Detroit Fresh Food
Access Initiative
Report of
Taskforce Findings
August 2008
Acknowledgements
The Detroit Fresh Food Access Initiative
gratefully acknowledges LaSalle Bank,
now Bank of America, for funding the
work of the taskforce. In addition, this
report would not be possible without
the significant time and energy of each
taskforce member.
Special thanks for the leadership of Jane
Shallal of Associated Food and Petroleum
Dealers and Warren Disch of Supervalu,
as well as the guidance of David Blaskiewicz of the Detroit Investment Fund,
Dennis Duncanson, Todd Carmody, and
Brian Holdwick of the Detroit Economic
Growth Corporation, Glenn Lapin of
Detroit Renaissance, and Rob Grossinger,
Tosha Brown, and Tiffany Douglas of
LaSalle Bank, now Bank of America.
The insight and advice of James JohnsonPiett and John Talmage, as well as the staff
of The Food Trust and Social Compact was
invaluable to the process.
Finally, thanks to Olga Savic of the
Detroit Economic Growth Corporation
and Hilary Doe, intern, in preparing this
report for publication.
Dear Friends,
A new movement is sweeping our country around increasing access to fresh, healthy foods for all Americans.
There is a growing recognition that access to fresh food improves public health and community development
outcomes. It is often the most vulnerable residents and neighborhoods within urban communities that suffer the
greatest lack of fresh food options, compounding the negative outcomes that poor access creates.
Efforts to improve access come in many forms, from urban gardening initiatives, nutrition education programs,
farmers markets, alternative retail outlets like neighborhood vegetable carts, and efforts to strengthen and
improve urban grocery stores. Many of these efforts are present in Detroit and contribute to incremental
improvements in Detroiters’ access to fresh food.
The Detroit Fresh Food Access Initiative was convened to specifically address the role of traditional food retail
outlets in fresh food access, with the goal of recommending ways to strengthen the overall grocery industry as
a delivery mechanism for fresh and healthy foods. These traditional food retail outlets, namely neighborhood
grocery stores, face additional pressures in the urban environment. Not insurmountable, these pressures result
from complex factors and demand comprehensive solutions. This report contains the recommendations proposed
by the Detroit Fresh Food Access Initiative to address these complex factors.
The City of Detroit presents opportunities for the development of new grocery stores and the expansion
of existing stores. These opportunities can be accelerated only if the overall economic system that prevents
widespread urban grocery store success is addressed.
We hope that a wide variety of stakeholders will join together to help implement the recommendations outlined
in this report. There is a role for everyone, from policymakers, government agencies, elected officials, financial
institutions, economic and community development partners, grocery industry members, social service
agencies, community organizations to residents. We invite stakeholders to consider how their contributions can
complement, or in some cases, implement the recommendations outlined in this report.
We look forward to continuing to work with Detroit Fresh Food Access Initiative members to implement the
recommendations. We thank them for their significant contributions to this report and the overall effort to
improve fresh food access in Detroit.
Together, we can all make a difference in Detroit’s public and community health.
Sincerely,
Jane Shallal
President
Associated Food and Petroleum Dealers
Co-Chair
Detroit Fresh Food Access Initiative
Warren Disch
Regional Vice President, Market Development
SUPERVALU
Former Chair, Michigan Grocers Association
Co-Chair
Detroit Fresh Food Access Initiative
Olga Savic
Acting Vice President, Business Development
Detroit Economic Growth Corporation
Co-Chair
Detroit Fresh Food Access Initiative
Detroit Fresh Food Access Initiative
Report of Taskforce Findings
March 2008
Detroit Fresh Food Access Initiative Membership
Co-Chairs:
Associated Food and Petroleum Dealers Ms. Jane Shallal, President
Michigan Grocers Association Mr. Warren Disch, Former Chair, and SUPERVALU
Central Region Vice President, Market Development
Detroit Economic Growth Corporation Ms. Olga Savic, Acting Vice President, Business Development
Associations:
Michigan Food and Beverage Association
Michigan Food Policy Council Michigan Grocers Association Detroit Renaissance Independent Detroit Retailers
Eastern Market Corporation Gigante Prince Valley Super Mercado Indian Village Market Metro Foodland Save-A-Lot University Foods Mr. Edward Deeb, President
Ms. Kirsten Simmons, Executive Coordinator
Ms. Linda Gobler, President
Mr. Glenn Lapin Director, Planning and Development
Mr. Jim Sutherland, Director of Operations
Ms. Kim Hill, Director, Outreach & Community Relation
Mr. Joe Gappy, Vice President
Mr. Najib Attisha, Owner
Mr. James Hooks, Owner
Mr. Charles Walker, Owner
Mr. Norman Yaldoo, Owner
Independent Metro Detroit Grocer
Value Center Market Mr. Terry Farida, Owner
National Retailers
ALDI Mr. David Kapusansky, Director of Real Estate
Meijer Mr. Scott Nowakowski, Director of Real Estate
The Kroger Company Mr. Rick Ragsdale, Director of Real Estate, Michigan
Developers
Curis Enterpises, Inc. Mr. Michael Curis, President
Grand Sakwa Properties Mr. Ted Simon
Wholesale/Distribution
Liberty International Mr. Mike Dikhow, Owner
Metro Produce Mr. Joseph Kuspa, Owner
Spartan Stores Mr. Jim Gohsman, Manager of New Business Development
2
Financial Intermediaries
Detroit Investment Fund Great Lakes Capital Fund LISC Michigan Interfaith Trust Fund Shorebank/Detroit Community Loan Fund Mr. Dave Blaszkiewicz, President
Mr. Dennis Quinn, Regional President-SE Michigan
Ms. Deborah Younger, Executive Director
Ms. Rita Hillman, Director, Community Development
Mr. Ray Watters, Executive Director
Regulatory, Planning and Economic Development Agencies
City of Detroit Mayor’s Office Ms. Anika Goss-Foster, Director of Philanthropic Affairs
and Next Detroit Neighborhoods Initiative
City of Detroit Health Department Mr. Bill Ridella, Deputy Director
City of Detroit Planning and Development Mr. Douglass Diggs, Director
Mayor’s Office of Neighborhood Commercial Revitalization Ms. Marja Winters, Director
Michigan Department of Agriculture Ms. Kathy Fedder, Director, Food and Dairy Division
Ms. Karen Butler, Regional Supervisor
Wayne County Economic Development Ms. Nancy Cappola, Deputy Director, Business Development
Academia
MSU Mott Group for Sustainable Agriculture Dr. Mike Hamm, C.S. Mott Professor
of Sustainable Agriculture
Wayne State University Dr. Kami Pothukuchi, Department of Geography
and Urban Planning
Detroit Food and Fitness Initiative Susan Goodell, co-chair of Food Systems Sub-Committee
and Executive Director, Forgotten Harvest
Ms. Nikita Buckhoy, CityConnect Detroit Project Director
Banks
LaSalle Bank (now Bank of America) Mr. Rob Grossinger Senior Vice President,
Community Impact Regional Manager
Ms. Tosha Brown, Assistant Vice President,
Market Development Specialist
Ms. Tiffany Douglas, Vice President,
Market Development Manager
Foundations
Community Foundation for Southeast Michigan Mr. Chris Smith, Program Officer
The Skillman Foundation Mr. Ed Egnatios, Senior Program Officer
Consultants/Technical Assistance
The Food Trust James Johnson-Piett, Program Coordinator
Social Compact John Talmage, President and CEO
3
Executive Summary
The Detroit Fresh Food Access Initiative
(DFFAI) was formed in response to the
city’s unmet grocery sector demand.
