Business

Workshops to seek solutions to Southeast Raleigh 'food desert'

Posted February 1, 2013

— A decision by Kroger Co. to close two urban Raleigh supermarkets has left thousands of residents without easy access to healthy food, and pushed the Southeast Raleigh neighborhood further into a federally recognized health danger zone called a food desert.

Neighborhood groups, City Council members and faith-based organizations reacted to the January closures by brainstorming new options for fresh food in their neighborhood, including the creation of a co-op grocery store. Researchers at N.C. State University are on the case too, with a United States Department of Agriculture grant to improve healthy food and fitness options in the neighborhood. It will host community workshops at Martin Street Baptist Church Feb. 22 and 23.

A public workshop will take place from 8:30 a.m. to 3 p.m. Feb. 23 at the Johnson Building of Martin St. Baptist Church, 1001 East Martin St. All community members interested in helping make sure that families have access to healthy food and safe places to be active are invited to RSVP at the Voices Into Action website.

There is an additional workshop for representatives of community organizations or agencies from 8:30 a.m. to noon Feb. 22, also at the Martin St. Baptist Church.

The community effort has seen some success already. A Dunn, N.C.-based chain called Carlie C’s IGA has agreed to open a store in Kroger’s shuttered New Bern Avenue location. Conversations are underway with other operators for the Martin Luther King Boulevard Kroger, according to neighborhood activists.

But the question remains: how grocery stores can be successful in neighborhoods with high rates of poverty and declining populations?

It might help to first understand what traditional grocers like Kroger are up against. A 2011 study by the Food Marketing Institute found that the average profit margin for grocery stores is 1.3 percent, the smallest margin of almost any industry. That leaves very little room for fluctuations in food prices, the impact of high unemployment, rising health care costs for its staff, union demands and theft, all of which grocers face regularly.

In low-income areas, grocers also must account for the high percentage of shoppers using food assistance benefits, such as the Supplemental Nutrition Assistance Program (SNAP), which are distributed near the first of each month. Cash flow, inventory and staffing change radically from month’s beginning to end, presenting additional challenges for a grocer, reported the Food Marketing Institute in a July 2011 paper, “Access to Healthier Foods: Opportunities and Challenges for Food Retailers in Underserved Areas.”

Because most major chains are also public companies, they must make decisions that continue to bring the business profits and please shareholders, despite the challenges. In many cases, that means cutting costs, acquiring competitors, raising prices or closing stores.

And then there’s the increasingly competitive environment, with groceries now sold in pharmacies and dollar stores like Dollar Tree, Walgreens and Rite Aid, and at major chains like Target. Specialty grocers like Whole Foods Market, Fresh Market and Trader Joe’s have also taken market share from traditional grocers.

“In many cases, the supermarkets are just saying, ‘We’d rather not compete in this area. We’re just not making enough money,’” said John Stanton, a food marketing professor at St. Joseph’s University in Philadelphia.

Many chains have reacted by changing their business model altogether, often doubling the size of the traditional store and adding more selection, such as organics, natural foods and sushi, as well as household goods, coffee shops, health clinics, prepared food counters and catering. FMI data shows that the median store size has grown from 18,000 square feet in the 1980s to 46,000 square feet in 2010. The organization suggests the most profitable store today to be about 60,000 square feet.

Smaller, lower-end stores like those in Southeast Raleigh are increasingly difficult to operate, because their shoppers may not be able to afford organic fruits and vegetables, sushi and expensive cheeses, and they certainly won’t pay $4 for a coffee drink at an in-store Starbucks.
Store shelves sat empty a few days before the closing of Kroger on Martin Luther King, Jr. Boulevard.

Areas in the front of store where bakery and fruits and vegetables would be are shut down as Kroger prepares to close. Photo by Karen Tam.

Those in the neighborhood who have the means to buy those items will forgo their local store altogether to shop at a higher-end grocery within driving distance.

In Southeast Raleigh, the problem is exacerbated by declines in population. 2010 U.S. Census data shows that population dropped by about 10 percent in the area around the Martin Luther King Jr. Boulevard store.

Kroger officials did not respond to requests for comment on this story, but said in a news release that both Southeast Raleigh stores were unprofitable despite store upgrades and attempts to lure in shoppers. Those challenges certainly aren’t limited to low-income areas. Kroger also closed a store in North Raleigh last year, citing the same poor results.

Though the situation might sound more bleak for a neighborhood like Southeast Raleigh, there is evidence nationwide of profitable independently owned stores in urban areas. Often, they are subsidized with government incentives or other community support, Stanton said.

In Philadelphia, ShopRite stores have opened in low-income areas with help from a Pennsylvania grant and a revolving-loan program created to address food deserts.

In urban Detroit, where many major grocery chains have closed stores, Spartan Stores of Grand Rapids is opening three Valu Land stores (similar to Aldi and Sav-A-Lot). Chaldean-Americans (Iraqi-Americans) in the city have also formed a Detroit Independent Grocers Association to promote and support more than 80 independent stores.

