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* Research consultant Mari Gallagher writing in Crain’s…
Retail attracts retail, and like attracts like, in either a positive or negative direction. The conundrum is that quality retail typically goes where quality retail is already. With a more careful and granular data analysis, we see that there are way more hundred-dollar bills than imagined. Not everyone is poor where retail choices are lacking.
In 2006, our firm released “Examining the Impact of Food Deserts on Public Health in Chicago.” Efforts in Chicago and across Illinois enjoyed some short-term success in opening needed stores. But over time, many communities suffered severe and disappointing setbacks, with newly built, subsidized stores closing while other areas were unable to recruit any quality food stores at all.
We and many others have always stressed that plopping down a grocery store and cutting the ribbon in front of the cameras does not mean the problem is solved. In fact, over the long run, opening stores without a sustainable plan does more harm than good. We could pin these failures on the “local economy,” but that would be disingenuous. Markets are complicated. So are people and their food choices. People just want at least the basics of living and shopping like everyone else. […]
Mayor Brandon Johnson’s administration should consider a few municipally owned or nonprofit grocery options and a community engagement effort that uses existing carrots and sticks to set a new commercial tone that, over time, other retailers match. Some local independent food stores aspire to step up, but they don’t have the purchasing power of dollar and convenience store chains. Why not help them with a collective purchasing initiative? Good grocers go where good grocers are already, and they, in turn, will attract other types of quality stores that people want and need. Leading by example will begin the long, hard work of market repair.
That’s not a bad idea at all, and the mayor is showing interest…
Mayor Brandon Johnson’s administration is exploring a city-owned grocery store, hoping to promote food equity. […]
The exploration is being done in partnership with the Economic Security Project, a nonprofit dedicated to building economic power for Americans. Senior adviser Ameya Pawar said in a news release that a municipally owned grocery store would operate similarly to a library or post office, offering “economic choice and power to communities.”
But I hope they’re not just thinking about plopping down another grocery store without considering some other factors. Crain’s has been focusing on this topic lately.
* Here, for example, is William Towns, “an adjunct professor at Northwestern University’s Kellogg School of Management and national market president for community revitalization and public housing at Gorman & Company”…
Retail isn’t merely a place to buy goods and services; it’s a social epicenter. Local shops, markets, and restaurants serve as gathering spots where friends and neighbors convene to exchange stories, celebrate milestones and, increasingly, provide flexible working environments for remote professionals. These establishments form the lifeblood of a community, fostering a sense of belonging and local pride. […]
Simultaneously, housing serves as the fuel upon which the retail social epicenter thrives. Affordable housing attracts residents who, in turn, become patrons of local businesses. This symbiotic relationship between housing and retail creates a feedback loop where the prosperity of one bolsters the other. […]
When redevelopment prioritizes retail without housing, businesses often lack the density necessary for sustained profitability. Conversely, when housing leads the way, it may lack the amenities that homeowners and renters seek, making the area less attractive. By recognizing the essential interplay between retail and housing, communities can harness this synergy to nurture inclusive, vibrant, and resilient places for people to live and prosper.
By ensuring no housing plans exist without considering a retail strategy and no retail strategy moves forward without considering its contribution to a housing plan, we can weave stronger, more connected communities that benefit everyone. It’s a model that safeguards the essence of neighborhoods and enriches the lives of those who call them home.
* Crain’s reporters Ally Marotti and Corli Jay…
Chicago TREND, a commercial real estate developer, is deploying a strategy that allows residents to invest in commercial retail properties. A social enterprise formed in 2016, it focuses on transforming retail economics in communities of color. It owns three neighborhood shopping centers in the city and one in south suburban Olympia Fields, with plans to buy two more Chicago properties in the next year.
Chicago TREND hired local property managers and local leasing agents who put equity into the properties. It identifies, acquires and improves service-oriented community shopping centers in urban neighborhoods by partnering with entrepreneurs and residents. The enterprise has deployed this model at two properties in Baltimore. […]
South Shore, too, with its oversaturation of fried food joints, beauty shops and dollar stores, is looking to take a similar approach. The Chamber of Commerce is set to launch a model in late 2024 that would allow residents to invest in commercial properties. Trice, of the South Shore Chamber, says allowing residents to take ownership is one of the only ways to really control which businesses open in a community.