This need has been demonstrated by
market research, the serious public
health impacts of inadequate access to
fresh foods, and, most importantly, the
complaints of Detroit residents about
the lack of quality grocery options in the
city. DFFAI’s charge is to examine the
barriers to the Detroit grocery sector’s
expansion and recommend methods
by which to overcome those obstacles.
The DFFAI taskforce consists of
representatives from independent
grocers, national retailers, wholesalers,
developers, industry associations,
regulatory, planning, and economic
development agencies, academics, banks,
and financial intermediaries. Their
knowledge and interests were combined
with the expertise of Social Compact
and The Food Trust to create a strategy
aimed at improving fresh food access
in Detroit. Social Compact determined
that the City of Detroit could support
between 600,000 to one million
additional square feet of grocery retail
space—amounting to approximately
$210 million to $377 million dollars in
lost grocery sales. Armed with this
information, the taskforce determined
why residents were underserved, and
recommended a strategy to improve
the situation.
Detroit’s unmet grocery demand appears
in two forms: 1) neighborhoods lack
full-service grocery stores where fresh
foods and healthy options are available
for purchase, and 2) full-service stores
4
do not always provide the selection or
quality that neighborhood residents
demand. These deficiencies in food
provision can be attributed to very
complex factors that create reinforcing
cycles. Some factors, like the food stamp
cycle and customer preferences for larger
format stores, influence the demand for
groceries in Detroit. Other factors
directly influence the supply of grocery
stores, like perceptions about Detroit’s
market strength, the increased cost of
business in the city, development
challenges, inadequate financing and
capacity, and difficulties hiring and
retaining a reliable, well-trained
workforce. These issues may make
grocery store expansion and new store
development difficult or unattractive.
that the following policy outcomes are
necessary to foster grocery store
success in Detroit.
Recommendations
• New state tax incentives, like
those in Senate Bill 294 of 2007,
should be passed to encourage
the development of urban
grocery stores.
DFFAI has distilled these complex
reasons into several factors that describe
whether a grocery store can be successful. These categories include resident
demand for fresh food; resident access
to and support of neighborhood stores;
store quality as evidenced by
store operations; store compatibility
with the surrounding neighborhood;
and the mitigation of development
and financing challenges. Using this
framework, DFFAI has developed
the following recommendations for
improving the supply of fresh food
retail outlets in Detroit:
1. Improvements to the business
climate: Though relevant
stakeholders will influence the means
by which these end-states should come
to fruition, the taskforce acknowledges
• Food stamps should be distributed
more evenly throughout the month
to lessen the uneven impact on
urban grocery stores.
• Detroit residents should have
access to information about
nutrition and healthy eating,
particularly encouraging the
consumption of fresh foods.
• State government should move
to reduce costs associated with
item pricing and bottle deposit
redemption regulations that
disproportionately burden
urban grocers.
2. Creation
of a new grocery
store business attraction and
retention program: This program
will help to recruit new stores and
improve existing stores to better
meet the unmet market demand.
The following components should be
included in a grocery store business
attraction and retention program:
• Provision of accurate market
information
• Assistance with site selection
• Streamlining of the development/
permitting process
• Financing support for qualified
grocers
3. Attention
to workforce
development and grocer capacity
building: High quality grocery
stores with excellent service and
products attract customers. It is
imperative that store managers and
employees possess all the skills
necessary to operate a high-quality
establishment in a challenging
environment. Technical assistance
and training will help grocers achieve
operational excellence, while
workforce development will not
only improve the customer experience,
but also will give grocery industry
employees the tools necessary for
upward mobility in the sector.
4. Innovation
in retailing and
community relations: By lessening
the obstacles to grocer innovation
and encouraging the adoption of
best practices, Detroit can empower
grocers to employ unconventional
strategies for meeting the challenges
that they face. In addition to creating
operational improvements, innovative
practices will improve the perception
of Detroit’s grocery industry.
Resources should be devoted to
practices, such as:
• Partnering with local community
organizations
• Piloting customer transportation
programs
• Increasing access to food rescue
programs
• Upgrading to energy efficient
lighting and fixtures, in addition
to other sustainable practices
As these recommendations are
implemented, grocers will be better
able to capitalize on the city’s unmet
demand, and Detroit residents will
benefit from increased access to fresh
foods. To tackle this important challenge
most effectively, the grocery business
attraction and retention program must
be established as soon as possible.
Essential to the development of Detroit’s
grocery sector, it will require substantial
funding to effectively support existing
local grocers and impact new retailer
attraction. As the overall lynchpin,
the business attraction and retention
program will ground the implementation
of the other recommendations by
a variety of partners.
Food is a basic human need; yet, many
Detroiters see this need go unmet in
their neighborhoods. As evidenced by
the large number of diverse stakeholders
on the DFFAI taskforce, it is imperative
to dedicate resources to addressing the
challenge of limited fresh food access in
order to promote the health and vitality
of Detroit’s residents and neighborhoods.
5
­Why address the issue of food access?
Over 500,000 Detroiters live in
neighborhoods characterized as
“food deserts”—areas that require
residents to travel more than twice as
far to reach a full-service grocer than
an alternative, and often less healthy,
food supplier.1 In some Detroit
neighborhoods, residents avoid
neighborhood grocers due to perceived
quality or selection problems. Market
research has found that there could be
as much as $210 million to $377 million
in Detroit consumer spending that is not
currently being captured by Detroit’s
grocery sector.2
This lack, or perceived lack, of quality
grocery stores creates serious challenges
for the health of Detroit’s neighborhoods
and its residents. Throughout the city,
community organizations, developers,
and residents widely report the
perception of poor grocery store access
as an impediment to the attraction of
new residents.3 Recent market research
related to the Detroit downtown
housing market identified the lack
of quality retail options as a hindrance
to the marketability of residential
projects, as well as an area where new
downtown residents want improvement.4
In Philadelphia, the introduction of new
supermarkets in previously underserved
neighborhoods increased home values
by 4-7% and positively impacted the
rate of housing appreciation in the
neighborhood. In particular, downward
trends in housing values in low-income
neighborhoods were largely mitigated
by the addition of a new supermarket.5
In addition to impeding neighborhood
redevelopment, poor grocery store access
has serious public health implications.
Numerous academic studies have made
clear the connection between diet and
disease. Research shows that, not only
does the availability and cost of healthy
food vary across communities, but also
the availability of nutritious foods is
positively associated with consumption.6
Since African-American residents may
be more reliant on their local neighborhood for healthy food—due to limited
access to private and public transportation—those living in neighborhoods
with supermarkets generally have
healthier diets.7
In Detroit, Mari Gallagher’s 2007 food
desert study tied the lack of fresh food
access to poor public health outcomes.
Diet-related health outcomes in both
Detroit and its suburbs are worse when
residents have to travel farther to access
grocery stores than alternative food
outlets—even after accounting for
differences in income, education, and
race. Detroiters living in these “out of
balance” areas are even more likely to
suffer premature death.8
Focused Citywide
Attention to Fresh
Food Access
Food Policy Task Force:
New York, New York
The City of New York drew
attention to the problem of poor
fresh food access through Mayor
Bloomberg’s aggressive campaign
to address unhealthy eating.
