Promising Strategies to Improve Access to Fresh, Healthy Food and ...

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PolicyLinkLarge-Scale Retailers Develop Small-Scale StoresOver the last few years, an expanding group of large retail chains have begun developing models that use the smallerdesign structures and tightly controlled “limited assortment” product offerings that have proven successful for companiessuch as Trader Joe’s for years. For example, the chain store Jewel-Osco is testing new Urban Fresh small-format storesin Chicago, and Safeway is conducting a similar trial in Southern California. 76 The British chain Tesco is opening10,000-square-foot Fresh and Easy stores in the western United States that are smaller than most supermarkets butlarger than convenience stores. Wal-Mart is piloting Marketside stores that are less than half the size of conventionalsupermarkets. Other stores are also actively scaling down the size of their new stores.These types of smaller-scale stores have excellent potential to serve lower-income communities in urban areas, sinceassembling land in urban areas is often challenging. Tesco has expressed an interest in opening—and in some cases hasnow opened—Fresh and Easy stores in lower-income areas that have been otherwise underserved. The national Save-A-Lot chain has committed to locating their small-format stores in urban and rural areas that lack access to larger, moreconventional stores, as well as enhancing its produce department in response to customer demand. 77 Fresh and Easy andWal-Mart advertise that their stores will offer fresh, healthy choices at prices below other chain grocery stores, and Wal-Mart says that their Marketside stores will offer organic, regionally grown produce, meats, and dairy products.Unfortunately, some of the chains that are piloting new store models in low-income communities have controversiallabor and environmental records. Both Tesco and Wal-Mart are non-union companies, and have been critiqued in terms ofemployee wages, worker health-care coverage, environmental impacts, relationships with suppliers and local communities,and other concerns. 78Advocates are taking a range of approaches to pressure these retailers to make changes. This includes issuing reports anddemands, publicizing concerns to the media, opposing the opening of new stores by these retailers, and in some cases,working with these companies to secure stores in long-underserved neighborhoods while also pressuring the chains toagree to specific labor, environmental, and other community demands. It is encouraging that grocers are beginning torecognize the potential to run profitable grocery stores in low-income, urban communities—but residents will need todecide whether the mix of products, service, and community benefits offered by these stores is acceptable to the community.Tax revenue for municipalities. Grocerystore developments bring needed revenue tocash-strapped municipalities through salesand property taxes. Community residentsbenefit through tax-financed city services.Physical revitalization. New storescontribute to the physical revitalizationof communities by returning abandonedand vacant land to productive use.ChallengesPerception of profitability. Supermarkets—withannual profit margins averaging one percent—arefocused on a very tight bottom line and oftencite lack of profitability as a barrier to investmentin underserved communities. A survey of retailexecutives found that their top three concernswere insufficient customer base, lack of consumerpurchasing power, and crime or the perception ofcrime that could deter potential shoppers. Otherconcerns included higher operating costs in urbanlocations due to additional expenses for security,insurance, and real estate taxes. 80 Customers’smaller average purchase sizes and more frequentshopping trips can also lead to higher operatingcosts since stores need to hire additional cashiersto cover the higher volume of transactions.Securing a site. Grocery stores often have largesite requirements. They need ample parking lotsand are often built as a part of much larger retaildevelopments that sit on 10 or more acres ofland. Such sites are difficult to find in densely builturban areas, where land is expensive, ownershipis fragmented, and sites may be environmentally28 Healthy Food, Healthy Communities
PolicyLinkcontaminated. Large-scale grocery stores sometimesplace a restrictive land use covenant on land deedswhich prohibit other grocery stores from operatingon a site if the current grocer leaves. This limitsaccess to healthy food and contributes to blight incommunities, since these large parcels are oftendifficult to fill with other types of retail stores. 81Negotiating the zoning and regulatory processesinvolved in land acquisition can also be burdensome.Assembling the land needed to build a new storecan take years and may require litigation andmunicipal intervention. For example, acquiring the62 parcels for the NCC Pathmark developmentin Newark, New Jersey (described on page 18),took eight years, including six years of lobbyingthe state to exercise its power to condemn someof the properties, and two years of legal battlesinvolving the last six absentee owners. 