$3M offer fails to bring grocers into Dallas' "Food Deserts"

[submariner]

Things aren't looking good in Southeast Dallas. Despite an offer from the city to give 'at least $3 million' to any store willing to sell fresh produce and other healthy foods in identified "food deserts" in Southern Dallas.

https://consumerist.com/2016/12/01/even ... d-deserts/

The city wasn’t quiet about their offer, either; it put out ads in grocery trade publications advertising the available bounty. But to no avail. The large Texas-based grocery chain H-E-B is opening two more Central Market stores in Dallas soon… but both are in the competition-filled northern half of the city.

[storewanderer]

Who/where was the last grocer to operate in this area?

[pseudo3d]

"Food deserts" are a manufactured crisis, trying to link the lack of a supermarket in areas that have poverty (and the associated link with obesity, something about healthy choices), and often is used an excuse to introduce some backdoor gentrification.

In any case, grocers tend to stay away from rougher areas because shrinkage is too high to maintain profitability (either by shoplifting or not being able to sell high profit margin items), and that's common for every place...Kroger has over 120 stores in their Michigan division, and despite being in all of the suburbs, they have ZERO stores in Detroit proper.

[wnetmacman]

"Food deserts" are a manufactured crisis, trying to link the lack of a supermarket in areas that have poverty (and the associated link with obesity, something about healthy choices), and often is used an excuse to introduce some backdoor gentrification.

No, that isn't true. Here's a map of the affected area in Dallas:

K=Kroger
A=Albertsons
T=Tom Thumb
W=Walmart

I didn't include any other players, because this was for a basic example. If you look at the area roughly bordered by I-30 on the north, I-635 on the east, I-20 on the south and I-35 on the west, you'll see a very blank slate covering a large part of Dallas' population.

In any case, grocers tend to stay away from rougher areas because shrinkage is too high to maintain profitability (either by shoplifting or not being able to sell high profit margin items), and that's common for every place...Kroger has over 120 stores in their Michigan division, and despite being in all of the suburbs, they have ZERO stores in Detroit proper.

Retailers use shrinkage as an excuse. There are things they can do to keep profits from walking out the door, they just don't want the investment required. No retailer wants to lose money on a store and use the others to bolster the loser, which would probably happen here.

[wnetmacman]

Who/where was the last grocer to operate in this area?

My two bets are Safeway and Minyard. And not Tom Thumb under Safeway ownership. Plain Safeway, pre-1987. It's a rough area.

[SamSpade]

It looks like there are some former Safeways still in operation as independents (well, I found one - and another is now a Family Dollar/AutoZone split). Save A Lot has 2 stores in the area, it's surprising to me they didn't try to take advantage of the offer. Maybe the developer didn't want them or 20,000 sf is actually too large. Their reviews are mixed, but come in at about a 3.

There's a former Minyard Food Store that's now a Cost Plus/Cash Saver, but with pretty good reviews from the locals on Google.

There seems to be one Fiesta and people's Google reviews for it were more positive than negative.

[veteran+]

"Food deserts" are a manufactured crisis, trying to link the lack of a supermarket in areas that have poverty (and the associated link with obesity, something about healthy choices), and often is used an excuse to introduce some backdoor gentrification.

No, that isn't true. Here's a map of the affected area in Dallas:
dfd.png
K=Kroger
A=Albertsons
T=Tom Thumb
W=Walmart

I didn't include any other players, because this was for a basic example. If you look at the area roughly bordered by I-30 on the north, I-635 on the east, I-20 on the south and I-35 on the west, you'll see a very blank slate covering a large part of Dallas' population.

In any case, grocers tend to stay away from rougher areas because shrinkage is too high to maintain profitability (either by shoplifting or not being able to sell high profit margin items), and that's common for every place...Kroger has over 120 stores in their Michigan division, and despite being in all of the suburbs, they have ZERO stores in Detroit proper.

Retailers use shrinkage as an excuse. There are things they can do to keep profits from walking out the door, they just don't want the investment required. No retailer wants to lose money on a store and use the others to bolster the loser, which would probably happen here.

Excellent data supporting "food desert" issues.

Thanks!

There are many communities with the same problem for various reasons. An old neighborhood of mine in New York (Bronx) had the same problems. Safeway/Finast, A&P, Bohacks, Pathmark and others all gone.

[pseudo3d]

"Food deserts" are a manufactured crisis, trying to link the lack of a supermarket in areas that have poverty (and the associated link with obesity, something about healthy choices), and often is used an excuse to introduce some backdoor gentrification.

No, that isn't true. Here's a map of the affected area in Dallas:
dfd.png
K=Kroger
A=Albertsons
T=Tom Thumb
W=Walmart

I didn't include any other players, because this was for a basic example. If you look at the area roughly bordered by I-30 on the north, I-635 on the east, I-20 on the south and I-35 on the west, you'll see a very blank slate covering a large part of Dallas' population.

In any case, grocers tend to stay away from rougher areas because shrinkage is too high to maintain profitability (either by shoplifting or not being able to sell high profit margin items), and that's common for every place...Kroger has over 120 stores in their Michigan division, and despite being in all of the suburbs, they have ZERO stores in Detroit proper.