In November 2007, the city
announced the creation of a Food
Policy Task Force to oversee all the
city’s food-related policy efforts.
The Task Force, consisting of
representatives from the Office of
the City Council, the Department
of Education, the Department of
Health and Mental Hygiene, and
Human Resources Administration,
will coordinate all relevant agencies
in their efforts to make nutritious
foods more easily accessible to
low-income residents. For example,
the Task Force will oversee a
program to encourage bodegas in
impoverished areas to offer fruits
and vegetables, as well as other
healthy, lower-fat products. Additionally, the Mayor anticipates that
the formation of the Task Force
will simplify and reduce the costs
of developing/expanding grocery
stores in underserved areas.
(Sources: Diane Cardwell. “City Hires Coordinator of Food Policy.” The New York Times. 21
January 2007.; “Mayor Bloomberg and Speaker
Quinn Announce Effort to Increase Access to
Healthy Food in Low-Income Communities.”
New York City Department of Health and Mental
Hygiene. (Press Release). 22 November 2006.)
___________________________________________
Mari Gallagher Research & Consulting Group. Examining the Impact of Food Deserts on Public Health in Detroit: Stranded in the Food Desert. July 2007.
Social Compact Detroit 2007 Drilldown, Social Compact 2008 Detroit Grocery Initiative
3
Guest, Greta. “More Farmer Jack Stores to Close in Detroit.” Detroit Free Press. 20 December 2003.
4
Katherine Beebe and Associates. Downtown Detroit Residential Market Study. Sept. 2006
5
The Reinvestment Fund. The Economic Impacts of Supermarkets on their Surrounding Communities. Reinvestment Brief. Issue 4.
6
Cheadle Allen, Bruce M. Psaty, Susan Curry, Edward Wagner, Paula Diehr, Thomas Koepsell, and Alan Kristal. 1991. “Community-Level Comparisons
Between the Grocery Store Environment and Individual Dietary Practices.” Preventive Medicine. 1991, 20:250-261
7
Morland K, Wing S, Diez-Roux A. The contextual effect of the local food environment on residents diets: the artherosclerosis risk in communities study.
Am J Public Health. 2002;92;1761-7.
8
Mari Gallagher Research & Consulting Group. Examining the Impact of Food Deserts on Public Health in Detroit: Stranded in the Food Desert. July 2007.
1
2
6
Many cities, including New York City,
NY, Chicago, IL, New Orleans, LA,
Philadelphia, PA, and Oakland, CA,
have recognized that there is a public
policy imperative in their neighborhoods
to address the issue of fresh food access.
Nationally, many organizations,
including the Kellogg Foundation,
Local Initiatives Support Corporation,
PolicyLink, and Initiative for a
Competitive Inner City, have
identified the lack of grocery stores
in urban neighborhoods as a major
challenge to community revitalization.
They join academics and food security
organizations that have long linked
grocery store access with the economic
and physical health of communities.
The Detroit Fresh Food Access Initiative
(DFFAI) represents one part of a larger
community concern about the access of
urban residents to healthy foods.
This concern has been expressed
through urban farming initiatives and
community activism, as well as in more
formal policy contexts like the Detroit
Food and Fitness Initiative and the
Michigan Food Policy Council. It is out
of this growing call to look specifically
at retail access to fresh foods in Detroit
that the Detroit Fresh Food Access
Initiative was formed.
The Community Response: Formation of the
Detroit Fresh Food Access Initiative
The creation of the Detroit Fresh
Food Access Initiative was a natural
response to:
• market research documenting
unmet grocery sector demand,
• public health impacts illustrated
in the Food Desert study, and
• constant community complaints
about the lack of quality grocery
options in the city.
As the City of Detroit’s dedicated
business attraction and retention
agency, the Detroit Economic Growth
Corporation (DEGC) recognized its
role in creating an economic climate
supportive of high quality grocery
store development in Detroit.
In partnership with Detroit Renaissance,
the Detroit Investment Fund, and
LaSalle Bank (now Bank of America),
DEGC began to study the issue of
neighborhood food access in depth.
With the generous support of LaSalle
Bank, DEGC was able to retain the
services of The Food Trust—a nonprofit
organization that had studied the issue
of grocery store access in Philadelphia
and created the innovative Fresh Food
Financing Initiative as a response.
Additionally, DEGC and its partners
spent several weeks conducting
dozens of industry interviews to better
understand the Detroit grocery sector.
As a result of these collaborative
efforts, the Detroit Fresh Food Access
Initiative was formed in October 2007;
the taskforce’s co-chairs include Jane
Shallal, President of the Associated
Food and Petroleum Dealers, Warren
Disch, a regional vice president for
SUPERVALU’s wholesale division
and outgoing chairman of the Michigan
Grocers Association, and Olga Savic,
Acting Vice President of Business
Development at DEGC. Taskforce
membership was broad, but mainly
industry and economic developmentfocused. It included independent
grocers, national retailers, wholesalers,
developers, industry associations,
regulatory, planning and economic
development agencies, academics, banks
and other financial intermediaries.
The taskforce was convened to
examine the barriers to attracting or
expanding grocery retail operations in
the City of Detroit, as well as possible
methods for overcoming those hurdles in
order to increase Detroit residents’ access
to healthy foods.
To accomplish this goal, the full
taskforce met three times from October
2007 through January 2008, while
sub-committees conducted additional
research between meetings. The report
is the outcome of that collective work.
7
What is the Demand for Full-Service
Grocery Stores in Detroit?
In order to focus the taskforce’s charge,
Social Compact—a Washington D.C.
based non-profit organization specializing in urban market analytics—studied
Detroit’s potential for grocery store
development. Their analysis was greatly
aided by the industry expertise
of taskforce members.
Given the proliferation of places where
food is sold, it is important to clearly
define the grocery stores that DFFAI
was interested in studying. Grocery
stores, as DFFAI defines them, are
retail outlets that carry a full line of
grocery, meat, produce, dairy, and
bakery items. They can include limited
assortment stores (full line of grocery
items, just with fewer choices), outlets
serving specific demographics (like
upscale or ethnic), conventional supermarkets, or superstores that carry
general merchandise in addition to
groceries. They do not include stores
that sell an extremely limited amount
of fresh food, like convenience stores,
drugstores, or dollar stores.
Social Compact’s 2007 Detroit Drilldown
determined that Detroit was a much
larger market than previously thought,
with a sizeable buying power. Detroit’s
933,000 residents had $2.0 billion more
aggregate income than previously
counted. In addition, Detroiters were
spending $1.7 billion in retail purchases
outside of the city.9
Social Compact 2007 Detroit Drilldown.
9
8
Detroit residents spend $975 million in
grocery expenditures annually, which,
using the International Council of
Shopping Centers’ (ICSC) average sales
per square foot figure of $351, implies
that Detroit would be able to support
2.8 million square feet of grocery retail
space. Yet, when accounting for all
grocery stores in Detroit, including
some that may not be classified as full
service—Detroit has only 2.2 million
square feet of actual grocery retail space.
