Why don't poor neighborhoods have Grocery Stores? (Ashland, Union: sales, health insurance)

[At1WithNature]

Why do all of the grocery stores move out once demographics change and the financial class of people is lowered? Poor people become so obese and overweight because all they have is fast food joints around them combined with zero grocery stores, in close proximity, to purchase actual nutritionally rich foods. So, why can't grocery stores survive in poor neighborhoods? Food stamps are just as good as money (to the grocery store) so that can't be the reason. Is theft the main issue?

[aragx6]

I don't know the entire reason -- I'm sure it's a multi-headed issue, but I do know one factor:

A supermarket's profit margin on most items is extremely small -- they have to sell a lot of product just to break even. Only fancy, luxury items have a good mark up. The things people on food stamps buy -- like milk and bread -- are sold almost at cost for most grocery stores because they use them to drive traffic into the store.

[Damage Control Freak]

The spending capacity of poor folks is rather limited, so the prospective profit of a store is just as limited and usually lower than in a more affluent hood.
One might think that everybody needs groceries so it wouldn't make a difference, but it does. I guess that's mainly because the typical US supermarket is fairly large and carries dozens of brands of nearly identical products, so they need pretty substantial volume of sales to actually make a profit from a store. And that's you won't get in a hood where people probably tend to only buy the cheapest brand of chips and no $7 organic sea salt stuff.
Aldi on the other hand with its concept of a very limited choice of very low-priced products is racking up nice profits in exactly these hoods.

[ajolotl]

It's a great question and I'm looking forward to hearing people's responses. I agree with aragx6 that there are several factors at play. I'm sure staffing and protecting the store from vandalism/theft are issues also. Look at the new Target on 111th and I-57 -- they put a lot of money into lighting, security, etc. to make it feel security. It probably wasn't cheap. Probably most companies have also not yet exploited all existing opportunities in more middle class areas. I'm also guessing that exaggerated negative perceptions come into play. I'm sure others will disagree with that.

There are some poor areas with large grocery stores -- Stony Island 63rd to 87th has a Dominick's, Moo and Oink, Pete's. On the Dan Ryan at 87th there is Jewels or Dominicks (I can never recall which). At 111th off of I-57 there is a new Jewel being built. 95th and Ashland has a Jewel. An Aldi was just completed on 67th and Cottage Grove. Roseland seems to be a big "food desert" but there is still plenty of stuff close by.

But yes, most areas on the south side are horribly underserved even by basic staple businesses beyond groceries. I was at a gas station on 95th and Cottage and another one at 83rd or so in Cottage a few days earlier and I was struck at just how much they sucked. Credit card readers didn't work, huge potholes, cracked displays, etc. -- just a total dump. I'd say it looked third world but it wasn't nearly as nice as what I'm used to in Latin America (the oil companies have money and make very nice gas stations there). I don't think Citgo or whatever was too poor to fix it -- they just have no motivation to since the people who use it either are not in a position to or for whatever reason don't demand it.

[Avengerfire]

Originally Posted by At1WithNature

... Is theft the main issue?

I would say it is a big part of it. Heck people even steal from Aldi's!

[aragx6]

I read once -- a very long time ago, so I'm not at all sure it's accurate -- that if you count up all of the money Wal-Mart loses each year from theft it would be a Fortune 500 company.

[hank0604]

Food is actually the most common type of item stolen, year in and year out. Going back to the OP's post about poorer people being overweight, I don't think it is because of a lack of grocery stores and an abundance of fast food places. When you think about it, most of the unhealthiest food in the grocery store is also the cheapest, most overly processed stuff: mac n cheese, pastas, hot dogs, little debbie snacks, etc...

[aragx6]

Originally Posted by hank0604

Food is actually the most common type of item stolen, year in and year out. Going back to the OP's post about poorer people being overweight, I don't think it is because of a lack of grocery stores and an abundance of fast food places. When you think about it, most of the unhealthiest food in the grocery store is also the cheapest, most overly processed stuff: mac n cheese, pastas, hot dogs, little debbie snacks, etc...

And then you have companies like McDonald's creating full-blown advertising campaigns to appeal to blacks and Latinos compounding the problem at the same time that government funding was drastically cut for nutritional education in this country -- the resulting obesity rates shouldn't be shocking.

[Damage Control Freak]

Originally Posted by aragx6

I read once -- a very long time ago, so I'm not at all sure it's accurate -- that if you count up all of the money Wal-Mart loses each year from theft it would be a Fortune 500 company.

This might easily be true. The losses from theft probably only need to be like 3 or 4 % of the turnover fo it to be true.
However usually the VAST majority of losess from theft come from theft by employees, so it's not really that dependent on the site of the store.

[GoCUBS1]

Interesting question. I wonder how the Grocery Workers Union plays into this? Perhaps there are higher union/health insurance/pension costs for employing and training the local workers? There may also be higher employee turnover costs. I'm sure all other insurance costs are higher as well.

There's probably also higher administrative costs for food stamps/WIC programs. And as Aragx6 pointed out, if the higher margin items (e.g. fresh fruit) do not sell well, there would be much lower profits combined with higher operating costs.