82Obtaining financing. Grocery store developmentsare multimillion dollar real estate deals thatrequire high levels of start-up and operatingcapital. Financing these costs means combininggrants and loans from multiple public and privatesources, including commercial banks, communitydevelopment intermediaries, state and localeconomic development programs, and federalagencies such as the Department of Housingand Urban Development (HUD), the Departmentof Human Services, and the Department ofCommerce. 83 Harlem’s Abyssinian DevelopmentCorporation assembled loans from four privatebanks, a community development intermediary, anda state economic development agency; federal andstate grants; and an equity investment from a privateequity fund to finance the $15 million developmentof the first Pathmark supermarket in Harlem. 84Meeting the needs of diverse consumers.Shifting their operations from models that suithistorically homogenous suburban communities toones that meet the needs of racially and ethnicallymixed communities as well as the increasinglydiverse suburbs presents a challenge for large chaingrocers. They lack sound, unbiased informationon community demographics and consumerpreferences, and they are locked into contracts withsuppliers to stock the same merchandise in all oftheir stores based on what sells in suburban markets.Complexity. One of the biggest obstacles forcommunities that want to bring a grocery store totheir area is the amount of time and complexityinvolved in commercial real estate development.Supermarket developments are exceptionally large,risky, and difficult deals to pull together, and oftenrequire specialized negotiation skills and expertise. 85Strategies and Policy OptionsCreate Financing OptionsPublic and private institutions can develop nonconventionalsources of capital that can be used tofinance grocery stores in underserved communities.• States can create funding poolsearmarked for grocery storedevelopments. For example:| | In 2004, Pennsylvania passed landmarklegislation to fund the developmentof fresh food retailers, includinggrocery stores and farmers’ markets, inunderserved communities throughout thestate (see page 30).| | The Illinois Fresh Food Fund will provide$10 million in state funding to beleveraged with private matching funds toprovide loans and grants to encouragegrocers to build and expand stores inunderserved communities statewide. 89| | The state of New York passed the HealthyFood/Healthy Communities Initiative thatcreates a $10 million revolving loan fundand provides grants for farmers’ marketinfrastructure and other incentives(see page 32).| | The New Jersey Economic DevelopmentAuthority partnered with The ReinvestmentFund to create the New Jersey Food AccessInitiative. The program bundles togethera variety of loan products from differentsources to meet the financing needs ofsupermarket operators willing to locate inunderserved areas in the state. 90| | The state of Louisiana passed the HealthyHealthy Food, Healthy Communities29
Page 2 and 3: PolicyLink is a national research a
Page 5 and 6: PolicyLinkCase Studies30 Healthy Fo
Page 7 and 8: PolicyLinkPrefaceIn 2005, PolicyLin
Page 9 and 10: PolicyLinkby groups such as The Rei
Page 11 and 12: PolicyLinkCommunity Supported Agric
Page 13 and 14: PolicyLinkIntroductionIn many commu
Page 15 and 16: PolicyLinkLimited Access to Healthy
Page 17 and 18: PolicyLink• In the Mississippi De
Page 19 and 20: PolicyLinkWhy Access MattersHealth
Page 21 and 22: PolicyLinkMarket Creek Plaza: Resid
Page 23 and 24: PolicyLinkhave found that their hig
Page 25 and 26: PolicyLinkSolutions to Close the Ac
Page 27 and 28: PolicyLinkhelped support the develo
Page 29: PolicyLinkDeveloping New Grocery St
Page 33 and 34: PolicyLinkCASE STUDYsupermarkets fi
Page 35 and 36: PolicyLinkand is assisting in groce
Page 37 and 38: PolicyLinkFacilitate Site Identific
Page 39 and 40: ShopRite Parkside: Bringing Hope (a
Page 41 and 42: PolicyLinkImproving Existing Small
Page 43 and 44: Creating a Network for ChangeCASE S
Page 45 and 46: PolicyLinkOptions Near SchoolsMany
Page 47 and 48: Making Good NeighborsCASE STUDYPres
Page 49 and 50: PolicyLinkStarting and Sustaining F
Page 51 and 52: PolicyLink• limited staff time an
Page 53 and 54: Kaiser Permanente Farmers’ Market
Page 55 and 56: Broad Street Farmers’ Market:Meet
Page 57 and 58: PolicyLinkImproving Linkages betwee
Page 59 and 60: PolicyLinkresidents develop career
Page 61 and 62: Growing PowerCASE STUDYIn Milwaukee
Page 63 and 64: Building Healthy Communities: From
Page 65 and 66: California FreshWorks FundCASE STUD
Page 67 and 68: PolicyLinkConclusionImproving acces
Page 69 and 70: PolicyLinkNotes1Jeffrey Levi et al.
Page 71 and 72: PolicyLink33S. Handy et al., “Mea
Page 73 and 74: PolicyLinkcan begin a larger CSA wi
Page 75 and 76: PolicyLinkphp?product_id=149. Addit
Page 77 and 78: PolicyLinkAssociation, 2006).163The
Page 79 and 80: PolicyLink205Vicki Been and Ioan Vo
Page 81 and 82:
PolicyLinkAcknowledgmentsPolicyLink
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Headquarters:1438 Webster StreetSui
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