This difference can be interpreted as an
unmet demand for an additional 600,000
square feet of general grocery retail
space in the city. The difference between
the supply and demand of grocery retail
space based on purchasing power is
also known as grocery leakage
(See Fig. 1). These calculations imply
that Detroit is experiencing annual
grocery leakage of $210 million.
When considering only full-service
grocery stores, the estimated amount
of retail leakage increases. Industry
standards assume at least 10,000 square
feet of retail sales space is needed for a
Figure 1:Lost Consumer Spending in Detroit’s
Grocery Sector
full-service grocery store. After removing
grocers who do not meet this benchmark
from the retail leakage calculation,
there is only 1.7 million square feet
of full-service grocery retail space in
Detroit. This means Detroit residents
could support up to 1 million additional
square feet of full-service grocery retail
space, or that leakage in this sector is
closer to $377 million—almost double
the more conservative estimate.
at 3 square feet of grocery retail per
person. Though the tri-county area
around Detroit shows an average of
2.95 square feet per person, Detroit
has only 2.34 square feet per person
(See Fig. 2). Approximately 694,000
people—or 74% of the city population—
have access to less than 3 square feet
per person of grocery retail space.
Furthermore, 88,000 people have
access to even less than half that amount.
This difference points to the need for
precise neighborhood level analysis that
will better incorporate the presence of
full-service grocery stores, as well as
other retail food outlets that might
consume residents’ grocery dollars.
However, even when assuming the
lower retail leakage estimate, Detroit
could support at least one large
superstore, several conventional
grocery stores, and the expansion
of several existing grocery stores.
While suburban residents have roughly
equal access to small and large grocery
store formats, Detroit residents
primarily choose from small format
stores. For the purpose of their analysis,
Social Compact defined large format
stores as larger than 30,000 square feet.
To provide some context, the Food
Marketing Institute reports the national
average size for a grocery store is
47,500 square feet. Larger stores
can provide more selection and may be
more attractive to consumers. Only 23%
of Metro Detroit’s stores larger than
10,000 square feet are located in the
City of Detroit, while Detroit’s share of
the tri-county region’s stores greater than
30,000 square feet is even smaller—at
only 8%. Residents outside of Detroit
must travel about 1.05 miles to a large
format grocery store, but those inside
Detroit travel an average of 1.72 miles.
Over one third of Detroit residents travel
further than 2 miles to reach a large
Figure 2: Grocery Retail Availability Per Capita
Where is the Demand
Located?
To begin understanding which parts
of Detroit present opportunities for
new store attraction or existing store
improvement, Social Compact used a
few additional metrics to determine
which neighborhoods were underserved
by grocery providers. These metrics
included the grocery sales area per
person, as well as the average distance
to large format grocery stores.
A recent survey of national retailers
by Social Compact and ICSC revealed
that the national average for grocery
trade areas could be roughly computed
9
format store (See Fig. 3). Coupled with
poor access to personal vehicles and
difficulty transporting groceries home
via bus, this can be a formidable distance
to travel for regular grocery shopping.
Social Compact’s findings show that not
all neighborhoods suffer the same lack
of fresh food access. Northwest and
west Detroit have significantly more
concentrated grocery retail leakage
than other parts of the city, with smaller
pockets of concentrated leakage along
the northern city limits, far-east city
limits, the Livernois-McGraw area, and
a few other areas. These neighborhoods
demonstrate demand for new stores.
When looking at grocery access from
the perspective of larger format stores,
residents in Southwest Detroit, portions
of the greater downtown area, the
Lodge Freeway Corridor, northeast
and far east Detroit must travel
significant distances. These neighborhoods may provide opportunities for
expansions and improvements to existing
stores, in order to provide a higher
quality experience closer to home.
Finally, Social Compact worked with
handshake—a marketing agency known
as an industry leader in behavioral
targeting, diversity, and segmentation
marketing—to analyze whether a
marketing program aimed at behavioral
change in the grocery shopping habits of
Figure 3: Large Grocery Store Proximity
10
Detroit residents would produce results.
Handshake found that Detroit residents
exhibit a great desire in Detroit to eat
healthy foods, but have little access to
nutritious options. Handshake concluded
that a “healthy eating” campaign,
coupled with a grocery store expansion
and attraction effort, would likely result
in high levels of behavioral change, as
more Detroiters would seek out healthy
choices in their neighborhoods.
These findings, including the extent to
which Detroit residents are underserved
by existing full-service grocery stores
and the receptiveness of Detroit
residents to marketing geared towards
the purchase of fresh foods, underscore
the demand for additional full-service
grocery retailers. Not only are many
Detroit residents underserved in their
neighborhoods, they would be highly
responsive to the presence of new or
improved stores in their communities.
Why is Detroit’s Grocery Store Demand Unmet?
Detroit suffers from two disparate
problems. Some neighborhoods simply
lack any full service grocery stores, and
are instead serviced by convenience
stores, dollar stores or other fringe food
outlets. Other neighborhoods have
full-service grocery stores, but these
establishments may not always provide
the selection or quality that neighborhood residents demand. Various factors
can be considered responsible for these
current conditions.
• Perceptions about Market Strength:
Poor perceptions of Detroit’s market
strength are widespread, due to
population and income undercounts.
Since accurate market information
is difficult to access, many retailers
believe that the City of Detroit lacks
the density and income necessary to
sustain full-service grocery stores.
Traditional market studies rely on
inaccurate census-derived population
and income estimates and have
underreported Detroit’s retail
purchasing power by as much as
$2 billion. Some retailers also express
concern about the demand for fresh
food and vegetables. It is their
perception that youth in particular
may be unfamiliar with the preparation of some fruits and vegetables.
While demand for healthy foods is
difficult to quantify, handshake’s
market research referenced earlier
suggests that reports of low demand
may be influenced by Detroiters’
lack of knowledge about where to
purchase quality fresh foods.
• Impact of Food Stamp Cycle:
Grocers in neighborhoods with
high concentrations of food stamp
customers often suffer the boom-bust
cycle associated with food stamp
distribution. In Michigan, food stamps
are distributed during the first nine
days of the month, concentrating
grocery store traffic during that
time-period. As a result, many
grocers suffer from reduced traffic
at the end of the month, which
impacts their ability to provide a
quality, fresh product at those times,
and prevents consistent staffing
throughout the month. In April 2008,
the Michigan Legislature passed
Public Act 107, which changed food
stamp distribution to twice monthly.
Unfortunately, the federal Farm Bill
pre-empted the state’s ability to enact
this law.
• Difficulty in Capturing Existing
Market: Many Detroit residents
report shopping for groceries outside
of the city. Customers often associate
store appearance with perceptions
about food quality. Store appearance
can be impacted by poor store
infrastructure, including worn floors,
poor lighting, and old refrigeration
equipment, or by the processing of
returnable bottles and cans at the
front of stores, making it difficult
to keep these areas clean, pleasant,
and inviting. A preponderance of
close-dated or out-dated foods may
discourage residents from shopping
at local food retailers, leading them
Market Information
Department of City Development:
Milwaukee, Wisconsin
When pursuing economic development efforts, the City of Milwaukee
consistently encountered negative
perceptions of the city’s population
size and resident buying power. To
combat this problem, the Department of City Development requested
that the University of WisconsinMilwaukee’s Employment and
Training Institute (ETI) estimate
these figures by non-traditional
means. The ETI combined detailed
income tax filing data with other
evidence of spending patterns
amongst the city’s residents for
16 different categories of consumer
items in over 50 ZIP codes across
the city’s Metro area. The result
was a clearer, more accurate, and
much more promising picture of
Milwaukee’s income concentration
and spending power among commercial districts, implying that retail
promise existed in some of the city’s
most underserved markets. This
is similar to the work of the Social
Compact in over a dozen US cities.
