were impressed with The Fresh Grocer’s commitment to providing fresh food in underserved urban areas, their attractive displays and interiors, and their work in the local community. At their 56th and Chestnut store, they partnered with a local elementary school to incentivize higher attendance rates. At the end of the marking period, they provided $10 gift cards to children with perfect attendance rates. In the beginning of the initiative they gave out about 10 gift cards, but according to Sprouss, they gave out 85 gifts cards during the last marking period.

Honorable Mention

Honorable mentions were awarded to Mugshots Coffee House and Café, a coffee shop with 3 locations in Philadelphia, PA, and Gothic Cabinet Craft, a furniture retailer with 33 locations in and around New York City. 

Mugshots Coffee House and Café: The first Mugshots Coffee House and Café opened over 6 years ago. They now have three locations in the Philadelphia area. Their newest location on Girard Avenue in Brewerytown opened in November of 2009 with support from The Merchant Fund’s ReStore Retail Incentive Grant program, among other grant programs. Owner Angela Vendetti is a local resident with a deep personal interest in seeing the neighborhood revitalized. She notes that Girard Avenue is still a street in need of investment, and that retailers remain hesitant to open stores in the neighborhood. However, she noted that the arrival of Mugshots has helped stir local buzz. Since Mugshots opened, a day spa and pharmacy have opened, and restaurants are beginning to add to the retail mix.

The judges were impressed by the impeccably renovated façade featuring brick, ornamental metal, French doors, and large original plate glass windows. These details make the storefront stand out as a model façade improvement along the street. The interior also reflects the attention to design, with a focus on restoring the original plan oak flooring and other period details. “The store is a gem” says Patricia Blakely of The Merchant Fund, who provided funding for the façade. The judges also commend the owner for a standout, high quality investment in a low/moderate income neighborhood, and anticipate that this investment will spur other similar investments in the area.

Gothic Cabinet Craft: Gothic Cabinet Craft’s affordable, solid wood furniture has been a New York staple for almost forty years. The winning location, 82-18 37th Avenue in Jackson Heights, NY stands out for the care taken with merchandise displays and their large transparent windows that give pedestrians simple eye candy on a street otherwise cluttered with newsstands and dollar stores. The store manager also offers the community prominent window space to display student art work sponsored by the Jackson Heights Beautification Group, a local community group. Additionally, most of their furniture is built locally in Maspeth, Queens, providing valuable industrial jobs within the City. We congratulate the winners and hope their stories inspire your efforts to work with local businesses in support of your commercial revitalization efforts!

The judges were impressed by Gothic’s willingness to locate in underserved outer borough markets, where their clean, attractive merchandise displays often stand out on otherwise visually cluttered streets. While there are other small, budget furniture stores near the Jackson Heights location, Gothic’s arrival in Jackson Heights has helped elevate the quality of furniture offerings in the district and has also created improved opportunities for window shopping.

Walmart Seeks Aggressive Growth of Smaller Stores in Urban Markets

More and more retailers are seeing sluggish US growth and beginning to tap opportunities in urban markets - markets that have previously gone underserved. Hold your breath...Walmart is now among them. (Wal-Mart to Aggressively Roll Out Smaller Stores). The national retailer seems to "scouring" urban communities looking for spaces of less than 20,000 sf - a far cry from their typical protype of around 150,000 sf. Their recent small prototype is called "Marketside" and includes a focus on fresh food. According to the article, there are now four of these prototypes and they average 15,000 square feet each. It seems Walmart isn't letting "Fresh and Easy" (a 15,000 sf grocery store developed by British-based Tesco, the third largest retailer in world) get away without a run for its money. Another Walmart prototype called "Neighborhood Market" includes a mix of food, pharmacy, beauty, etc. in about 42,000 square feet.

Watch out for more retailers trying to tap underserved urban markets. This Friday Target plans to detail it's own urban strategy...I'll be sure to keep you updated!

New City and State Programs Encourage Grocery Store Retention and Attraction

This morning, Queens Borough President Helen Marshall hosted a panel to unveil new incentives at the city and state level in New York to retain and attract neighborhood grocery stores. Commercial district managers in urban neighborhoods are well aware of the challenges faced by grocery stores in urban neighborhoods--higher land costs, logistical difficulties, and thinner profit margins than other retail uses that compete for space. These new incentive programs, FRESH and the NY Healthy Food & Healthy Communities Fund, aim to make grocery store retention and attraction financially viable and thereby increase fresh food access in urban neighborhoods.

The creation of these programs was inspired by a recent study conducted for the Mayor's Food Policy Taskforce, which found that nearly all NYC neighborhoods are under-served by supermarkets based on national standards. Additionally, some neighborhoods are acutely under-served and feature high instances of diet-related diseases as well as residents with limited mobility. The national standard is at least 3 square feet of grocery store retail per resident; no community district in Queens meets this hurdle.

On the city level, two types of incentives are available: financial incentives from the NYC Industrial Development Agency and zoning incentives from the Department of City Planning. Currently, the zoning incentives are only available in neighborhoods with the most acute need according to the study (Jamaica, Central Brooklyn, Northern Manhattan, and the South Bronx), while the financial incentives are available in distressed census tracts citywide. On the state level, the New York Healthy Food & Healthy Communities Fund provides a variety of construction and rehabilitation loans as well as some grants for supermarket operators and developers. This program is run by the Low Income Investment Fund and is based on the successful Pennsylvania Fresh Food Financing Initiative.

To qualify for these incentives, the supermarket must fulfill the set of criteria that are outlined below. These incentives can be used both to attract new and renovating existing businesses. If you have a food retailer in your district that meets the space requirements, these programs may be a good resource to help them make adjustments and carry more fresh food options.

• Provide a minimum of 6,000 square feet of retail space for a general line of food and nonfood grocery products intended for home preparation, consumption and utilization;

• Provide at least 50 percent of a general line of food products intended for home preparation, consumption and utilization;
  

• Provide at least 30 percent of retail space for perishable goods that include dairy, fresh produce, fresh meats, poultry, fish and frozen foods; and
  

• Provide at least 500 square feet of retail space for fresh produce.