* More on Chicago TREND from Andrew Beideman, chief strategy officer for the Pritzker Traubert Foundation, writing in Crain’s about revitalizing strip malls…
What if we were more intentional in harnessing the potential of these familiar sites to create community assets? What if this type of overlooked real estate could improve access to healthy food and needed retail? What if the properties themselves could be a vehicle to build wealth for nearby residents? […]
Led by entrepreneur Lyneir Richardson, Chicago TREND will leverage impact investment capital to buy overlooked commercial centers in underserved communities. It will then partner with entrepreneurs of color to upgrade the properties and improve each center’s retail offerings to meet community needs. Most exciting, an innovative crowdfunding structure will enable nearby residents to participate in each purchase for as little as $1,000 and benefit from future appreciation.
This comprehensive approach can turn everyday strip malls into drivers of community change — improving access to quality retail like restaurants and pharmacies, turning eyesore properties into community assets and creating pathways for nearby residents to generate wealth.
The Pritzker Traubert Foundation believes that Chicago succeeds when its residents live in strong, supportive and vibrant neighborhoods. We are partners with the Kresge Foundation, the MacArthur Foundation, the McKnight Foundation, the Surdna Foundation and others to launch the TREND fund, which we believe is an important step toward this goal.
Many smaller strip malls already serve as de facto business incubators. This particular plan appears to be upping the game.
Your thoughts?
posted by Rich Miller
Thursday, Sep 14, 23 @ 11:04 am
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Grocery stores are low profit margin businesses. If you have an area with high crime plus the green light on not prosecuting $949 and less: it’s hard to make a profit. If Wal-Mart couldn’t turn a profit, can Chicago?
Comment by Steve Thursday, Sep 14, 23 @ 11:14 am
Hey, Steve, try focusing on the overall topic here instead of your usual city bashing. Thanks.
Comment by Rich Miller Thursday, Sep 14, 23 @ 11:17 am
Reverse discrimination. Why should communities that are better off be using their tax dollars to fund cheaper grocery stores in less privileged communities? I could use my grocery bill to be 40-50% lower, I don’t have reliable transportation, so set one up in my neighborhood.
Comment by Old IL Dude Thursday, Sep 14, 23 @ 11:26 am
===Reverse discrimination===
Another victim heard from.
Comment by Rich Miller Thursday, Sep 14, 23 @ 11:32 am
=When redevelopment prioritizes retail without housing=
Include clean, safe and affordable housing for folks, add retail and they will help build the community in an area.
Comment by Cool Papa Bell Thursday, Sep 14, 23 @ 11:37 am
I have been a proponent of this for about 2 years. Whole Foods and Walmart didn’t work. Maggiano’s isn’t interested. This dance of trying to get chains into food deserts is like Lucy and Charlie Brown and the football. The profit margins are too tight and I can’t imagine what the insurance alone costs. A not-for-profit or government-owned grocery store or a hybrid just seems like something that makes sense to try. It does not need to run a profit. It could even be run at a loss. A not-for-profit could even get donations to cover losses. The overall costs in healthcare (healthier eating) are also a factor. This makes a lot of sense to do a pilot.
Comment by levivotedforjudy Thursday, Sep 14, 23 @ 11:40 am
===an innovative crowdfunding structure will enable nearby residents to participate in each purchase for as little as $1,000=== Good plan but if they don’t have $1,000 how about finding a way for them to participate with sweat equity?
Comment by EP1082 Thursday, Sep 14, 23 @ 11:42 am
“Why should communities that are better off be using their tax dollars to fund cheaper grocery stores in less privileged communities?”
What’s stopping you from shopping at stores in those communities?