Armed with this new information,
Milwaukee’s Department of City
Development mapped and posted the
ETI’s results on the city website to
mitigate any existing misconceptions
and to promote further economic
development. The city also provides
neighborhood profiles and suggests
possible site locations to help businesses and developers more easily
assess the opportunities in Milwaukee. ETI provides similar data on the
100 largest metro areas in the US.
(Sources: www.mkedcd.org/PurchasingPower ;
“Stimulating Supermarket Development:
A New Day for Philadelphia.” The Food Trust.
2004. pg. 4.; www.socialcompact.org)
11
to look to alternative stores for fresh
foods. Finally, the perception of a
store’s safety can deter urban
customers who carry cash when
doing their shopping (See Fig. 4).
Many Detroit grocers, particularly
in mixed income neighborhoods,
have difficulty providing the
appropriate blend of products for
upper and lower-income clientele—
a problem aggravated by the small
sales floor. This leads to some customers’ decisions to shop outside of their
neighborhood in order to purchase the
products they desire. Even stores
with interior renovations and quality
products at reasonable prices may not
be able to draw new neighborhood
customers because the community
lacks knowledge of these improvements and the store’s selection.
Finally, in many Detroit neighborhoods, residents have limited or
no access to personal transportation.
Customers without cars tend to buy
fewer items per trip because of the
difficulties associated with transporting groceries on bus or foot, even if
home is just a mile away.
• Increased Business Costs: Urban
operators report a number of
increased or disparate business costs
that affect their profitability. The most
significant of these relates to “shrinkage,” or the loss of merchandise, and
security issues associated with crime
prevention. Like in the suburbs,
urban store shrinkage occurs because
of shoplifting or backroom theft.
Unlike suburban stores, urban stores
also suffer from a high loss of costly
shopping carts, either by theft or
12
customer use to transport groceries
home. This shrink can be decreased
by the installation of security cameras,
the increased use of security guards,
and the use of expensive shopping cart
wheel-locking systems. These costs
eat away at a grocer’s profitability and
may deter a grocer from locating in a
Detroit neighborhood.
Urban stores also incur unique costs,
such as the processing of significantly
more returnable bottles and cans than
sold by the store, which poses a major
storage, staffing and pest problem.
Insurance costs can be higher in
Detroit, as are operating costs,
including property, business and
utility taxes, building and permit
fees, and labor. Additionally, Detroit
grocers reported challenges with city
services including the police, public
lighting, permitting and inspections.
Though a cost borne by retailers
throughout the state, Michigan’s item
pricing law, which requires grocers to
individually price tens of thousands of
items, is labor-intensive, particularly
for grocers lacking sophisticated
technology. These costs, while
not the primary challenges for
Detroit grocers, eat away at a
grocer’s profitability.
• Development Challenges: Modern
supermarket developments within
suburban-style shopping centers are
difficult to create in Detroit. Such
developments require assemblage of
dozens of parcels of land—an
expensive and time-consuming task.
Because of the shallow commercial
frontage along Detroit’s major
commercial corridors, such developments may require zoning changes,
utility relocation, and other site
preparation issues that can add time
and cost to the development project.
In addition, many sites in Detroit, like
in most urbanized areas throughout
the state, have brownfield issues.
Further, Detroit’s development
process, from navigating zoning and
site plan review to obtaining the
necessary building inspections, can
be perceived as complicated and
lengthy. Perceptions of this process
can deter new investors from
considering Detroit.
Figure 4
Lack of shoppers in urban neighborhoods
discourages food store investment in urban areas.
Suburban
Grocery
Stores
Yet,
Lack of options for grocery shopping
forces urban shoppers to suburbs.
Urban
Shoppers
• Inadequate Financing and Capacity: Given the challenges
outlined above, it is sometimes
difficult for an independent grocer to
raise sufficient equity and working
capital to make an urban store successful, both during the initial store
opening and after several years of
operation when upgrades are needed
to sustain high-quality operations.
Traditional commercial finance
requires appropriate levels of
collateral and equity. It is difficult to
achieve the appropriate levels of collateral with grocery stores given the
perishable nature of the inventory,
particularly if the building is leased.
Grocers may find it difficult to overcome these collateral deficiencies
with personal assets or by raising
higher levels of equity investment.
Additionally, store managers turned
store owners sometimes lack business
management experience needed to
start up and operate a new grocery
store, especially in terms of financial
management and inventory control.
National retailers, who self-finance
their stores, may pass over urban
markets because of the higher rates
of return needed to compensate for
the added development and business
costs in these areas. When stores
experience problems, both independent grocers and national retailers
may lack the technical resources
necessary to address the cause of
the problem. These resources might
include accurate market information
to guide merchandising decisions,
community relationships to help
with store marketing, or innovative
Figure 5
Suburban
Stores
Many
Factors
Negatively
Impact
Urban
Grocery
Store
Development
Increased Business Costs
& Hiring Challenges
Inadequate
Financing
approaches to shopping cart loss,
graffiti, or security issues.
• Hiring challenges: The retail
industry in general has a difficult
time hiring and retaining good
workers. In Detroit, the perception
about poor workforce quality can
impact grocer interest. In addition,
some Detroit residents suffer from
challenges like lack of transportation
or family issues that can impact their
reliability and tenure at the store.
Given the complexity of these issues,
many Detroit grocers are trapped
in a cycle that prevents them from
either making improvements in their
existing stores or opening new stores
(See Fig. 5). These issues can also
discourage new retailers from entering
the market because of the added
resources necessary to address them.
No single agency is focused on
combating these challenges, and, in fact,
few of these issues currently receive
focused attention from any actor in the
grocery industry or the public sector.
Inadequate
Capacity
Lack of Accurate
Market Information
Real and Perceived
Development Costs
Numerous factors adversely affect
financial investment in urban areas.
13
How can Access to Fresh Food Retail Outlets
Be Strengthened?
DFFAI recognizes that Detroit’s
current grocery store quality and supply
is the product of a complex economic
system. The success of Detroit grocery
stores depends on store ability to both
increase individual demand for fresh
food at their establishment and decrease
the unique costs of doing business in
an urban setting. Success also requires
stores to provide a high quality product
that meets the demands of residents in a
setting that respects the neighborhood.
Many Detroit grocers want to understand how to meet the challenge outlined
above, as would possible entrants to the
Detroit market. The following DFFAI
policy and programmatic recommendations are meant to guide not only players
in the grocery industry, but government
and non-profit entities interested in
improving Detroit residents’ access to
quality fresh foods. Again, the DFFAI
aims to increase the supply of selfservice retail food stores that include
meat, produce, dairy, bakery, and
grocery departments.
The recommendations are grouped into
four categories:
• Improvements to the business climate
• Creation of a new grocery
store business attraction and
retention program
• Attention to workforce development
and grocer capacity, and
• Innovations in retailing and
community relations.
14
They address the five factors that affect
the quality and success of Detroit’s
grocery store sector; including:
• Resident demand for fresh food
• Resident access to and support of
neighborhood stores
• Store quality, as evidenced by
store operations
• Store compatibility with surrounding
neighborhood, and
• Development ease and financing
challenges.