Retailers use shrinkage as an excuse. There are things they can do to keep profits from walking out the door, they just don't want the investment required. No retailer wants to lose money on a store and use the others to bolster the loser, which would probably happen here.

The gap in your map is a little misleading since about a third of that is a large floodplain/greenbelt, which really limits the market area to begin with. Ignoring that, let's get into the meat of the argument.

All stores that are built are meant to be stores that do well, and ones that are underperforming are the ones that get subsidized by the others, not the ones that lose money hand over fist consistently. Shrinkage is very real, and part of the problem is that upper management rarely lets stores take care of their own issues (this is not theory, I know two distinct examples in chain supermarkets). The other "solution" is to just cut service departments out altogether and downscale the merchandise mix, I know SuperValu did this to Albertsons stores (starting with the seafood) and H-E-B will also tend to do it with some stores, even new-builds (the H-E-B in North Bryan is like this, it replaced a Pantry store, kind of a rough area). I know Kroger (Southwest Division) will tend to hang around in lower-end areas, but if things get bad, they know when to quit, which is why I give props to Kroger for being consistent.

Cynically, I wonder if someone like ALDI was interested (or even Albertsons) but they were rejected by the city because they were angling for a gentrification-style store like Trader Joe's. You see, the left portion of that map is where Central Expressway runs parallel to I-45, partially running as a freeway until past Highway 130, which is an interchange with a dangerous turn (3 lanes basically make a 90° turn). TxDOT wants to convert Central Expressway into a surface street and extend 130 to I-45. (This freeway removal plan is practically ignored by yuppies, who would prefer TxDOT to remove US-75 closer to downtown, despite that's a far more vital artery). It's possible someone still viewed the freeway removal plan as a way of revitalizing the neighborhood and adding a nice grocery store could turn it around, but that's just a theory.

[architect]

"Food deserts" are a manufactured crisis, trying to link the lack of a supermarket in areas that have poverty (and the associated link with obesity, something about healthy choices), and often is used an excuse to introduce some backdoor gentrification.

No, that isn't true. Here's a map of the affected area in Dallas:
dfd.png
K=Kroger
A=Albertsons
T=Tom Thumb
W=Walmart

I didn't include any other players, because this was for a basic example. If you look at the area roughly bordered by I-30 on the north, I-635 on the east, I-20 on the south and I-35 on the west, you'll see a very blank slate covering a large part of Dallas' population.

In any case, grocers tend to stay away from rougher areas because shrinkage is too high to maintain profitability (either by shoplifting or not being able to sell high profit margin items), and that's common for every place...Kroger has over 120 stores in their Michigan division, and despite being in all of the suburbs, they have ZERO stores in Detroit proper.

Retailers use shrinkage as an excuse. There are things they can do to keep profits from walking out the door, they just don't want the investment required. No retailer wants to lose money on a store and use the others to bolster the loser, which would probably happen here.

The gap in your map is a little misleading since about a third of that is a large floodplain/greenbelt, which really limits the market area to begin with. Ignoring that, let's get into the meat of the argument.

All stores that are built are meant to be stores that do well, and ones that are underperforming are the ones that get subsidized by the others, not the ones that lose money hand over fist consistently. Shrinkage is very real, and part of the problem is that upper management rarely lets stores take care of their own issues (this is not theory, I know two distinct examples in chain supermarkets). The other "solution" is to just cut service departments out altogether and downscale the merchandise mix, I know SuperValu did this to Albertsons stores (starting with the seafood) and H-E-B will also tend to do it with some stores, even new-builds (the H-E-B in North Bryan is like this, it replaced a Pantry store, kind of a rough area). I know Kroger (Southwest Division) will tend to hang around in lower-end areas, but if things get bad, they know when to quit, which is why I give props to Kroger for being consistent.

Cynically, I wonder if someone like ALDI was interested (or even Albertsons) but they were rejected by the city because they were angling for a gentrification-style store like Trader Joe's. You see, the left portion of that map is where Central Expressway runs parallel to I-45, partially running as a freeway until past Highway 130, which is an interchange with a dangerous turn (3 lanes basically make a 90° turn). TxDOT wants to convert Central Expressway into a surface street and extend 130 to I-45. (This freeway removal plan is practically ignored by yuppies, who would prefer TxDOT to remove US-75 closer to downtown, despite that's a far more vital artery). It's possible someone still viewed the freeway removal plan as a way of revitalizing the neighborhood and adding a nice grocery store could turn it around, but that's just a theory.

