Upscale grocers see business opportunities in ‘food deserts,’ but will residents pay the high prices?
August 30, 2014 5:00AM ET
BY MARK GUARINO | AL JAZEERA
CHICAGO — The intersection of 63rd Street and South Halsted Avenue in the Englewood neighborhood here was once the center of the South Side’s busiest shopping district, a destination for middle-income families who came to buy school clothes, Christmas gifts and groceries. But the loss of manufacturing jobs in Chicago over the past few decades drove retailers away, and today the area suffers from neglect, with convenience-store items like cigarettes and candy the only wares available for purchase.
That is changing. In July, Mayor Rahm Emanuel helped to break ground on a business that, until now, was considered an anomaly in low-income neighborhoods: Whole Foods Markets.
“This is a groundbreaking,” he said, “but it’s about a breakthrough for Englewood.”
For the Austin, Texas–based grocery chain — often referred to as “Whole Paycheck” for its high prices — opening a store in one of Chicago’s most marginalized neighborhoods is part of a new strategy. The upscale store and other national chains like it see business opportunities in “food deserts” — neighborhoods that lack supermarkets and other options for purchasing fresh produce and healthy food.
“There is now a rising tide of interest in healthy foods, and it crosses socioeconomic boundaries,” says Eric Johnson, president of Ignited, a Los Angeles advertising agency that works with the grocery chain Fresh & Easy. “Smart retailers are finding out ways to make products price-competitive and still make money.”
In the past three years, Whole Foods has opened stores in Boston’s Jamaica Plain, Detroit’s Midtown and New Orleans’ Mid-City neighborhoods, repurposing its model of organic and locally sourced food for gentrifying areas with high crime, vacant storefronts and crumbling infrastructure. In Englewood, the unemployment rate (24 percent) is double that of greater Chicago and the per-capita income ($12,255) roughly half, according to city data.
Walter Robb, Whole Foods’ co-CEO, told reporters at the Chicago groundbreaking that the new store “will be accessible and affordable … [and] one of the most meaningful things we’ve done as a company.”