Recommendation
Improvements to the
Business Climate
Several complex policy issues impact
the climate for Detroit grocery store
success—each with multiple strategies
possible to achieve the optimal policy
results. The following describes the
DFFAI’s recommended policy outcomes,
but leave industry associations and
actors, community organizations, and
government agencies free to determine
the best way to achieve them.
• Food stamps should be distributed
more evenly throughout the month
to lessen the uneven impact on urban grocery stores created by the current distribution system.
Current distribution practices lead to
a “boom and bust” cycle at grocery
stores with high concentrations of
food stamp recipients, especially in
urban neighborhoods. This can lead
to quality and selection problems for
consumers shopping at the end of
Innovative Best Practices
AFB Innovative Merchandising
Model, Dorchester, Massachusetts
Despite initial difficulty attaining
positive profit margins, America’s
Food Basket’s (AFB) innovative
merchandizing practices helped the
store capitalize on the urban population’s diverse needs. AFB began
to pay careful attention to shifting
immigrant populations in the community, then merchandized to meet
the changing consumer demand.
AFB recognized the preferences of
consumers from different countries
as opportunities to capture profit.
In order to merchandize effectively,
every department manager at AFB is
given autonomy over the purchasing
decisions, product lines and pricing,
labor issues, and operational practices
(i.e. cleanliness, etc.) in their department. This allows each manager to
remain sensitive to the needs of the
community he or she focuses on, and
develop relationships with AFB’s
specialty food suppliers. In this way,
AFB provides a vital community
service by stocking the regional items
that residents want to purchase. For
example, AFB’s “rice shack”—an
aisle stocked with over 10 varieties of
rice—caters to the preferences of the
diverse Dorchester, Massachusetts
community. These details will induce
shoppers to frequent the store and pick
up other standard items in the process.
AFB’s attention to community demographics is reflected in other successful store strategies as well; for example, AFB’s dedication to hiring local
staff members means that employees
speak the languages of the customers
that the store hopes to attract.
(Source: “The Changing Models of Inner City
Grocery Retailing.” Initiative for a Competitive
Inner City. January 2003. pg. 22)
the month. By evening out resident
demand for fresh food, store quality
can be improved, and, in turn, store
demand can be increased. While
Public Act 108 of 2008 moved
Michigan to twice monthly food
stamp distribution, the 2008 federal
Farm Bill pre-empted the state’s
ability to implement the act.
• Detroit residents, particularly children and youth, should have access to education about nutrition
and healthy eating, with particular
emphasis on the consumption of fresh
foods. Increased understanding about
healthy eating, as well as knowledge
about food preparation, storage, and
safety, will increase demand for nutritious food choices, and help to sustain
demand for fruits and vegetables at
Detroit grocery stores. Changes in
the youth’s consumption have the
greatest ability to drive long-term
demand, as children and youth learn
to choose fresh foods over highly
processed, less nutritious alternatives.
Increases in resident demand will help
improve fresh food turn over, and
ensure a more consistently highquality product. In some cases, simply
providing residents with information
about where to purchase quality fresh
food at an affordable price can make
the difference, as it gives community
members with the opportunity to
make informed decisions about
their purchases.
• State government should move to reduce the costs associated with
item pricing and bottle deposit
redemption regulations due to the
resulting burdens on urban grocers.
Both item pricing and bottle deposit
redemption place a disproportionate
burden on urban grocery store
operators. In particular, bottle returns
create storage, pest and manpower
problems. These costs shrink the
already slim profit margins in the
grocery sector, and make it harder
for Detroit grocers to invest in
store improvements.
• New state tax incentives, like those
in Senate Bill 294 of 2007, should be passed to encourage the development of urban grocery stores.
Property tax abatements can lessen
the higher taxes and business costs
incurred by urban grocery stores.
For current Detroit grocers, state tax
incentives would encourage store
improvements and expansions. For
new grocers, state tax incentives
would mitigate the increased development costs associated with opening
stores in Detroit.
In addition to these policy recommendations, DFFAI acknowledges the
importance of the Eastern Market as
a center for wholesale and retail food
distribution in Detroit. The Eastern
Market district plays an important role
in our region’s food supply, and can be
an important driver of economic growth.
For many Detroit residents, it represents
the best source of fresh fruits, vegetables,
and meats. Significant improvements
to the market district are planned as
part of the Eastern Market Redevelopment Plan, including shed renovations,
infrastructure improvements, and other
development activities. Eastern Market
Corporation has already implemented
food stamp redemption for fresh food
sold in the market. Efforts to strengthen
and improve Eastern Market will directly
impact Detroit’s overall grocery sector
Site Selection Assistance
Retail Chicago: Chicago, Illinois
Realizing that the fresh food and
other retail needs of Chicago residents were not being met, the City of
Chicago formed Retail Chicago—
a centralized agency for retail
developers to contact with all of
their concerns. It was the city’s hope
that the creation of such an agency
would streamline the development
process and attract grocers to the city.
Specifically, Retail Chicago took
great steps to ensure that the agency
could assist developers in the site
selection process by providing maps
of available properties, square foot
vacancies, as well demographic
information, traffic patterns, and
descriptions of city neighborhoods.
Additionally, Retail Chicago began
to give tours to developers, pitch
Chicago property to retailers at
international conferences, and host a
Chicago Grocery Expo to encourage
further grocery sector investment in
the city.
Retail Chicago has proven extremely
successful; its performance is directly
attributable to the way in which the
agency caters to the needs of retail
developers. By aiding in the site
selection process and providing
customized market information, it
became markedly easier for developers to enter the market and identify
profitable opportunities, as well as
more appealing for grocers to locate
in Chicago than in other possible
retail locations.
(Sources: “Retail Chicago Program.” Department of
Planning and Development. <http://cityofchicago.org>.)
15
Streamlined Development
and Permitting Process
Philadelphia, Pennsylvania
In the last ten years, several older cities,
such as Baltimore, Chicago, Milwaukee,
and Pittsburgh, have streamlined their
development processes, rewritten their
zoning codes, and otherwise eased
development. Private and public
stakeholders in Philadelphia have
recommended similar improvements
to modernize the development process.
Most notable of these is the comprehensive set of recommendations by Building
Industry Alliance Association of Philadelphia (BIA) issued in 2004. These 10
reforms addressed the need for increased
transparency in the development process,
improved user-friendly services, timely
inspections, and zoning code reforms
that reflected the city’s current vision
for its neighborhoods and attracted
needed funding. The recommendations
also included the establishment of a land
bank to more quickly deliver site control
of land; the creation of an all-inclusive,
publicly-accessible electronic zoning map;
the distribution of a step-by-step guide to
Philadelphia’s development review process; and the creation of a Construction
Permit Center to allow representatives
from all of the City’s approving agencies
to issue permits in a centralized location.
Over the last few years, other public and
private stakeholders have joined BIA in
the call for development reforms. Most
recently, Mayor Michael Nutter has made
reforming Philadelphia’s development
process a key priority of his administration. He has already initiated an overhaul
to Philadelphia’s Zoning Board of Adjustments with the intention of making this
important agency in the city’s development process more developer-friendly.
While in the nascent stages, recent public
speeches by the Mayor indicate that
additional reforms are anticipated.