Carlie C’s is betting that it can turn a profit in Southeast Raleigh too. The 14-store chain benefits from its affiliation with Independent Grocers Alliance, which provides food distribution, private-label brands, marketing materials and other resources to 5,000 independent stores around the world.

Independent stores tend to carry fewer items and lack bells and whistles. They also operate with smaller profit, Stanton said.

“Not enough money for a global giant like Kroger is plenty of money for an independent operator like IGA,” he said.

Carlie C’s president Mack McLamb Jr. could not be reached for comment about his plans for the store. The News & Observer has reported that the store could open by Feb. 6.

Meanwhile, a neighborhood group called NC Co-operators is pulling together partners to create a co-op grocery store in Southeast Raleigh. It’s still unclear who would operate the co-op and how it would be funded, said Kia Baker, a resident and director of food recovery and distribution at Inter-Faith Food Shuttle, who is helping to organize the group.

The N.C. State team plans to use the outcome of its workshops to map out places in the community that provide access to healthy food and fitness options. Researchers will take that data to determine how to improve access, or to leverage existing options.

There may not be a large effort to recruit new stores, said Sheree Vodicka, director of Advocates for Health in Action, a partner in both projects. Instead, the groups may focus on educational efforts, and non-traditional approaches to providing food like better equipping corner stores, in addition to the co-op.

“Clearly, grocery stores closing means that they weren’t making any money, which means people weren’t shopping there. That begs the question, why weren’t people shopping there?” Vodicka said. “We don’t really have an answer to that.”

17 Comments

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  • kellypsnll Feb 1, 7:01 p.m.

    As far as growing the food for themselves, many of these people are elderly or live in apartments. Have you ever tried growing veggies in January? I'd like to see them if you have. NC maybe warmer than up north but they still have winter.

  • kellypsnll Feb 1, 6:58 p.m.

    Maybe aldi's could move in. Obviously, they don't have a huge election but the do carry the basics. From milk and eggs to toiletries. I have shopped there a few times in cary. Produce isn't always the best, but you can find some incredible deals on a lot of things including pineapples on sale for .99 cents periodically.

  • keeprightexcepttopass Feb 1, 6:56 p.m.

    Food Lion and wal-mart have horrific bottom of the barrel, wilted, bruised, moldy, rotten produce. I do the "majority" of my grocery shopping at Wal-mart, especially when I need non-grocery items, but then I suck it up and pay the insane high prices at Teeter because their prodice really is much better.

  • wideNCawake Feb 1, 5:05 p.m.

    ...too bad to lose a nice grocery store like good neighborhoods have.

  • dirkdiggler Feb 1, 5:00 p.m.

    "Harris Teeters prices are far from being on par with Whole Foods,in my experience"

    Their organics are similar in price, and their non-organics are far higher than elsewhere. It'd be nice to have Harris Teeter/Whole Foods quality produce at the Food Lion price. I have to scoff every time I hear that ad on the radio where Food Lion touts the changes they've made to their produce department, and how wonderful it is. All the Food Lions in a 20 mile radius of me have the same, rotten produce and awful selection. They really ought to be ashamed of themselves for having the positive attitude they have about their produce dept. Either we have really, really bad Food Lions around here, or their marketing executives have a really strange view of what awesome produce looks and tastes like.

  • dirkdiggler Feb 1, 4:57 p.m.

    Heavenly, I maintain a lovely garden and grow a variety of veggies. I've also got a berry patch for strawberries. I can't grow bananas, kiwi, papaya, asparagus, pineapples, or many other things I tend to pick up at the grocery store unless I wanted to invest in a greenhouse, which isn't going to be happening any time soon. Many people lack the know-how to maintain a garden, and many more lack the property to place one.

  • turkeydance Feb 1, 4:50 p.m.

    "easy access to healthy food"?
    well, they've proved they won't buy it regardless of access.
    Carlie C will do well, because CC will stock what will sell.
    so SE Raleigh will STILL be a "federally recognized health danger zone called a food desert", because of the federal guideline definition. basically: you just can't win.

  • superman Feb 1, 4:45 p.m.

    The local churches have buses and vans be easy for the church to take them in their vehicle to any store they want to patronage. Guess the old ways of the church of helping people is a thing of the past.

  • superman Feb 1, 4:43 p.m.

    The question is, "how can they make money with a shrinking inventory" Items disappear and no money in the cash register. If a large store like Kroger cant make money just how does a super small chain think they can do better. They were there for about 10 years and lost money. Bad decision for any store to set up shop there and expect to stay in business. They also just moved into the old Winn Dixie in Garner that also close for lack of business. Another location that they going to lose money. I was in the Garner store looking around and there were about 4 customers and 6 employees.

  • Eightball Feb 1, 4:41 p.m.

    "But the question remains: how grocery stores can be successful in neighborhoods with high rates of poverty and declining populations"...they obviously are not, lose $$$, and leave. Cant say as I blame them. They are not a charitable institution. Wager that their 'loss prevention' efforts & expenses are higher there than at other stores in the chain, and their profit margins much slimmer too...

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