Ultimately, the reason why no grocer has decided to move into this area is a simple matter of economics. Even with 3 million in incentives, the expense involved in providing extra security for a store in such a rough area, accounting for shrinkage due to theft, etc. simply do not make such stores work profitably, even with so much money thrown around on the front end. In addition, such stores often require a very different product mix, which can be difficult to format correctly unless if the company has a low-cost, discount format (such as HEB's Joe V's). In South Dallas as a whole, the areas which show the strongest potential for growth are already seeing interest from grocers. HEB is currently scouting sites in the I-30 corridor near West Dallas, Kroger is looking for ways to upgrade their longtime Wynnewood store, Aldi is opening stores scattered about, etc. The primary areas which are still struggling (which are quite large) are Fair Park, Pleasant Grove, the area bounded by the Trinity River and I-35/Hwy 67, and the areas west of Hwy 67 and roughly south of Illinois Avenue stretching to the I-20 corridor. Most of the traditional grocers in these areas have closed both due to economics and problems at the chain itself (chainwide struggles with Minyard in recent years, Albertsons closures during the mid-2000's, etc. With both Kroger and Tom Thumb moving progressively more upscale in the DFW area, I doubt that we will see either of these operators in the area soon. My best bet would be a small HEB if the chain decides to expand further into DFW, or potentially a scattering of Aldi/Walmart Neighborhood Market locations.

[pseudo3d]

No, that isn't true. Here's a map of the affected area in Dallas:
dfd.png
K=Kroger
A=Albertsons
T=Tom Thumb
W=Walmart

I didn't include any other players, because this was for a basic example. If you look at the area roughly bordered by I-30 on the north, I-635 on the east, I-20 on the south and I-35 on the west, you'll see a very blank slate covering a large part of Dallas' population.



Retailers use shrinkage as an excuse. There are things they can do to keep profits from walking out the door, they just don't want the investment required. No retailer wants to lose money on a store and use the others to bolster the loser, which would probably happen here.

The gap in your map is a little misleading since about a third of that is a large floodplain/greenbelt, which really limits the market area to begin with. Ignoring that, let's get into the meat of the argument.

All stores that are built are meant to be stores that do well, and ones that are underperforming are the ones that get subsidized by the others, not the ones that lose money hand over fist consistently. Shrinkage is very real, and part of the problem is that upper management rarely lets stores take care of their own issues (this is not theory, I know two distinct examples in chain supermarkets). The other "solution" is to just cut service departments out altogether and downscale the merchandise mix, I know SuperValu did this to Albertsons stores (starting with the seafood) and H-E-B will also tend to do it with some stores, even new-builds (the H-E-B in North Bryan is like this, it replaced a Pantry store, kind of a rough area). I know Kroger (Southwest Division) will tend to hang around in lower-end areas, but if things get bad, they know when to quit, which is why I give props to Kroger for being consistent.

Cynically, I wonder if someone like ALDI was interested (or even Albertsons) but they were rejected by the city because they were angling for a gentrification-style store like Trader Joe's. You see, the left portion of that map is where Central Expressway runs parallel to I-45, partially running as a freeway until past Highway 130, which is an interchange with a dangerous turn (3 lanes basically make a 90° turn). TxDOT wants to convert Central Expressway into a surface street and extend 130 to I-45. (This freeway removal plan is practically ignored by yuppies, who would prefer TxDOT to remove US-75 closer to downtown, despite that's a far more vital artery). It's possible someone still viewed the freeway removal plan as a way of revitalizing the neighborhood and adding a nice grocery store could turn it around, but that's just a theory.

Ultimately, the reason why no grocer has decided to move into this area is a simple matter of economics. Even with 3 million in incentives, the expense involved in providing extra security for a store in such a rough area, accounting for shrinkage due to theft, etc. simply do not make such stores work profitably, even with so much money thrown around on the front end. In addition, such stores often require a very different product mix, which can be difficult to format correctly unless if the company has a low-cost, discount format (such as HEB's Joe V's). In South Dallas as a whole, the areas which show the strongest potential for growth are already seeing interest from grocers. HEB is currently scouting sites in the I-30 corridor near West Dallas, Kroger is looking for ways to upgrade their longtime Wynnewood store, Aldi is opening stores scattered about, etc. The primary areas which are still struggling (which are quite large) are Fair Park, Pleasant Grove, the area bounded by the Trinity River and I-35/Hwy 67, and the areas west of Hwy 67 and roughly south of Illinois Avenue stretching to the I-20 corridor. Most of the traditional grocers in these areas have closed both due to economics and problems at the chain itself (chainwide struggles with Minyard in recent years, Albertsons closures during the mid-2000's, etc. With both Kroger and Tom Thumb moving progressively more upscale in the DFW area, I doubt that we will see either of these operators in the area soon. My best bet would be a small HEB if the chain decides to expand further into DFW, or potentially a scattering of Aldi/Walmart Neighborhood Market locations.

At this point, I'm not going to put money on H-E-B going into rougher neighborhoods as itself anymore. They seem to have transitioned some of the store sites they originally planned as H-E-B stores in Houston to Joe V's stores, and a 1996 Pantry store in Houston in South Union will be soon replaced with a H-E-B closer to 288 near Riverside Terrace and the trendy Museum District (or at a second will be built, not officially sure if they'd close that one, but that's been their M.O. as of late). AFAIK they've never straight-up converted an H-E-B into Joe V's yet.

Walmart Neighborhood Market stores are also not a sure thing anymore, they grew a lot in the mid to late 2000s, but the trend is to close or replace them these days, at least in DFW.