(Sources: “If We Fix It, They Will Come.” Building Industry Association of Philadelphia. October 2004; Mayor
Michael Nutter Speech from June 17, 2008. Plan Philly:
http://www.planphilly.com/node/3334.)
16
climate, particularly as it drives increases
in resident demand for fresh foods.
Finally, the issues around urban food
access also were examined by the
Michigan Food Policy Council;
a statewide panel convened by
Governor Jennifer M. Granholm to
consider ways to increase the state’s
agricultural diversity in order to enhance
economic growth and provide a safe,
healthy food supply for all Michigan
residents. In its 2006 report, Michigan
Food Policy Council made a number
of recommendations that relate to the
issues of urban grocery stores. DFFAI
supports these recommendations, and,
in particular, endorses the recommendation that the Michigan Department of
Human Services take action to smooth
distribution of food stamp benefits
across the calendar month.
Recommendation
Creation of New Grocery
Store Business Attraction
and Retention Program
Direct action must be taken to recruit
new grocery stores that fill service
gaps and to improve existing stores so
that they better meet market demands.
This must be done through a coordinated
business attraction and expansion
program that can respond to the
full-service grocery sector opportunities
across the city of Detroit.
This conclusion is supported not only
by the work of DFFAI, but also by the
Michigan Food Policy Council’s 2006
recommendations, which proposed that
increased access to fresh and healthy
foods could be achieved by increasing the
number of supermarkets and fresh food
retail outlets that serve urban low-income
populations. The Michigan Food Policy
Council called on the Michigan Economic
Development Corporation (MEDC) to
recommend five communities in which to
initiate urban grocery store development.
DFFAI strongly urges the Michigan Food
Policy Council and Michigan Economic
Development Corporation to begin implementing this recommendation in Detroit
by working with DFFAI members.
While a Detroit grocery store attraction and expansion program should be
housed at the DEGC—the only agency
charged with citywide business attraction and retention—it requires help from
industry, local and state government,
and community partners to implement.
Based on the factors affecting quality
and success of Detroit’s grocery store
sector previously discussed, DFFAI
recommends the following components
for the program:
• Market Information: Because of
the deficiencies in traditional market
information available about Detroit,
grocers have trouble identifying good
opportunities for new stores and
assessing whether the existing market
can support store improvements.
The DFFAI program would not only
commission high quality market
analysis of Detroit neighborhoods,
but use this market analysis to identify
opportunities for new stores and the
best candidates for store improvements. This market analysis would be
shared with independent grocers and
national retailers in order to encourage successful investment in Detroit.
• Site Selection Assistance: Detroit
can seem monolithic, even though
its landscape is composed of varied
neighborhoods with diverse needs and
tastes. New entrants to the market
may have difficulty understanding the
differences between neighborhoods
and the opportunities that they afford.
In addition, like in many urban settings, it may be difficult for grocers
to find appropriate development sites
since adequate locations might need to
be assembled or are not offered by
traditional real estate brokers. Using
information on available properties
and market demand, the DFFAI
program will help grocers interested
in Detroit determine where true
opportunities for new grocery stores
exist. In some cases, matching grocery
stores with mixed-use developments
might help subsidize rents.
• Streamlined development and permitting process: Like in any major
American city, Detroit’s development
process can be confusing to newcomers. While there are several existing
incentive programs that can help a
grocer with new store development
or store expansions and renovations,
many grocers do not understand how
to access them. It is important that
the city continue its work to simplify
the development process for developers and grocers seeking to improve or
expand full service stores in the city.
Equally important are city efforts to
ease the process small business owners
must undergo to maintain their
annual city permits. While this work
is underway, the DFFAI program
must have designated staff dedicated
to helping grocers and developers
understand available incentives and
move through the city’s development
process expeditiously, while also
assisting grocers experiencing
retention problems.
• Financing: Through the taskforce
process, DFFAI recognized that
while there were several commercial financing programs available in
Detroit, individually they could not
address the full financing needs of
the grocery store sector. Traditional
commercial finance requires
appropriate levels of collateral and
equity. It is difficult to achieve the
appropriate levels of collateral with
grocery stores given the perishable
nature of the inventory, particularly
if the building is leased. Grocers may
find it difficult to overcome these
collateral deficiencies with personal
assets or by raising higher levels of
equity investment. In addition,
existing operations may be so highly
leveraged that it is difficult to borrow money to make store improvements, especially if it is uncertain that
customer demand will increase as a
result. A layered approach might be
successful, but only in cases where the
appropriate mix of grants, loans and
equity are available.
Financial intermediaries active in
Detroit recognized that a new
financing program was needed to
better attend to grocery industryspecific needs. Such a program
would address new store development, existing store enhancements,
and existing store expansions.
Financing would be provided in
the form of grants, loans, and equity,
and could be used for a variety of
purposes, including pre-development
needs, land assembly, construction
financing, leasehold improvements,
Financing
Fresh Food Financing Initiative:
Philadelphia, Pennsylvania
The Food Trust championed, and
now administers the Fresh Food
Financing Initiative (FFFI) after
its passage by Pennsylvania state
government in 2004. The FFFI is
a public/private partnership that
finances supermarket construction
in underserved communities—
closing the ‘grocery gaps’ that exist
in Pennsylvania’s inner cities and
combating the unhealthy eating habits
that stem from limited access. Specifically, the FFFI provides financing to
supermarket operaters where development costs and operating capital
cannot be financed through conventional sources. Financing is delivered
through a combination of grants and
loans managed by The Reinvestment
Fund (TRF) in conjunction with the
Greater Philadelphia Urban Affairs
Coalition, and The Food Trust. To
date, the FFFI has leveraged $120
million to allocate to fresh food retailers locating in underserved areas.
Though the FFFI has financed
50 supermarket projects across
Pennsylvania, the majority of its
efforts have focused on projects in
Philadelphia. The city has seen many
successes as a result. Funding has
been used for predevelopment needs
to construction financing to operational needs like equipment financing
and workforce development. For
example, through FFFI funding and
technical advice, The Food Trust
has helped corner stores install
low-energy coolers and lights that
allow storeowners to sell new, fresh
products in place of packaged items.
(Source: “Pennsylvania Fresh Food Financing
Initiative: Providing Healthy Choices to Pennsylvania’s Communities.” Four-pager Case Studies.
The Food Trust. September 2006.)
17
equipment financing, inventory, and
working capital (broadly defined to
include soft costs like customer focus
groups, market research, training,
security, and shrink prevention).
This flexibility is especially important
for encouraging innovative store
practices, store improvements, or
ventures that might seem risky but
meet a public need. In addition, grants
and equity investment could be used
to support new entrants to the market,
such as specialty grocers or Detroitresident owned stores.
To qualify for DFFAI financing,
grocers would need to meet minimal
requirements beyond general
Innovative City Practices
Hartford, Connecticut and
St. Petersburg, Florida
Though urban grocers often lack
the financing necessary to expand,
make improvements, or open new
locations, innovative practices in city
governments are addressing this
barrier to fresh food provision. The
Hartford Connecticut Food System,
for example, offers retailers access
to the same wholesalers that the city
uses for its public schools in order to
decrease costs for grocers and promote
the sale of healthier food options.
St. Petersburg, Florida has supported
its grocery sector’s growth by utilizing
tax credits to finance grocery stores.