I am heavily in favor of municipal owned grocery stores. Food deserts are a nagging problem that don’t have easy solutions. Access to fresh food at reasonable prices benefit everyone when taken as a whole
Comment by Sox Fan Thursday, Sep 14, 23 @ 12:28 pm
Open up some vacant parking lots for “farmers markets”. Let family farms set up tables for free, have CPD provide security. The leftover vegetables at the end of the daily event then is donated to the local food pantry. Of course, this is too late to set up this year, as winter will be closing in soon.
Comment by DuPage Thursday, Sep 14, 23 @ 12:36 pm
We need leadership and accountability for economic development. Alderman frequently block new businesses from opening in their wards and create barriers to needed development in their own communities. We need to make it easier for people to purchase, rent, and renovate vacant properties. The business licenses need to be easier to obtain. There are wealthy black business owners who can’t expand and aspiring entrepreneurs who can’t get off the ground because of red tape. Reverse discrimination? Please. We already subsidize outside businesses that blow into a community, take our tax money and run. Whole Foods got $10 million of our dollars to operate a store for 5 years. If we’re subsidizing private development, we should subsidize people who have a commitment to those communities. And if some providers like grocery stores need to be fully city-operated to stay in a community, so be it.
Comment by D0 Thursday, Sep 14, 23 @ 12:48 pm
one of the great aspects of living in a democracy is the freedom to be able to experiment and trying new things. So from that perspective I say hey, try out a city owned grocery store if you want, go for it! Knowing how things work, i think it’s a terrible idea politically, because you are likely doomed for failure and because it’s such a public departure and a public experiment, the failure will be all over the news. what are the grocery store hours going to be? what will it look like inside, what will the inventory be? what will it look like when someone FIOA’s the expenses behind it. this will capture national news, and unless you can (somehow) guarantee success, you are likely running a high risk
Comment by Merica Thursday, Sep 14, 23 @ 12:52 pm
“It does not need to run a profit. It could even be run at a loss”
Sure a govt run grocery store can sell at a loss - but if you crowd out the private sector - you will forever disincentivize any for-profit stores from ever opening anywhere near a Government-run one. Also due to a lack of investment/innovation, these stores will quickly become obsolete. Lastly, the wholesale grocery warehouse delivery companies will not be able to provide volume pricing to so few stores.
Comment by Donnie Elgin Thursday, Sep 14, 23 @ 12:57 pm
Grocery store development in under-served areas is a costly and partial solution to the food desert problem. To me, the more effective and cheaper alternative is expanding grocery delivery.
You can subsidize a whole bunch of grocery deliveries to an under-served zip code for the same the cost of building a new $3 million store that might fail within a couple of years.
Comment by sulla Thursday, Sep 14, 23 @ 1:11 pm
= but if you crowd out the private sector - you will forever disincentivize any for-profit stores from ever opening anywhere near a Government-run one.=
Now talk to me about government subsidies for Ag, Oil, Steel, Auto’s etc. etc.
Comment by JS Mill Thursday, Sep 14, 23 @ 1:23 pm
“subsidies for Ag, Oil, Steel, Auto’s etc. etc”
A big difference between ownership and subsidies.
Comment by Donnie Elgin Thursday, Sep 14, 23 @ 1:38 pm
- A big difference between ownership and subsidies. -
Yeah, one is a handout to profitable businesses and the other provides food to underdeveloped communities.
Comment by Excitable Boy Thursday, Sep 14, 23 @ 1:51 pm
A government operated food store would need to hire competent, experienced employees and managers. More likely they would have inexperienced but politicly connected managers needing a long learning curve. They could easily lose a lot of money by making big, costly mistakes and think they are doing a great job.
Comment by DuPage Thursday, Sep 14, 23 @ 3:22 pm
=== Sure a govt run grocery store can sell at a loss - but if you crowd out the private sector - you will forever disincentivize any for-profit stores from ever opening anywhere near a Government-run one.===
I thought “Retail attracts retail, and like attracts like, in either a positive or negative direction.”
There’s a Mariano across the road from a Jewel near Lane Tech in Chicago. Both seem to be doing well. I think Mari Gallagher is correct here.
Comment by 17% Solution Thursday, Sep 14, 23 @ 4:22 pm