The city also developed a system to
assemble land and release it to food
retailers at deep discounts.
(Sources: “Hartford Food System: News.” Hartford Food
System. Fall 2007.; “Midtown’s Tangerine Plaza.” City
of St. Petersburg (Press Release). 18 October 2006.)
18
underwriting and credit standards,
such as community involvement, store
aesthetics and cleanliness, full service
selection, and good product quality.
These requirements support DFFAI’s
overall objective – to encourage quality
stores that meet community needs.
Recommendation
Attention to Workforce
Development and Grocer
Capacity Building
Top quality business management,
customer service and overall store
operation are critical for the success of
grocery stores anywhere, but especially
for urban grocery stores. Store owners and managers must possess the best
business management and technical skills
possible to overcome the increased
challenges of the urban market place.
Urban stores must exhibit excellence in
order to win back customers who have
long made other shopping choices.
Some improvements can result from
increased regulation by the Michigan
Department of Agriculture or from
increased managerial certification
requirements by the City of Detroit
Health Department. The greatest
long-term improvements will result
when grocers increase overall store
and staff capacity to meet rigorous
quality standards.
Some workforce development and
technical training programs exist, but
they are uncoordinated, and, in some
cases, are unfocused on the grocery
industry. Many independent grocers face
time and resource barriers in pursuing
needed training for themselves and their
employees. Even though national chain
grocers often provide employee training,
they may perceive increased basic
training needs in urban areas as a
barrier for locating new stores there.
Industry partners, including the retailer
associations, wholesalers and others
should work together to coordinate
workforce development and training
opportunities that improve store operations in Detroit, and encourage Detroit
grocery industry employees to pursue
upward career opportunities within
food and retail industries. Encouraging
connections with the Detroit Workforce
Development Department’s retail training program may prove very useful for
training and job placement in the sector.
A focused effort around workforce and
skill issues in the industry would develop:
• job skills of potential grocery store
employees from the local community,
leading them up a career ladder
that includes management and
possibly ownership;
• business skills of grocers to encourage
the success of Detroit stores; and
• technical skills of grocers and employees related to food safety and store
operations, specifically increasing the
number of certified food safety/retail
grocery managers in Detroit.
Workforce development, skill-building
for entrepreneurs, and technical
training should be supported through
DFFAI financing programs and any
other business attraction/retention efforts
that are developed to support the grocery
industry in Detroit.
Recommendation
Innovation in retailing and
community relations
Case studies of high performing urban
grocery stores show that unconventional
thinking sets successful stores apart.
Many times grocers are unable to adopt
innovative practices because of upfront
costs and potential risks.
Best practices, innovation, and excellence
should be encouraged and supported
within the Detroit grocery industry in
order to foster success and challenge
negative perceptions of the industry.
Resources should be devoted to help
Detroit grocers embrace best practices,
such as:
• Partnering with local community
organizations to create community
connections to their stores. A
connection with a local community
organization could help increase
acceptance and support for the
store within the neighborhood, as
well as facilitate the hiring of quality
local workers and communication of
customer merchandise preferences.
Additionally, store affiliation with a
community organization provides an
opportunity for resident education
programs, such as in-store food
preparation demonstrations.
grocers. Participation in food
rescue programs help grocers
increase the net benefit to their
bottom line through an increased
tax deduction, but more importantly,
helps stores save significant sums by
decreasing their refuse collection.
• Upgrading store lighting and fixtures to energy-efficiency models and
piloting other sustainable practices.
Designing and implementing these
upgrades may be costly at first but
saves grocers recurring energy costs
over the long run.
• Providing community members with
better access to locally grown foods,
especially from community gardens
and local farms.
Community groups, industry
associations, foundations, government
agencies, and the DFFAI fund, when
created, should help to promote
innovative practices that address the
challenges of urban grocery store
operation. This is a long-term effort
that must be anchored by a strong
foundation of research.
Community Relations/Innovative Business Practices
Pathmark Stores: Newark, New Jersey
After years of work by residents and the New Community Corporation—
a Newark community development organization—a full-service Pathmark
grocery store was built on Bergen Street in Newark’s previously underserved
Central Ward in 1990. The store, which is dually owned by New Community
Corporation and Pathmark, serves 50,000 shoppers a week and earns revenues
more than twice the national average for supermarkets. More impressive,
however, is the benefit to the community that Pathmark has fostered through
its policies.
As a rule, the vast majority of Pathmark employees live in the community.
The store has created several hundred jobs with 65% of management positions
being filled by community members who started as entry-level employees.
Additionally, store revenues have funded the New Community Corporation’s
efforts to provide low-income housing and social services to Newark residents.
• Piloting customer transportation
programs that provide a free trip
home for customers that have spent a
minimum amount. This will encourage
residents to spend more per trip to the
store, and enable customers to shop
more frequently.
In addition to educational programs about child nutrition and information
about daily dietary needs, Pathmark has provided an innovative shuttle service
for local residents. The store’s eight vans provide shoppers with transportation from Pathmark to their homes. Studies have shown that similar shuttles in
low-income urban areas recover their investment as a result of increased sales,
even if only 15% of transit-dependent persons utilize the service. These experiences indicate that there is a financial incentive for supermarkets to implement
a shuttle program—as it increases customer trips to the store and, subsequently,
spending in addition to the benefit the community receives from improved
access to fresh foods.
• Increasing access to food rescue
programs, especially for independent
(Source: Revkin, Andrew. “A Market Scores a Success in Newark.” The New York Times. 30 April 1995;
“NCC Pathmark: A Market-Making Partnership.” The Changing Models of Inner City Grocery Retailing.
Initiative for a Competitive Inner City. January 2003.)
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Conclusion: How to Implement
these Recommendations?
While sobering, the findings of the
DFFAI taskforce inspire action.
The well-being of almost one million
Detroiters and their neighborhoods rests
on the improvement of fresh food access.
The DFFAI recommendations address
the complexity of this issue, as well as
the difficulties the market faces in
addressing the challenges on its own.
The first objective in this work is to
implement the grocery store business
attraction and retention program,
complete with sizable financing capacity.
Without the DFFAI fund, it will be
very difficult to make an impact in the
grocery sector, due to a lack of private
sector resources and financing available
to address urban store challenges.
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The fund alone will not solve all of the
challenges, but must be implemented
alongside the much-needed efforts to
improve the overall business climate,
increase the capacity of grocers
and their employees, and inspire
business innovations.
The DFFAI taskforce represents an
effort spanning the grocery industry
from independent operators to grocery
chains, wholesalers, community development interests, economic development
and regulatory agencies, academics, and
financing intermediaries. This broad
interest illustrates the importance of this
issue to many constituents. No one group
will be able to change the dynamics of the
industry in Detroit on its own. It is the
hope of the DFFAI that new
partnerships will result between
taskforce members that will aid future
implementation and promotion of the
taskforce’s findings.
DFFAI also hopes that others are
inspired to take action to improve
fresh food access in Detroit. This issue
impacts not only the health of children,
families, and elders, but also that of the
neighborhoods they live in. Improvements in grocery store quality and access
can help increase neighborhood property
values, access to jobs, perceptions of the
neighborhood, and individual health.
This report should serve as a call to
action on this public policy imperative.
500 Griswold St.
Suite 2200
Detroit, MI 48226